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Flood Insurance Will The Changes Effect You?

On July 16, 2012, changes were made to The National Flood Insurance Program (NFIP) that required the Federal Emergency Management Agency (FEMA) to remove subsidies on flood policies, which resulted in rate increases for thousands of homeowners who were required to carry flood insurance.

Luckily for those homeowners, the rate increases were not implemented thanks to the H.R. 3370 bill passed by Congress, known as the Homeowner Flood Insurance Affordability Act of 2014. This bill delayed the implementation of the rate increases of flood premiums for four years.

If you are a homeowner fortunate enough to live in a “Preferred Flood Zone,” flood insurance is not required, so do not worry. However, purchasing flood insurance is something you should still consider because every home has the potential of experiencing a flood and that flood resulting in damage.

Others, however, are not so fortunate, and flood insurance is required. Flood premiums must be paid in full at the renewal of each policy.

If you are required to carry flood insurance, remember that to get the best rate, an Elevation Certificate is recommended. This certificate allows the NFIP to provide you with the most accurate rate. Failure to secure an elevation certificate could result in the highest premium, as premiums must be manually rated.

Flood insurance serves many purposes. Most don’t know that flood insurance covers more than just water damage due to a flood. Coverage goes beyond water damage but includes hurricanes, tornadoes, flooding, droughts, ice storms, earthquakes, wildfires, and tropical storms. Any of these perils could occur as Mother Nature is unpredictable.

If you are wondering whether or not you should purchase flood insurance or have questions about your existing flood policy, do not hesitate to call your agent.

New Flood Insurance Development

Flood Risk Floods are often associated with rivers and streams overrunning their banks or heavy rains from hurricanes and other major storms. While those are genuine hazards, the reality is that flooding can be caused by several factors that you may not have considered.

One factor to consider when evaluating your risk of flooding is the development and new construction in your area. A development project or new construction can drastically alter how the ground around the project is cleared of trees and other brush that help absorb ground water, or if the project has large paved areas, like parking lots, that could impact drainage and run-off. This could be true whether it’s a relatively small project like a new home being built next door to something much more significant, like a shopping center which may be large enough to impact flood risk for an entire neighborhood.

If you’re doing the “weekend warrior” thing and working on significant gardening or landscaping projects, remember that you don’t want to increase your flood risk inadvertently. For hardscape surfaces such as patios and paths, consider using semi-permeable materials such as flagstones or gravel that will allow groundwater to drain rather than collect (which it might if you were to pave these areas). Manage stormwater and runoff by planting vegetation that can help absorb water, and try to avoid projects that would cause water to drain back towards your home.

The reason it’s so important to be aware of these risks is because flood damage is excluded explicitly by homeowners’ and renters insurance policies. Flood insurance coverage, though, is available through independent insurance agents as a separate policy from the National Flood Insurance Program (NFIP), a federal insurance mechanism. In the 1960s, taxpayers often had to “bail out” flood victims. Congress created the NFIP to make flood insurance available in communities that adopted floodplain management laws to reduce flood damage.

If you own or rent property in low- or moderate-risk flood areas, you can buy flood insurance and may be eligible for a lower-cost preferred-risk flood policy. Unlike homeowners insurance, flood insurance typically has a waiting period. The NFIP sets a standard 30-day waiting period before flood coverage goes into effect. However, it’s essential to discuss this with your insurance agent to understand the exceptions to the waiting period and whether it would apply to your situation. If there’s a new development in your neighborhood, it could impact your risk. A Lock Insurance independent insurance agent can help you sort out the coverage options, understand what the policy will and won’t cover, and can help you get a policy through the NFIP.