Flood Insurance

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Fast melting snow, severe storms and heavy extended rainfall can all contribute to extensive flooding during the spring months, according to the Insurance Information Institute (I.I.I.), which is encouraging U.S. residents to learn about their risk during Flood Safety Awareness Week (March 14-18). 

 Midwestern states that had record amounts of snowfall are particularly vulnerable to flooding from overwhelming rivers, lakes and streams. Homeowners and renters who reside near bodies of water should purchase a flood insurance policy if they haven’t already done so, warned the I.I.I.

 “Floods are the nation’s leading natural disaster – anywhere it rains, it can flood,” said Loretta Worters, vice president with the I.I.I.

 While the optional comprehensive portion of an auto insurance policy includes coverage for flood damage, it is excluded under standard homeowners and renters insurance policies.

 Flood coverage for homeowners and renters is available in the form of a separate policy from the federal government’s National Flood Insurance Program (NFIP) and from a few private insurers. There is typically a 30-day waiting period—from date of purchase—before a new NFIP policy goes into effect, so it’s important to act now, before the waters rise. Consumers can get more information by visiting the NFIP’s FloodSmart website. The site includes numerous interactive resources (all of which are shareable), including:

  • Cost of Flooding tool – estimates the cost of damage from various levels of flooding
  • Flood Risk Scenarios
  • Video Library – home and business owners who have experienced flooding
  • One Step Flood Risk Profile tool – accessed from the home page, enables consumers to estimate their risk and flood insurance premiums and find agents who serve their communities
  • FEMA’s Are You Ready for Flooding? widget
  • Link to FEMA’s Flood Safety Awareness Week site – additional information about the dangers of flooding and how U.S. residents can protect themselves and their properties

Just a few inches of water from a flood can cause tens of thousands of dollars in damage. Over the past 10 years, the average flood claim has amounted to over $33,000, the NFIP reported.

 The National Oceanic and Atmospheric Administration (NOAA) notes that a large swath of the U.S. is at risk of moderate to major flooding this spring, from northeastern Montana through western Wisconsin following the Mississippi River south to St. Louis. On February 24, the National Weather Service released an initial spring flood outlook for this high risk region and is expected to release a national spring flood outlook on March 17.

 For the third consecutive year, forecasters predict moderate to major flooding along the Red River of the North, which forms the state line between eastern North Dakota and northwest Minnesota and includes the Souris River Basin and the Devils Lake and Stump Lake drainages in North Dakota. If the current forecast holds, the main stem Mississippi River is at risk for moderate to major flooding from its headwaters in St. Paul, Minnesota, all the way to St. Louis.

 When it comes to floods and the damage they can do, many people are complacent. A 2010 I.I.I. poll found that 16 percent of Americans thought their homeowners policy covered damage from flooding during a hurricane. Moreover, the proportion of people in the South—among the areas most severely affected by hurricane related flooding—who thought homeowners insurance covers flooding from a hurricane was only10 percent higher, a mere 26 percent.

 The NFIP provides coverage to its policyholders for up to $250,000 for the structure of a home and $100,000 for personal possessions. Private flood insurance is available for those who need additional insurance protection, known as excess coverage, over and above the basic policy or for people whose communities do not participate in the NFIP. Some insurers have introduced special policies for high-value properties; these policies may cover homes in non-coastal areas and/or provide enhancements to traditional flood coverage. 

 The average cost of a flood policy for homeowners is $570 annually but can be as low as $129 a year in low risk areas. For renters in a moderate to low risk area, rates start from $49 annually for contents-only coverage.

 “Your home is your most valuable asset and flood insurance is the best and most affordable way to protect that investment,” said Worters.

 For a related video, go to Water and Flood Damage: What Is and Is Not Covered.

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