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National Flood Insurance Program
Ridgway-Bauer & Associates, Inc.
December, 2003
Flood:
A general and temporary condition
of partial or complete inundation of normally dry land areas from overflow
of inland or tidal waters or from the unusual and rapid accumulation or
runoff of surface waters from any source. (definition from the Standard
Flood Insurance Policy)
The storms and flooding experienced in
the spring and summer of 2003 will be long remembered for their severity and
lasting impact. Extensive property damage in the millions of dollars, and
sadly, the loss of two lives, can be blamed on this unusual weather year.
Many individuals, families, and
businesses discovered the extent of their insurance coverage – and
limitations. Those who experienced backup of sewers and drains were
surprised at how quickly the limit of $10,000 could be reached. Others had
the disappointment of learning that their water damage was not covered
because the cause of loss was determined to be a “flood.”
The fact that a flood, as defined above
by the insuring contract within the National Flood Insurance Program, is not
covered on a typical homeowner’s policy is a surprise to many. It’s
particularly disturbing to discover this after a major, uninsured
loss.
Fortunately, the frequency of these
unforeseen flooding events is so rare that it never becomes an issue.
Agents, then, who attempt to sell “flood insurance” in areas not prone to
such occurrences are viewed with the same contempt as a snake-oil salesman.
So, it is no surprise that few policies are sold – even in areas that have
had a history (albeit, not within recent history) of flooding.
So, how does one go about determining
whether flood insurance is something they need, or even if it is available?
The simple answer is to call your agent.
She can tell you whether your community is participating in the National
Flood Insurance Program (NFIP), and how much insurance you can buy, and what
the premiums would be. She (or he) can then help you through the
registration, inspection, and application process.
First, determine whether your home is in
a designated flood plain. Common sense will tell you that if you are within
sight of a river, stream, lake or other body of water, then, more than
likely, you are in a flood plain. If you can remember a specific flood
event, chances are, you are in a designated flood plain. Unfortunately, it’s
not that simple. It is possible to live in an area that has a history of
flooding, yet not be eligible for the NFIP because the community you are in
has failed to register. Fortunately, that situation is rare. Most
communities participate at some level in the NFIP.
Your agent can determine if you are in a
participating community. Or, you can find out yourself by going to:
http://www.fema.gov/fema/csb.shtm. Click on the appropriate state, and
all of the communities participating will be listed.
Next, you will need to file an
application with the program. Your insurance agent has access to application
kits. If you are in a participating community, all you need to do is fill
out a two-page application with the appropriate fee.
The following section is taken from the
NFIP web site, and reflects the most recent premium examples:
There are many factors that affect the price you'll pay for
flood insurance. The higher your flood risk, the higher the premium. If you
purchase $100,000 in building coverage for your single family home, your
annual premium will vary depending on your level of risk.
Special Flood Hazard Areas (SFHA)
-
Property located near the ocean and therefore subject to
storm surge and hurricane damage, is most likely in a V Zone. V zones have
the highest risk for flooding.
-
Property located near a river, lake or stream, is
probably in an A zone which also have a high potential for flooding.
-
Property located in SFHAs can only be insured under
Standard Policy rates.
Non-Special
Flood Hazard Areas (Non-SFHA)
Below are annual
premiums using Standard Policy rates for $100,000 of flood insurance
coverage for a residential single family home:
|
Pre/Post-FIRM* |
Zone |
Other Rating Factors |
Premium
May 1, 2003 rates |
|
Pre-FIRM |
Zone V1-30,VE |
No
Enclosure/basement |
$985.00 |
|
|
|
With Enclosure |
$1,325.00 |
|
Post-FIRM |
Zone V1-30,VE
Built between
1975-1981 |
One Floor-No Basement/Enclosure at BFE*** |
$
1,085.00 |
|
|
|
One Floor- No Enclosure - 1 Foot below BFE |
$
2,855.00 |
|
Post-FIRM |
Zone V1-30, VE
Built 10/1/81 & After |
Elevated Floor at BFE - Free of Obstruction - Replacement Cost 75% |
$1,310.00 |
|
|
|
Elevated Floor at BFE - With Obstruction <300 sq. ft. - Replacement Cost
75% |
$1,760.00 |
|
Pre-FIRM |
Zone A1-30, AE, AO, AH |
No
Basement |
$625.00 |
|
|
|
With Basement |
$720.00 |
|
Post-FIRM |
Zone A1-30, AE |
One Floor- No Basement at BFE |
$521.00 |
|
|
|
One Floor- No Basement/enclosure - 1 foot above BFE |
$351.00 |
|
|
|
One Floor- No Basement - 1 foot below BFE |
$1,601.00 |
|
Pre/Post-FIRM |
Zone B, C, X, A99 |
No
Basement |
$
396.00 |
|
|
|
With Basement |
$
466.00 |
*Pre/Post FIRM is determined
by the date of construction of the structure & the date of the initial Flood
Insurance Rate Map for the community.
