Flood insurance gives a whole new meaning to preparing for a rainy day. Perhaps you received a notice that you must purchase flood insurance for your property. Maybe you are just concerned about the potential for flooding and want to know how to better protect your home and belongings against damage. Either way, we here at AFI Insurance can help you reduce the impact of a flood on your private structure with a flood insurance policy from the National Flood Insurance Program (NFIP).
The National Flood Insurance Program
Flooding is the most costly and frequent natural disaster in the U.S., yet homeowners and renters insurance does not typically cover any type of damages caused by rising groundwater. Since just one inch of floodwater can cost as much as $27,000 or more in property damages, imagine how much a foot of water could cost without flood insurance protection.
The National Flood Insurance Program is a federal program managed by the Federal Emergency Management Agency (FEMA). The goal of the program is to minimize financial devastation after a flood by offering government-backed insurance to homeowners, renters, business owners, and other property owners.
Types of Flood Coverage
Flood insurance can typically cover two things – your home’s structure and your personal property. Homeowners may need both types of coverage, whereas renters may only benefit from the latter. The NFIP offers replacement cost basis flood insurance for home values of up to $250,000. If your home is worth more, talk to your agent about purchasing supplemental flood coverage from a private insurer. NFIP personal property coverage limits are capped at $100,000, but the damages are typically only covered for their actual cash value accounting for depreciation.
Do You Need Flood Insurance?
Federal law requires homeowners in certain high-risk areas to purchase flood insurance. To find out where your home is in relation to surrounding flood zones, check your location on a local flood map. FEMA provides flood maps online; simply type in your address or coordinates to learn about your risks.
Even if federal law does not require you to purchase flood insurance, you may still be obligated to purchase coverage due to terms in your mortgage agreement. Lender-required flood insurance is commonly enforced to protect the value of the home until the mortgage is paid in full.
Even if you are not required to purchase coverage, flooding can still happen to you. Approximately one in four flooded homes is located in low-risk areas. That is why we generally recommend flood insurance for all property owners and renters – including those in low-risk areas. All it takes is a few inches of water to ruin your appliances, destroy your flooring, damage your walls, and devastate your property.
Disaster Assistance vs. Flood Insurance
Some homeowners mistakenly assume that disaster assistance will be available in the event of a flood. In reality, this requires a disaster declaration from the President of the United States. Even if disaster assistance becomes available, it is not the same as insurance. Federal disaster assistance is usually distributed in the form of FEMA grants and loans.
FEMA grants do not need to be repaid to the government, but they also do not provide significant assistance. Instead, they are intended to pay for temporary housing, medical bills, personal property losses, and other disaster-related expenses. If you need to repair your home, you may instead be offered a loan from the Small Business Association. SBA loans typically carry low-interest rates, but they must be repaid.
With flood insurance, your policy can pay for damages regardless of whether the President declares your county a federal disaster area. In addition, the benefits do not need to be repaid, which minimizes your out-of-pocket costs after a flood. Furthermore, purchasing flood insurance does not disqualify you from receiving federal aid in the event of a disaster.
Applying for Coverage
If you are considering flood insurance for your property, do not wait. In most cases, the NFIP implements a 30-day waiting period before your flood insurance becomes effective. There may be exceptions to this rule if you are in the process of taking a new mortgage or if your structure exists within an area that was designated as a high-risk Special Flood Hazard Area within the past 13 months.
Illinois Flood Insurance Quotes
Although the National Flood Insurance Program coverage is backed by the federal government, coverage can only be purchased through an agent. At AFI Insurance, we can help you get quotes on flood insurance for your home, as well as provide ongoing support and assistance with future questions and claims. Furthermore, you can trust that we offer the lowest available price on flood insurance since NFIP premiums are the same no matter where you buy it from.
Although you must pay NFIP premiums in full when you purchase your policy, payment options are flexible. In some cases, the premiums are rolled into your mortgage statements. Otherwise, the NFIP accepts credit card payments for your convenience.
Other Water Damage
Keep in mind that you may not be fully protected against water damages even with homeowners and flood insurance. There are other types of damages – water and sewer backups and overflows – that are not covered under standard property insurance policies. Instead, we recommend adding this important coverage as an endorsement to your homeowners policy for more comprehensive protection.