While water is a critical part of life on earth, it can also be deadly. From hurricanes to flash floods, we’re often faced with water-caused disasters.
The number one disaster in the U.S. is flood and it rings up about $2 billion dollars in insurance claims annually.
We are heading into what the experts call “peak flood season,” which occurs between late spring through summer. “This is due to a combination of factors, including a slower jet stream and more humid air,” according to the Weather Channel’s Jonathan Erdman.
Folks living in flood-prone areas who lack flood insurance can be on the hook for tens or hundreds of thousands of dollars in damage.
The National Flood Insurance Program says that the average claim is $46,000 and that only 15 percent of American homeowners carry the policy.
Unless you have a lot of cash stashed away, why wouldn’t you carry flood insurance? Let’s take a look at some of the reasons the experts hear.
I can’t afford flood insurance. I’ll buy it when the time comes
This is a bit like saying that you can’t afford auto insurance and you’ll wait until you’re involved in an accident to buy it.
It just doesn’t work that way.
Besides, the Federal Emergency Management Agency (FEMA) says that there is a waiting period (typically 30 days) after payment of the first premium before the policy kicks in.
There are exceptions to this and you can find out more at FEMA.gov.
Affordability shouldn’t be an issue – at least not when you compare the monthly cost of a policy (about $54 on average) to the tens or hundreds of thousands of dollars you’ll spend to repair or rebuild your home.
I’m pretty sure flood damage is covered by my homeowners insurance
According to the Insurance Information Institute, “Standard homeowners and renter’s insurance does not cover flood damage.” If you purchased a separate policy, then you’re covered. But, as mentioned earlier, most homeowners don’t purchase it.
I don’t live in a flood plain
One-fifth of insurance claims for flood damage are from homeowners who live in low-to-moderate risk areas, according to FEMA.
Lenders typically don’t demand flood coverage to folks buying homes in these risk corridors so it’s up to the homebuyer to be proactive.
If you have flood insurance
Just as you should do with your homeowners policy, you should review your flood coverage at least annually.
The National Flood Insurance Program offers up to $250,000 in coverage for the home and $100,000 in coverage for your personal property.
Often, people will buy expensive items and neglect to obtain additional coverage to protect their loss.
Be proactive – it may save you from the devastation of losing your home. The FEMA website offers more information.
Homeowner’s and Flood Insurance
Terms and definitions are important to know when discussing insurance.
- Actual Cash Value This refers to the amount it would cost to replace an item with the deduction of appreciation due to age and usage.
- Additional Living expenses (ALE) This covers extra cost you incur when your home is deemed unlivable and is being restored. This includes reasonable payments for lodging, food, clothing, and other associated expenses. This is also referred to as Loss of Use coverage.
- Admitted Insurance Company An insurance company that has been approved by the state’s insurance department.
- Deductible Amount The amount of money a policyholder must pay before they can collect money from the insurance company for a covered loss. In Florida, a homeowner’s insurance policy has two deductibles: one for hurricane damage and one for all other perils, which is generally amount.
- Dwelling Coverage Coverage for a home and its attached structures. This is based on the cost to rebuild the home and does not include the value of land. This means the amount paid for a home in a real estate sale could be different from the dwelling coverage amount.
- Endorsement An amendment or addition to an existing insurance contract which changes the terms of the original policy. Endorsements may also be referred to as riders.
- Flood Insurance Available from the Federal Government under the National Flood Insurance Program. It is excluded from the homeowner’s policy.
- Forced Place Insurance Insurance that a lien holder places on a property to provide coverage in the event the borrower allows coverage to lapse.
- Replacement Value The amount it would cost to replace an item based on current market prices, meaning depreciation would not be deducted. However, the cost reimbursed would not exceed the maximum dollar amounts shown on the policyholder’s declarations page.
- Surplus Lines Insurance Insurance that can be purchased from an insurer that is not licensed in the insured’s state, though the surplus lines insurer will still be licensed in the state where it is based.
Purpose of Property Insurance
Citizens Property Insurance Corporation
What is the public purpose of the Citizens Property Insurance Corporation?
In 2002, the Florida Legislature created Citizens Property Insurance Corporation (Citizens), a not-for-profit alternative insurer, public purpose is to provide insurance to, and serve the needs of, property owners who cannot find coverage in the private insurance market.
Citizens Property Insurance Corporation is a Florida-based, government-owned not-for-profit insurer that was established in 2002. The company sells property insurance to Florida homeowners who cannot get coverage through private insurers. This includes homeowners who have a sinkhole located near or on their property, or live in a high-risk flood zone.
Florida residents can purchase traditional homeowners insurance through Citizens Insurance, as well as renters, condo and manufactured home insurance. The provider also sells wind-only insurance policies for residential and non-residential properties. Citizens Insurance is funded exclusively by policyholder premiums.
What is a wind mitigation inspection?
Wind mitigation inspection: A policyholder may elect to have an inspection to determine what wind mitigation credits they are entitled to receive on the homeowner’s windstorm premium. Inspectors will complete the wind mitigation inspection form for the insured to submit to the insurance company.
- Wind mitigation credits: If your home has documented wind-damage mitigation features, you could qualify for a lower rate. Examples include storm shutters, hurricane impact windows and doors that are designed to withstand projectiles.
- Roof construction discount: Citizens Property may offer a lower insurance rate if your home qualifies for the Florida Building Code Compliance discount. There may be additional discounts if your roof is inspected by a professional roof technician.