**All Premium values are based on total written premium plus Federal Policy
Fee and Increased Cost of Compliance premium as of May 1, 2003.
***BFE-Base Flood Elevation found on Flood Insurance Rate Map.
The following section (again from the NFIP web site)
explains how much coverage is available, and what it covers:
Flood Insurance Coverage Available
Limits Of Liability
|
BUILDING
COVERAGE |
|
Coverage Category |
Emergency Program |
Regular Program |
|
Single family
dwelling |
35,000 |
250,000 |
|
2-4 family dwelling |
35,000 |
250,000 |
|
Other residential |
100,000 |
250,000 |
|
Non-residential |
100,000 |
500,000 |
|
CONTENTS
COVERAGE |
|
Coverage Category |
Emergency Program |
Regular Program |
|
Residential |
10,000 |
100,000 |
|
Non-residential |
100,000 |
500,000 |
What Does It Cover?
The Standard Flood Insurance Policy (SFIP) Forms contain
complete definitions of the coverages they provide. Direct physical
losses caused by "floods" are covered. Also covered are losses resulting
from flood-related erosion caused by waves or currents of water activity
exceeding anticipated cyclical levels, or caused by a severe storm,
flash flood, abnormal tidal surge, or the like, which result in
flooding, as defined. Damage caused by mudslides (i.e., mudflows), as
specifically defined in the policy forms, is covered.
What Is Covered in My
Basement?
The NFIP defines a basement as any area of a building with
a floor that is below ground level on all sides. While flood insurance
does not cover basement improvements, such as finished walls, floors or
ceilings, or personal belongings that may be kept in a basement , such
as furniture and other contents, it does cover structural elements,
essential equipment and other basic items normally located in a
basement. Many of these items are covered under building coverage, and
some are covered under contents coverage. The NFIP encourages people to
purchase both building and contents coverage for the broadest
protection.
The following items are covered under building coverage, as long as they
are connected to a power source and installed in their functioning
location:
Sump pumps.
-
Well water tanks and pumps, cisterns and the water in them.
-
Oil tanks and the oil in them, natural gas tanks and the gas in them.
-
Pumps and/or tanks used in conjunction with solar energy.
-
Furnaces, hot water heaters, air conditioners, and heat pumps.
-
Electrical junction and circuit breaker boxes, and required utility
connections.
-
Foundation elements.
-
Stairways, staircases, elevators and dumbwaiters.
-
Unpainted drywall and sheet rock walls and ceilings, including
fiberglass insulation.
-
Cleanup.
The Following items are
covered under contents coverage:
-
Clothes washers
-
Clothes dryers
-
Food Freezers and the food in them
What Is Increased Cost
of Compliance (ICC) Coverage?
Increased Cost of Compliance (ICC) under the NFIP provides
for the payment of a claim to help pay for the cost to comply with State
or community floodplain management laws or ordinances from a flood event
in which a building has been declared substantially damaged or
repetitively damaged. When an insured building is damaged by a flood and
the State or community declares the building to be substantially damaged
or repetitively damaged, ICC will help pay for the cost to elevate,
flood proof, demolish or relocate the building up to $30,000. This
coverage is in addition to the building coverage for the repair of
actual physical damages from flood under the Standard Flood Insurance
Policy (SFIP).
When Will My Policy Go
Into Effect?
There is a 30-day waiting period before a flood
insurance policy can become effective. In most instances, the insurance
producer who writes your policy can provide you with the date that your
policy should go into effect.
What Is A Flood ?
-
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 the policyholder's property)
from:
---Overflow of inland or tidal waters; or
---Unusual and rapid accumulation or runoff of surface waters from any
source; or
---Mudflow; 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.
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