Flood insurance is a kind of insurance coverage that is available for all residential and commercial properties. More and more people are talking about flood insurance these days because of flood damage caused by melting snow, heavy or continuous rainfall, coastal area storm surges, flash flooding, among many other natural catastrophes that occur every year.
What is Flood Insurance?
Flood insurance is offered by insurance companies as a coverage plan that provides protection for your home in the event of financial losses due to flooding. It is important that we make a distinction between damage due to rising floodwaters and damage due to wind-driven rain such as fierce types of rainstorms caused by hurricanes.
Structures can get damaged by water when it enters areas like holes in a roof, doors, or through windows. When this kind of damage occurs, losses are usually not replaced by flood insurance. Flood insurance only covers the overflow of inland tidal waters and the unusual or rapid accumulation of runoff surface waters.
Although there are some private insurers on the market, the government program NFIP, which is administered by FEMA, issues most flood insurance policies.
When is Flood Insurance Required?
Any home that is financed by loans that are guaranteed by the federal government in areas that are designated by FEMA as “special flood hazard areas” require flood insurance. These areas are also commonly referred to as “flood zones”.
FEMA defines flood zones as areas of land where there is 1% of flood water encroachment during any year. This is commonly referred to as the 100-year flood. You can check the area where you live on the flood risk profile which includes a map. This information can be found on the FEMA website.
Here are a few other reasons:
– Flood insurance is sometimes required by lenders to provide coverage for only the property structure
– Required when buying a home in a high-risk flood area that is a designated flood zone
– Required by lenders that are federally insured or regulated such as FHA
– Sometimes used to eliminate risk by the lender in the event that the borrower leaves the home and discontinues making mortgage payments
Why It is Important to Have It
If your home is at a high elevation, this does not mean there is no risk of flooding. There is still a 1% chance or greater risk of flooding during any year in many areas. This means that flooding often occurs in places that are outside of flood-prone areas.
If the 100-year event occurs where you live, it is possible that water can reach a higher level that’s beyond the established flood zone. In fact, 20% of claims against the National Flood Insurance Program come from homes outside of risk flood areas.
After a flood and there is major damage to a home, flood insurance can take care of the repairs. In some cases where entire homes get wiped out from floods, flood insurance will cover rebuilding the entire home. When the property floods, the insurance company will make a payment for the amount needed to make repairs or cover the cost of what was destroyed.
Contact GEC Insurance Services
GEC Insurance Services offers flood insurance for those who are purchasing or refinancing a home. We take the time to help you why this type of insurance coverage is necessary when purchasing a home. We also provide you with options on how to reduce its cost and find the right flood insurance solution that protects your home and property. Give us a call today to be matched with one of our local advisors who can help you discuss your flood insurance needs.