Flood Policies

Flood insurance policies go into effect 30 days after the date of purchase.

A few inches of water can cause thousands of dollars of damage. According to the Federal Emergency Management Agency (FEMA), the average flood claim is $33,000. Conventional insurance policies through a commercial insurer do not cover flood damage. Most flood insurance policies in the United States are issued through the National Flood Insurance Program administered by the Federal Emergency Management Agency. You can buy National Flood Insurance through your insurance agent.

Homeowners

Homeowners in low-to-moderate risk areas are eligible for preferred rates on flood policies. According to FEMA, which determines risk areas based on flood-zone maps, almost 25 percent of National Flood Insurance claims are from low-to-moderate risk areas. The preferred-risk policy covers the building and its contents. Homeowners in these areas are not required to carry flood insurance.

Homeowners in high-risk areas must purchase a standard-rated policy, which offers coverage for the building and optional coverage for the contents. The Dwelling Form is insurance for buildings with up to four units, townhouses and single family condominiums. The General Property Form is for other types of residential and commercial properties. Homeowners in high-risk areas with federally insured or regulated mortgages are required to purchase flood insurance.

Renters

Preferred-risk policies are available for most renters who live in low-to-moderate risk areas. Renters do not purchase flood insurance for the building, only their personal belongings. As of 2010, preferred-risk, contents-only policy premiums begin at $39 per year. Standard-rated policies for renters in high-risk areas are available, as well.

Commercial

Most businesses in low-risk areas are eligible for preferred-risk policies. Commercial flood policies cover buildings and contents; contents-only coverage is also available. As of May 2010, building and contents coverage premiums started at $557 per year. Contents-only coverage in low-risk areas starts at $152 per year. Standard-rated policies are offered to businesses in high-risk areas.

Coverage

Flood insurance policies cover damage to the building and its foundation; electrical and plumbing systems; air conditioning systems; refrigerators, stoves and built-in appliances; permanent carpeting installed over unfinished flooring; permanent paneling; bookcases, wallboard and cabinets; detached garages up to 10 percent of the building property coverage; and debris removal. Personal belongings, furniture, electronic equipment, portable microwave ovens and dishwashers, window air-conditioners, carpets not insured under the building coverage, freezers and food in them, and artwork up to $2,500 are some of the contents that are covered in flood policies.

Exclusions

Coverage is limited to damage to property and contents caused by the water. Flood policies do not cover secondary damage, such as mold, which is considered to be preventable. Flood policies also exclude money, stock certificates and precious metals. Property and contents outside of an insured building are not covered. These include septic systems, landscaping, decks, patios, hot tubs and swimming pools. Vehicles are not covered, nor are temporary housing or loss of business.

Premiums

Flood policy premiums are based on the year of construction, the number of floors, the building occupancy and contents, flood zones, the elevation of the lowest floor in relation to the flood map elevation, and the amount of coverage and deductible you choose. Premiums are higher for buildings with basements. Low-risk residential flood policies for building and contents coverage begin at $119 per year. This policy provides $20,000 for building coverage and $8,000 for contents. Contents-only coverage begins at $39 for an $8,000 policy. High-risk residential policies begin at $478 per year for $35,000 of building coverage and $10,000 for contents. Commercial flood policies begin at $50,000 of coverage for buildings and $50,000 for contents.

References

• National Flood Insurance Program: Residential Coverage
• National Flood Insurance Program: Residential Coverage -- Renter
• National Flood Insurance Program: Commercial Coverage Business Property Risk
• National Flood Insurance Program: Commercial Coverage Policy Rates
• National Flood Insurance Program: Residential Coverage -- What's Covered
• National Flood Insurance Program: Commercial Coverage -- What's Covered