NEW YORK – Aug. 19, 2011 – Less than a fifth of U.S. homeowners have a flood insurance policy that protects their property and personal belongings, even though more than four out of every five natural disasters nationwide involve flooding, according to the Insurance Information Institute (I.I.I.).
Coverage for flood damage resulting from surface water, including storm surge caused by hurricanes, is excluded under standard homeowners and renters insurance policies. Flood coverage is available from the National Flood Insurance Program (NFIP) and from a few private insurance companies.
During the first six months of 2011, the federal government declared 28 major flood disasters. This put the U.S. well ahead of the pace set in 2010 when 50 federally declared major flood disasters occurred during the entire year.
“People tend to underestimate the risk of flooding,” says Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I. “But, in fact, 90 percent of all natural disasters in this country involve flooding. It is important to note that there is a 30-day waiting period for flood insurance to go into effect, so don’t delay purchasing this important financial protection.
”The percentage of homeowners with flood insurance was highest in the South, at 19 percent. Thirteen percent of Midwestern homeowners had a flood insurance policy in 2011, along with 12 percent of homeowners in the West and 5 percent in the Northeast.
Consumers can find out their risk of flood and the cost of a policy by going to the NFIP’s website: FloodSmart.gov.
NFIP provides coverage for up to $250,000 for the structure of a home and $100,000 for personal possessions. It provides replacement cost coverage for the structure of a home but only actual cash value coverage for possessions. Replacement cost coverage pays to rebuild a home as it was before the damage. Actual cash value is replacement cost coverage minus depreciation. Flood insurance is also readily available for renters.
There is a 30-day waiting period after applying for flood coverage and paying the premium before the policy goes into effect.
The only exceptions are:
• If a homeowner purchases flood insurance in connection with making, increasing, extending or renewing a loan.
• If a lender determines that a loan on a property that does not have flood insurance should be protected by flood insurance, there is no waiting period as long as the premium is presented at the completion of a loan application.
• There is a one-day waiting period if a homeowner purchases flood insurance during the 13-month waiting period following the effective date of a revised community flood map issued by FEMA, the agency with oversight over NFIP.
“Flood insurance is also easy to buy. It can be purchased from the same agent or company representative who sold you your home or renters insurance policy,” said Salvatore. “So to file a flood insurance claim, you can simply get in touch with your insurance company.”
© 2011 Florida Realtors®