Do You Even Need Flood Insurance?
By Cara Csotty
"I won't flood", "I can't flood", and as Luke Bryan sang, "rain makes corn and corn makes whiskey", so rain is a good thing, right? Well, the big deal is that in the last 5 years, all 50 states have had a flash flood or flooding event. Based on Flood Insurance Rate Maps, Florida has 6 of the country's 10 most at-risk cities to be affected by storm surge. The west coast of Florida is home to four: Tampa, Bradenton, Fort Myers, and Naples.
We commonly hear "flood insurance will cost too much to purchase", but this could not be further from reality. There are currently two ways to buy flood insurance. One is through the National Flood Insurance Program (NFIP) and the other is through a new emerging market our industry calls "Private Flood Insurance". Private flood insurance typically costs between 20-50% less than the National Flood Program. Why? Because the private market can be selective and choose what they write and also because the NFIP currently owes about $30 billion dollars and the 2017 hurricane season may drive that number closer to $50 billion.
Here are the Top Three Flood Insurance Myths:
1. Only some homes are in a flood zone or I am above the flood plain.
Everyone lives in a flood zone; the difference is some flood zones carry a higher risk for flooding than others. Water can find its way to unexpected places and reach unanticipated levels in a matter of hours. Even with the most sophisticated technology, an identified zone is really just our "best guess". Although it may be an educated guess, it has been determined by FEMA that low risk flood zones are involved in about 25% of the flooding events that occur.
2. All homeowners' insurance policies cover flood damage.
More than 80% of American homes do not have flood insurance, yet most people believe that their home insurance policy will cover them if they have a flood event. A typical homeowners' policy does NOT cover flood insurance. Only in certain situations, from very specific companies, does your home policy contain flood coverage. In almost every case, you would need to purchase a separate policy to cover flood. Policies start as low as $144 per year with an average annual premium running around $750.
3. I can only buy $250,000 in flood coverage for my home.
The National Flood Insurance Program offers coverage up to $250,000 for your home, BUT private companies (typically at a much lower premium) offer up to whatever limit you need to purchase. if you have a home replacement cost of $800,000, you can buy $800,000 in coverage. If your home insurance need is $350,000, then you can buy that. The federal program is limited and cannot offer more than $250,000 for a residential structure but the emerging private markets are aggressively pursuing the opportunity to be your insurance company of choice.
So in the end, Luke Bryan was right that "rain is a good thing". It keeps our communities green and vibrant. Too much rain, however, can cause flooding, and flooding can cause damage, but ensuring you have the coverage you need might cost you less than you think.
If you are looking to purchase flood insurance for your home, don't hesitate to contact Cara Csotty at Chapman Insurance Group.
Cara Csotty, Chapman Insurance Group