Flood – The forgotten insurance!

ONLY flood insurance protects against the risk of damage caused by floods!

Your business or home has a 26% chance of being damaged by flooding in a 30-year period, compared to a 9% chance of damage or loss due to fire. Floods can happen almost anywhere and anytime – not just near water. The floods are the number one natural disaster in the United States and have caused nearly $1.6 million in damage in Alaska and $23.8 billion in the United States over the past 10 years. Flood coverage is sold separately from all other types of insurance coverage.

Flood damage protection is available for protection against loss of commercial buildings, residential buildings/homes and tenants’ belongings. Coverage is available up to $250,000 for single-family, multi-family and other residential buildings and up to $100,000 for contents coverage. Non-residential buildings, including small businesses, can acquire coverage for up to $500,000 for the building and $500,000 for the contents. Flood damage coverage is not covered by any other type of policy except a flood insurance policy.

Insurance Placed by Lender vs Owner/Buyer

If you are applying for a home or home loan, the lender may take the initiative to purchase insurance for you to meet the terms of the loan. This is called “lender-placed” insurance coverage, and it can often be more focused on protecting the lender’s interests than yours. Additionally, coverage purchased through a lender could cost you up to three to four times more than if you purchase the insurance yourself through an agency or insurance agent. Lenders will advise borrowers if flood insurance is required as a loan condition (National Flood Insurance Reform Act of 1994). Also, there is no 30-day waiting period for flood insurance purchased as part of a mortgage. Flood insurance is required if the lender is federally regulated and your property is located in a special risk area.

What is a special risk area?

This is a designated area with the greatest risk of flooding. Flood insurance rate maps show high risk areas as zones A, AE, or V. However, nearly 25% of all flood claims come from listed medium or low risk flood zones. as zones B, C and X. Anyone can buy flood insurance. whether or not they are in a special risk area. If you already have flood insurance and are selling your business or home, you can assign your current flood insurance policy to the buyer at closing.

How are flood insurance premiums calculated?

Flood insurance premiums are based on the elevation level of the building or home. A “Flood Elevation Certificate” is required before flood premiums can be determined. This certificate must be completed by a licensed land surveyor or professional engineer authorized by law to certify elevation information. Flood elevation certificates cost between $200.00 and $1,000.00 to complete. Completed flood elevation certificates should be kept on file with your local community planning department as required by National Flood Insurance Program (NFIP) Regulation 44 CFR 60.3b1, FEMA Publication 480 and the local flood reduction ordinance for the community.

New Build Information

The participating community will require a homeowner or builder to obtain a “floodplain permit” before construction begins. This permit is issued by the community planning office and requires property owners to build above the base flood elevation. Check with the local community planning office to determine your flood zone. If your job site is located in a special risk area, it is wise to bring in a licensed land surveyor, professional engineer or licensed architect to establish a temporary baseline before construction begins. This will allow the builder to reference the reference and build above the base flood elevation (BFE). Additionally, it will help you determine the amount of fill material needed to raise your structure above the BFE, which will result in lower flood insurance costs. Remember: building above the BFE leads to lower flood insurance premiums; building below the BFE results in higher premiums.

Lower flood insurance premiums are available for homeowners who build above base flood elevation and do not have a basement or crawl space. Buildings that have a basement or crawl space require flood openings in the foundation. These are openings on all sides of the basement or crawl space walls that allow flood waters to flow freely through the space without creating hydrostatic pressure.

How do I get flood insurance?

Applying for flood insurance is easy! Flood insurance is available from approximately 90 insurance companies in more than 20,300 participating communities nationwide.

Your chosen insurance agent will require a flood elevation certificate which will contain the information needed to assess the policy. The premium charged for a properly rated NFIP policy will be the same regardless of who you purchase the policy from. For more information on rates, premiums or cards, contact your local independent insurance agent.

Flood elevation certificates can be delivered to your city or borough office for safekeeping.

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