Flooding caused by the severe storms that started September 18, 2009 damaged many homes in 14 counties across northern Georgia. The rising waters gave homeowners little time to protect personal property; therefore, loss was significant in the affected areas. If they were lucky, the home structure was not damaged beyond repair, and hopefully they had flood insurance. Not all floods are as devastating as what impacted northern Georgia or New Orleans in 2005. Likewise, not all floods occur in high-risk areas. No matter where you live, you may want to consider flood insurance for your home.
What is a Flood?
Let us first define a flood. Basically, a flood is excess water or mud on normally dry land. The official definition used by the National Flood Insurance Program is:
A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from:
- Overflow of inland or tidal waters;
- Unusual and rapid accumulation or runoff of surface waters from any source;
- Mudflow, defined as “A river of liquid and flowing mud on the surfaces of normally dry land areas, as when earth is carried by a current of water”; or
- Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.
A flood does not have to be 10 feet of water that forces you to climb to your rooftop. It can simply be a few inches of water in your home. You may not be devastated by it, but you could lose a lot of personal property. Just a few inches of water can ruin carpet, hardwood floors, and other floor coverings. Damaged drywall and baseboard molding would need replacing. A flood that reaches 10 inches may also destroy furniture, floor lamps, appliances, bookshelves, cabinets and so on.
What is Flood Insurance?
Flood insurance is a federally backed insurance program offered by the Federal Emergency Management Agency (FEMA). It helps protect homeowners against structural damage and loss of personal property in the event of a flood. Renters are also protected against loss of personal property. Homeowners insurance and renters insurance specifically excludes providing coverage for damages caused by flooding.
Flood insurance is required by law to obtain a mortgage if the property is located in a flood zone. It may also be required in areas exposed to a high risk of flooding. If the property is not located in a flood zone, the homeowner can still purchase flood insurance at preferred rates as long as the homeowner lives in a community that participates in the National Flood Insurance Program. Generally, there is a 30-day waiting period before flood insurance coverage is activated, unless required to obtain a mortgage.
What is the National Flood Insurance Program?
Congress created the National Flood Insurance Program (NFIP) in 1968. The purpose of NFIP is to reduce the taxpayers’ cost of providing disaster relief for flood victims. Communities participate in the program by using floodplain management ordinances, and in return, NFIP makes flood insurance available to homeowners, renters and businesses. Many communities in Georgia participate. Go to http://www.fema.gov/fema/csb.shtm to see if your community participates. Only a few communities do not participate.
How is Flood Insurance Obtained?
You can inquire about flood insurance with your homeowners insurance agent. If your agent cannot help you, visit http://www.fema.gov/nfipInsurance/companies.jsp to find a local agent in your area or call the experts at Henssler Norton Insurance, LLC at 770-429-9166.
How Much does Flood Insurance Cost?
According to FEMA, the average cost of flood insurance is a little more than $400 per year. However, the cost can vary greatly, depending on the amount of coverage you are seeking and what flood zone you reside in.
What does Flood Insurance Cover?
Flood insurance can provide coverage for the Replacement Cost Value (RCV) of the building up to $250,000 and the Actual Cash Value (ACV) of personal property up to $100,000. However, personal property in a below grade basement (the basement is below ground on all four sides) is not covered. Both types of coverage are recommended for homeowners and business owners. Renters can purchase coverage for personal property.
To be eligible for RCV coverage on the building, three conditions must be met:
- The building must be a single-family dwelling;
- Be your principal residence, meaning you live there at least 80 percent of the year, and
- Your building coverage is at least 80 percent of the full replacement cost of the building, or is the maximum available for the property under the NFIP.
Personal property is always valued at ACV, which is RCV at the time of loss, less the value of its physical depreciation.
What is a Preferred Risk Policy?
A Preferred Risk Policy provides flood insurance to homes, apartments and businesses located in low-to-moderate risk areas at a lower cost. A preferred risk policy that provides $250,000 of coverage for the replacement cost of the building property and $100,000 for personal property can be purchased for $388 annually if the homeowner has a basement or enclosure. For a homeowner without a basement or enclosure, that same policy would cost $348. The rates are lower for lesser coverage limits. Ask your agent if you qualify.
Prior to the September 2009 floods, you may not have thought your home was at risk for flooding. According to the FEMA website, 25% of all flood claims occur in the low-to-moderate risk areas, and recent events have supported that number. Flood insurance may provide additional peace of mind when you consider that your homeowners insurance specifically excludes flood damage. You may find that flood insurance is not very expensive if you live in a low- risk area. For properties that are at risk, you should look into obtaining flood insurance if you have not already. For more information, go to http://www.fema.gov/business/nfip/ or contact Henssler Financial at 770-429-9166 or [email protected].