My Insurance Insider and Finance Blog

Image via WikipediaNow, its yet another year of severe flooding that’s washed out properties and has left lots of people homeless in Indiana, Wisconsin, Iowa and several other parts of the country. Rescue operations are now on to evacuate people and animals from there to safer places. Once the mess up is over, people are to file flood insurance claims.

Now, what is flood?National Flood Insurance Program(NFIP) defines flood as a general and temporary condition of partial or complete inundation of normally dry land area by:

• Overflow of inland or tidal waters
• Unusual and rapid accumulation or runoff of surface waters from source
• Mudflows
• Subsidence of land causing erosion or undermining caused by waves or currents of water that result in a flood.

Here is some stats on Flood you should keep in mind:

• Flood is #1 natural hazard in the U.S., occurring in all 50 states.
• Floods happen in high-risk, medium-risk, and low-risk flood zones.
• Homeowner’s insurance doesn’t cover flood damage.
• 25% of all flood insurance claims come from outside high-risk area.
• Average payment for a $50,000 Disaster Home Loan is $311 a month
• Average premium for National Flood Insurance is $370 a year.

In 1968 Congress established the NFIP to cover the rising cost of taxpayer-funded disaster relief for flood victims and the increasing amount of damages caused by floods. The NFIP makes federally backed flood insurance available in communities. A number of private insurers have now started offering excess flood policies, providing more extensive water damage protection to homeowners than the NFIP policies.

If you are ever hesitate to purchase flood insurance, keep in mind that the average flood insurance policy (as per Insure.com) costs as little as $353 a year for coverage. Claims caused by disasters like hurricanes, river floods, floods caused by rain, dam or levee failure are covered under a NFIP backed flood insurance plan. NFIP reduces flood losses and provides financial protection to home and business owners.

Through partnerships with communities, the insurance industry and the mortgage industry, the NFIP helps to reduce flood damage by almost $1 billion a year. Moreover, buildings constructed in compliance with NFIP building standards experience damages less than 80% annually.

Though your homeowner’s insurance policy doesn’t cover flooding, NFIP does cover for an average cost of about $1 a day, depending on where you live and the coverage you choose.

Furthermore in order to be eligible for taxpayer-funded Federal Disaster Assistance, you’re required to buy flood insurance.This assistance is often given as a loan that has to be repaid with interest.
Coverage for Residential Building:

Building coverage insures a house with attached and detached garages, certain permanently installed fixtures such as built-in dishwashers, permanent shelving and cabinetry, furnaces and radiators, hot-water heaters, plumbing fixtures, stoves, ovens and refrigerators.

National Flood Insurance doesn’t 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.

Coverage for Residential Contents:

The coverage insures most of your personal property and belongings, including clothing, furniture, housewares, bedding, decorative items, lamps and lighting fixtures, books, home electronics,clothes washers and dryers, air conditioners,and portable microwave ovens,etc

Coverage for Non-Residential Building:

Building coverage for non-residential buildings that includes unfinished drywall for walls and ceilings, nonflammable insulation, electrical junction and circuit breaker boxes, central air-conditioning units, furnaces,water heaters, light fixtures, built-in cabinets etc.

Coverage for Non-Residential Contents:

Contents coverage for nonresidential buildings that includes furniture and fixtures, machinery and equipment, Stocks, raw materials, finished and unfinished goods, packing and shipping supplies etc.

Now, how much coverage is available?

*Homeowners, its up to $250,000 for building coverage and $100,000 for contents coverage.
*Business Owners, the limit is up to $500,000 for building coverage and up to $500,000 for contents coverage.

Furthermore,condominium associations can purchase flood insurance coverage for a residential building under the Residential Condominium Building Association Policy that’s upto $250,000 (x) number of units or the replacement cost of the building, whichever is less. Eligible buildings include garden apartment-type construction, row houses, town houses, and single-family detached buildings owned by the association with some exceptions. Residents of the individual units are then allowed to buy contents coverage separately up to $100,000.
Condo Insurance for Renters:

If you are renter of such house or apartment, you’ll be allowed to protect your contents from floodwaters. Its up to $100,000 of NFIP contents coverage is available for renters of insurable property.

What is the cost of NFIP?
The cost of flood insurance can be less than 50 cents a day and about $1 a day on an average. Average flood insurance premium is only about $370 a year. Your specific premium will depend on your place of living and how much coverage you want to choose, the age, elevation and structure of building, the occupancy and the deductible.

And lastly you can purchase NFI policy, from insurance agent of your area or contacting one of the Write Your Own (WYO) insurance companies. For an agent, call the NFIP’s toll-free number to get the name of an agent in your area at 1-888-RAIN 924 (724-6924).