When Am I Required to Buy Flood Insurance in Louisiana?
Hurricane Katrina and Hurricane Rita were emotionally and financially devastating lessons for residents of Louisiana. There are no state rules in Louisiana on flood insurance requirements. The only time that a landowner has to purchase flood insurance is if he has purchased his property with a federally backed mortgage and the property is located in a high-risk flood zone.
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The National Flood Insurance Program (NFIP)
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The National Flood Insurance Program (NFIP), administered by FEMA, makes flood insurance available to any resident in Louisiana as long as the resident lives in an NFIP Participating Community. For a homeowner and business owner, flood insurance can cover structure and content losses that occur from flooding. For a renter, it covers contents only. Remember that flood insurance is not typically included in your standard homeowner's or renter's policy. It is sold through private insurance companies and is financially backed by the federal government.
Participation
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For communities that participate in the NFIP, FEMA conducts an in-depth study that quantifies the flood risk. A high-risk zone, where insurance is required with a federally backed mortgage, has a 1 percent chance of flooding in a given year. Land outside of this high-risk zone, in the low-moderate risk zone, has less than a 1 percent chance of flooding in a given year. Then there is the undetermined risk zone, and in this zone, flood hazard analysis has not been conducted. You can find out your property's flood zone by visiting the FEMA website and looking up your community's digital flood insurance rate maps (see Resource section).
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Coverage
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Insurance is available for any type of building, as long as it is located in a community that participates in the National Flood Insurance Program. The maximum amount of coverage for a residential property and its contents is $250,000 and $100,000 respectively. For a commercial property, the maximum coverage is $500,000 for buildings and $500,000 for contents. If your home is in a high-risk zone and you have a federally insured mortgage, you will be required to purchase flood insurance for the amount of the loan (up to a $250,000 maximum and not more than the value of the home).
Cautions
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Just because your home is not within a high-risk flood zone does not mean that you are safe from flooding. During Katrina, hundreds of thousands of residences flooded because rainfall amounts were either greater than those accounted for in FEMA's flood-risk calculations, or areas were flooded from rising water from levees being breached. Across the United States, approximately 25 percent of flood loss claims are from properties located outside of the high-risk zones. Most homeowner's insurance policies do not provide coverage for damage caused by floods, so to protect your property from a flood you will have to purchase a flood insurance policy.
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References
Resources
- Photo Credit hurricane katrina image by jcpjr from Fotolia.com
