Flood Insurance-Related Questions

Q: What Is Flood Insurance?

A: Flood insurance is a type of property insurance that covers a residence for losses from water damages, usually due to extreme weather, groundwater builds up, or other causes of floods.

Q: I Already Have Homeowners/Renters’ Insurance.  Am I Covered?

A: No, flood insurance coverage is different from Homeowner’s insurance and what is covered differs. Check your Homeowner’s insurance provider to be sure, but typically flooding is not covered.

Q: How Does Private Market Flood Insurance Differ From NFIP?

A: Flood insurance can be either purchased through the National Flood Insurance program/FEMA or directly from private carriers. They are the same policy, underwriting, and claims adjusting. There are sometimes extra coverages that the Private Market can add to their policies that are not available through NFIP. The rate is typically a lot lower.

What is Risk Rating 2.0?

  • FEMA is updating the National Flood Insurance Program (NFIP) risk rating methodology through the implementation of a new pricing methodology called Risk Rating 2.0. The methodology leverages industry best practices and cutting-edge technology to enable FEMA to deliver rates that are actuarily sound, equitable, easier to understand, and better reflect a property’s flood risk. Risk Rating 2.0 is a complete redesign of the NFIP. It provides a more accurate and fair rating of properties. Some of Risk Rating 2.0 changes are: 

  • Elevation Certificates No Longer Required

  • New Rating Features:
    • Distance to Water Source
    • Difference In Elevation Between Ground And Lowest Floor
    • Type Of Flooding
    • Flood Frequency
    • Foundation Type
    • Replacement Cost
    • Prior Flood Claim History

How Will Risk Rating 2.0 Affect My Rates?

  • 23% of current policyholders will see an immediate premium decrease.
  • An additional 66% of current policyholders will see on average $0 - $10 per month increases.
  • 7% will see an increase on average of $10 - $20 per month.
  • 4% will see increases of $20 or more per month.

We have seen quite a few premium decreases in our area.

Q: What Are The Coverage Limits For Our Private Market Flood Insurance?

A: The limits are the same as NFIP. The maximum available limits are $250,000 for a home and $100,000 for contents. The coverage for maximum commercial property is $500,000.

You can purchase Additional Living Expenses through the Private Market.

You can also purchase “Excess” limits over and above the $250,000 or $500,000. In the Private market, we can write up to $2,000,000 on a home and $5,000,000 on a commercial building.

Q: Will Federal Disaster Assistance Pay For Flood Damage?

A: No, not necessarily. Federal Disaster Assistance is only available when a Presidential Disaster Declaration is declared. Most flooding events do not result in this declaration. If it is declared, the aid is commonly a form of low-interest disaster loans that must be repaid.

Q: Is Private Market Flood Insurance Affordable?

A: Yes, we offer policies that can be more than 50% less in some cases.  Our agency represents over 25 Private Flood Markets.

Q: What Is Covered In My Private Market Flood Insurance Policy?

A: PMFI policies are the same policy as NFIP - and better. You can add Additional Living Expense/Loss of Use to some PMFI policies. This coverage will help pay for any additional living expenses you have after a loss, such as staying in a hotel for a month while your home is being repaired.

Q: When Does My Policy Go Into Effect?

A: In most cases, there is a 30-day waiting period. In the Private Market, the policy will go into effect 15 days from the date of application. If you are buying a home and have a bank loan, there is no waiting period. 

Q: How Do I Switch From NFIP To Private Market Flood Insurance?

A: Simply contact us and we will happily help you through the process.

Q: What Are the Costs Of Private Market Flood Insurance Policies?

A: We have seen rates 25-75% lower than NFIP. However, we do run into situations where NFIP is a better option.

Q: What Private Market Flood Carriers Do We Use?

A: Policies are placed with and are underwritten by select insurance carriers who have maintained an AM Best financial rating of no less than “A or A-” (Excellent).

Q: Can I Cancel My NFIP Policy Mid-Term?

A: No. At this time the NFIP does not offer mid-term cancellations.

Q: Why Isn’t Every Insurance Agent Jumping On The Private Market Bandwagon?

A: Several reasons…

KNOWLEDGE: Not every agent is well-educated in flood insurance. This stuff is not easy. We have learned from the greatest minds in the industry.

MARKET: We have over a dozen markets that we use to find the best policy at the best price.

INCOME: Agents simply do not want to reduce their income. Half the premium for half the commission equals huge losses to agent income. For us… it is all about saving people money. The savings that we are seeing are incredible. We saved a non-profit business $23,000 on their policy. Imagine losing that commission. Now imagine what that non-profit can do with an extra $23,000!

