By Carolyn Paulochik, CIC
Georgetown Insurance Service, Inc.
Frederick, MD 21703
It’s a common misconception that you only need flood insurance if you own property in a flood-prone state like Florida, Louisiana, Georgia, or the Carolinas. But the truth is, floods can (and do) happen anywhere. Changing weather conditions in recent years have caused flooding in areas that have never had major issues with floods in the past. In 2018, Texas experienced the worst flash flooding since 1935 in Llano County when the area got as much as 13.24 inches of rain in just a two-day period, and Ellicott City, Maryland flooded (for a second time in two years) when nearly eight inches of rain fell in six hours.
It’s important to ensure your home or business is protected again our nation’s most common natural disaster. Here’s what you need to know about flood insurance:
Who needs flood insurance?
The short answer? Everyone.
Flood insurance is available to anyone, regardless of where you live or own commercial property. Sometimes it’s required—for example, when obtaining a mortgage on a property located in a federal flood zone—but regardless, everyone should consider purchasing a policy. It’s important to note that flood insurance is often excluded under homeowners or commercial property policies meaning the only way to ensure proper protection is to purchase separate flood coverage. When buying home or business insurance, always consider getting a quote for flood insurance, right from the start.
It’s also important to consider flood insurance if you’re a renter. If your landlord isn’t required to have flood insurance, it’s likely that they haven’t invested in a policy. This means that any damage to your personal belongings caused by flood damage would most likely not be covered.
Floods aren’t limited to natural causes either. For example, a water main in the street could burst causing a large amount of surface water to rapidly accumulate. This water continues to rise and rushes into nearby homes and businesses. Without flood insurance, you could be stuck with paying for these damages out of pocket. Losses can occur anywhere—even if you’re not in a flood-prone region.
What solutions are available?
The National Flood Insurance Program (NFIP) is available through FEMA or other designated carriers. It provides affordable insurance to property owners, renters, and businesses and encourages communities to adopt and enforce floodplain management regulations. According to FEMA, the program aims to reduce the socio-economic impact of disasters by promoting the purchase and retention of general risk insurance. More specifically, flood insurance.
Unfortunately, the future of the NFIP is constantly hanging in the balance. While it was reauthorized through May 31, 2019, the program remains in severe debt—partially due to a sharp increase in hurricanes and a tremendous surge in floods over the past few years.
If you’re located in a flood zone, flood insurance can certainly be expensive. While coverage through the NFIP is beneficial, it does have drawbacks. Flood policies written through the program can be somewhat restrictive on what they cover and there are maximum limits that can be purchased through the program. But, depending on the location of your property, there are also private flood carriers that can provide quotes which are broader—and usually less expensive—than the NFIP policies.
For people not living in flood zones, premiums are often much less for flood insurance from private flood carriers. And compared to the potential loss, insurance often comes at a bargain. According to an article on BankRate.com, one foot of water in an average home can cause $72,000 worth of damage.
It’s also important not to wait until the last minute. Most flood insurance policies require a 30-day waiting period before coverage becomes effective. It’s critical to be proactive and purchase a policy for your home or business long before the hurricane and storm seasons.
What are the next steps?
Flood insurance can be complicated based on your geographic region, flood risk, and type of property. If you don’t currently have a policy in place, we encourage you to speak with your agent at Georgetown Insurance Service and explain your situation. We represent carriers that write for the NFIP, as well as private flood carriers, so we’re well-equipped to help you find the coverage that best fits your individual needs.