Want flood insurance for hurricane season? You’re late
WASHINGTON – May 6, 2019 – While some Florida homeowners have private options, national flood insurance has a 30-day waiting period in most cases – and hurricane season starts in 25 days.
As it stands now, the entire National Flood Insurance Program (NFIP) expires on May 31, 2019. Should that happen, homeowners won't lose coverage but homebuyers may not be able to secure coverage even if it's demanded by their lender. Congress may have a new plan in place for the program by then, or they may authorize a short-term extension as they have done in the past.
In any case, homeowners and buyers should prepare for the possibility of another NFIP hiatus. NFIP issued the following commonly asked questions about flood insurance coverage:
Why do I need flood insurance?
Standard homeowner's insurance policies do not cover floods, and it's wise to consider flood insurance even if you are not required to purchase it. Even if you live outside a high-risk flood zone, called a Special Flood Hazard Area, it's a wise decision to buy flood insurance. In fact, statistics show that people who live outside high-risk areas file more than 25 percent of flood claims nationwide.
It's often said that wherever it rains, it can flood. So, while flood zones are specific geographic areas where there is a higher statistical probability of a flood occurring, floods do occur elsewhere. Florida, for example, has exceeded that statistical probability, putting more homes and properties at risk than expected over the last five years.
FEMA calculates that just three inches of floodwater in a home likely will require replacing drywall, baseboards, carpets, furniture and making other necessary repairs. If you don't have flood insurance, your likely out-of-pocket cost (based on a 1,500-square-foot, one-floor home) is estimated at $15,000. For six inches of water, estimated loss jumps to an estimated $23,000. And 18 inches or more could require repairs to electrical, heating and cooling systems plus replacing doors, appliances and cabinetry. The estimated cost: $30,000.
How does flood insurance work?
If a community participates in the National Flood Insurance Program (NFIP), both building and contents coverage can be included in a policy for homeowners and businesses. Renters can get coverage for contents only. Policies issued by the NFIP pay even if a federal disaster isn't declared.
In Florida and other states recently impacted by hurricanes, NFIP streamlined the claims process, enabling policyholders to receive advance payments to jump-start rebuilding. Some policyholders were recently able to get advance payments up to $5,000 without an adjuster visit or additional documentation. Some received advance payments of up to $20,000 if they had photos/video evidence and receipts or a contractor's estimate.
A Preferred Risk Policy (a lower-cost flood insurance policy) provides both building and contents coverage for properties in moderate-to-low risk areas. This policy can be purchased for as little as $325 per year.
When should I buy a policy? As soon as possible. There's a waiting period.
NFIP cannot pay a claim without a policy in effect when damage occurs. A new insurance policy from NFIP becomes effective 30 days after you buy it, unless the purchase is associated with the origination, renewal or extension of a federally backed loan on property in a high-risk area.
Even if I'm not in a flood hazard area, can I purchase flood insurance?
Yes, providing your community participates in NFIP. You're eligible to purchase a flood policy with the same coverage you would receive if you lived in a high-risk area.
Can I get flood insurance if I'm renting a property?
Yes. If you live in a community that participates in NFIP as a renter, flood insurance covers the contents of your home, apartment or business at a rented location. An insurance agent can talk about the costs and ways to lower those costs.
NFIP policy holders choose their amount of coverage. The maximum for one to four family residential structures is $250,000 in building coverage and $100,000 in contents coverage. For residential structures of five or more units, the maximum is $500,000 in building coverage and $100,000 in contents coverage.
The maximum for businesses is $500,000 in building coverage and $500,000 in contents coverage.
How much will I get from NFIP after flood damage?
There are some misconceptions about the amount a policyholder will receive following flood-caused damage. While a policy may state it covers losses up to a certain amount:
- The amount paid to the policyholder on a homeowner's flood insurance policy will cover only the cost of actual damage caused by the flood.
- The amount paid on contents will cover only actual losses caused by the flood.
- The amount paid to businesses covered for structure and contents will be only for actual losses by the flood.
Where can I buy flood insurance?
Contacting your insurance company or agent. For an agent referral call 800-427-4661 or visit FloodSmart.gov.
Information provided by Florida Realtors. Click here to see the original article.
Reprinted with permission Florida Realtors. All rights reserved.