PASSION: Nothing makes our day more than to save a homeowner or business thousands of dollars, or help a real estate agent finally sell a coastal property, or help a homeowner afford to buy their dream home on the water, or allow an elderly couple to keep their home because they can afford the flood insurance. This is why we get up every day. We love what we do and love seeing the faces of the people that we help. This is why many real estate agents have our phone number on speed dial.

Q: What Are The Issues With The NFIP?

A: Well, where do we begin….

  • Government Flood insurance written through NFIP and backed by FEMA is MASSIVELY subsidized. Homeowners in coastal areas screamed bloody murder back in 2012 when the government tried to charge the full rate for each risk. Congress reversed itself in 2014. In 2021, the NFIP completely revised their rating platform. It is called Risk Rating 2.0. They limited the increases to 25% per year.

  • The NFIP program is currently over $25 BILLION in the hole. That was before all the flooding and hurricanes of recent years. It is only going to get worse! The National Oceanic and Atmospheric Administration (NOAA) states that global sea levels are going to rise between 1-3 feet this century. They also say that climate change will contribute to more storms and flooding. The premiums charged by the NFIP do not correlate with the risk. We are essentially subsidizing risks in more flood prone areas such as Florida, Louisiana, and Texas. The current flood maps are in dire need of updating. This is done by Congress.

  • NFIP policies do NOT include coverage for additional living expense. If you need to move out of your home after a flood while repairs are being made, you need coverage for additional living expense. Private Market policies include this coverage.

  • It is simple mathematics. The NFIP model simply cannot sustain its current model. How big of a deficit will finally break the back of the program? The Private Market insurers can rate each property based on the individual risk and NOT try to subsidize the homeowner that lives on the Mississippi River whose home floods every few years and collects a large check.

  • Is the Private Market new? NO… They have been around for decades writing private and excess flood. Only recently in 2015 have they been accepted as a replacement option for NFIP. Congress is making it easier and easier to write your flood insurance in the Private Market.

Q: What Constitutes A Flood?

A: There are a few types of floods: Coastal, River, Drain/Sewer, Groundwater, and Flash Flooding

  • Coastal flooding is a cause of extreme weather and high tides. Low-lying seaside areas are in the most danger from coastal flooding.
  • River flooding is a very common type of inland flooding. It happens when a body of water exceeds the river banks, typically from intense rainfall. This flooding can affect surrounding properties and pose a serious safety threat.
  • Drain and Sewer flooding is not always due to extreme weather, though it can be a factor or the cause sometimes. Other times it may be a blockage or failure of the drainage system or an internal problem with the building.
  • Groundwater floods take time to transpire. With extended periods of rainfall, the ground becomes waterlogged until it is incapable of absorbing any more. Water then rises above the surface and begins to cause flooding. These floods can last for weeks and even months in some cases.
  • Flash floods are a very dangerous form of flooding. Unlike groundwater floods, it happens quickly when the ground cannot absorb water at the speed and amount it is falling at.

Q: How Damaging Can A Flood Be?

A: Floods can be extremely damaging, costing billions worth of damages in the U.S. alone. They can compromise the structural integrity of your house and destroy the items in it. Flood waters usually contain mud, sewage, bacteria, and toxins, which pose a grave threat. Even after the water has subsided and is gone in your house, mold is likely to occur due to walls, furniture, and other items being soaked.

Q: Where Can Floods Happen?

A: Floods can happen anywhere, even if you are in a low-risk flood zone. In the past 5 years, all 50 states have experienced a flash flood. Some areas are at a higher risk than others.

Q: How Can I Prepare For A Flood?

A: Though having flood insurance is a great start, there are other precautionary methods you can practice helping even further:

  • Pay attention to flood alerts. This simple task can help you a lot, giving you time to move furniture and other valuable to a safe place.

  • Always have a flood checklist. This should include what to do in case of a flood, items you should have, where you and your family should go, roads to take that are less likely to flood, higher ground locations near your home, and an evacuation plan.

  • Waterproofing your basement, though expensive, is worth it. The investment is easily payed off if you live in a frequently flooded area.

  • Invest in a sump pump. Sump pumps remove the water that has accumulated. The faster you get rid of the water the greater your chances of preventing damages and mold are. Many new sump pump systems come with a battery backup.

  • Elevate your electrical components at least 12 inches above predicted flood levels.
  • Anchor and elevate outdoor equipment. Things such as fuel tanks, generators, or air-conditioning units that can be swept away should be anchored and elevated to prevent this.
  • Install back-flow valves or plugs. These will prevent flood waters from entering and can stop sewage from entering your home.

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