It was in 1968 that the United States Congress initiated the National Flood Insurance Program so that ensuing related private and business property damage would be reduced. Available through insurance companies and insurance agencies, the coverage is managed and dictated by government laws and can protect the property owner from damage caused by flooding.
A Standard Insurance policy for a dwelling is meant as coverage for a one, two, three or four-family residential building, as well as a single-family home.
A general property flood policy can insure five or more family residential buildings, as well as buildings that are not used for a residence.
A Residential Condominium Building Association policy can insure a residential condo association building.
This type of policy should incorporate two types of related coverage: building property and personal property, defined as the contents in your premises.
Three Essential Things about a Related Insurance Policy
• Contents coverage needs to be purchased independently from the building coverage.
• Flood Insurance is not a valued coverage, meaning, it only covers the actual damages up to the policy’s limit.
• Flood Insurance does not feature guaranteed replacement cost coverage that is not bound to limits. Flood insurance only pays for damages up to the policy limit.
More Things to Understand
It is important to note that the government-run program provides special consideration when there are numerous flood claims submitted by the same policyholder. Officially regarded as ‘severe repetitive loss’, where intervention may be warranted to prevent future losses, these claims may result in an offer of a FEMA mitigation grant if applicable.
Acceptance of the grant is voluntary, but any policyholder that declines the opportunity for government-funded improvements that are designed to reduce the likelihood of property flood damage, may be strapped with a rate increase that is equivalent to one-hundred-fifty percent of the rate charged for property when the grant was offered.
Policyholders with severe repetitive loss property can be eligible for the grant if the following conditions are present:
• 4 or more different insurance claim payments (including building/contents payments) have been issued and every one of them is more than $5,000
Or
• A minimum of 2 different flood insurance building claim payments have been issued that all together are more than the current property value
For more about flood insurance and how a respective policy can be tailored to your individual needs, please contact an experienced independent agency.
