What you need to know about flood insurance

It was in 1968 that the United States Congress initiated the National Flood Insurance Program so that the resulting damage to private and business property would be reduced. Coverage is available through insurance companies and insurance agencies and is managed and dictated by government laws and can protect the property owner from damage caused by flooding.

Standard insurance for a home is intended to cover a single, two, three or four-family home and a single-family home.

A general real estate flood policy can insure five or more family homes, as well as buildings that are not used for a residence.

A housing association policy can insure a housing association.

This type of policy should include two types of related coverage: real estate and personal property, defined as the contents of your property.

Three essentials about a related insurance policy

• Home contents cover must be purchased separately from the building cover.

• Flood insurance is not valuable cover, meaning it only covers actual damage up to the policy limit.

• Flood insurance does not provide guaranteed replacement cost coverage that is not subject to limits. Flood insurance only reimburses damage up to the policy limit.

More things to understand

It is important to note that the government-run program offers special consideration when multiple flood claims have been filed by the same policyholder. Officially considered “serious repeated 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 who declines the opportunity for government-funded improvements intended to reduce the likelihood of damage to property may be tied down with a rate increase equal to one hundred and fifty percent of the rate charged for real estate when the grant was offered.

Policyholders with severe repetitive loss may be eligible for the subsidy if the following conditions are met:

• 4 or more different insurance claim payments (including home/contents payments) have been issued and each is over $5,000


• A minimum of 2 different flood insurance claims have been issued that together exceed the current value of the property

For more information on flood insurance and how a respective policy can be tailored to your individual needs, please contact an experienced independent agency.

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