The Rising Risk of Floods
Many business and property owners let the prospect of a flood rush right past them — like the images of natural disasters that only happen to other people in other places. Regardless of where one lives, works or owns property, the risk of floods far exceeds the threat of rising river waters.
And yet, according to federal records obtained by the Associated Press, fewer than 800 homeowners in the North Dakota and Minnesota communities recently threatened by the infamous Red River had flood insurance.
More than Rain
Floods — defined as two or more acres or properties inundated by water or mud — can happen anywhere it rains. But rain is not the only cause. Floods can occur because of excavation and construction development; faulty or inadequate drainage systems; broken levees; tidal surge; tropical storms; spring thaws; topography and elevation; excessive rainfall; and other causes.
Check the Maps
The common practice of assessing risk by referring to the Federal Emergency Management Agency (FEMA) Flood Insurance Rate Maps (FIRMs) may not be enough. The maps show 100-year and 500-year percentage risk of flooding from primary sources, such as major rivers.
One-third of the nation’s flood-loss claims occur outside the FEMA-mapped floodplain. Still, checking the maps is a good first step. Mortgage companies, community planning offices, homeowners’ insurance agents, and FEMA are sources for viewing FIRMs. The maps also are available from FEMA at 1-800-358-9616.
Flood Coverage
Water is one of the most powerful forces on the planet, and only a few inches of floodwater can cause damage that totals tens of thousands of dollars in loss. The National Flood Insurance Program (NFIP) reported on its Web site that the average flood claim over the past 10 years was more than $33,000.
Flood insurance is separate from standard homeowner’s or commercial property and casualty coverage. If the property to be insured is located outside the FEMA-mapped floodplain, the cost of coverage is relatively reasonable. Cost largely depends on the amount of coverage purchased, what is covered, and flood risk.
The NFIP offers flood insurance through leading insurance agencies, such as Holmes Murphy. Federally set rates do not differ from agency to agency, but cost is influenced by several factors.
Flood insurance is backed by the federal government. There is usually a 30-day waiting period before a paid policy takes effect; therefore, the urgency to insure properties — and contents — against the devastation of flooding rises with the arrival of spring. However, there may be an exception to the waiting period if additional insurance is purchased with a policy renewal or if a lender or map revision requires coverage.
Other Factors Affecting Flood Insurance Premiums
- Separate Contents Coverage
- Lowest Floor Elevation
- Number of Floors
- Construction Date
- Occupancy
- Deductible
Covered and Not Covered
The NFIPWeb site — www.floodsmart.gov — lists a “general guide” to what is covered and not covered. Specific reference to a policy’s “Summary of Coverage” is always advised, but here are some items from the NFIPlist.
COVERED for Property
- Insured Building
- Electrical and Plumbing
- Foundation
- Furnace and Central Air
- Major and Built-In Kitchen Appliances
- Detached Garage
- Debris Removal
COVERED for Contents
(Contents may require separate policy.)
- Clothing
- Furniture
- Portable Kitchen Appliances
- Electronics
- Art and Valuables (up to $2,500)
NOT COVERED
- Temporary Housing
- Business Interruption Losses
- Cars and Vehicles
- Septic Systems
- Swimming Pools
- Currency and Valuable Papers
- Damage by Mold, Mildew, and Moisture
- Sewer Backup (Unless result of flood.)
- Basement contents with few exceptions of building mechanics (Basement and “walkout basement” coverage is limited.)
Professional insurance agents help property owners understand their degree of risk, determine the safest level of coverage, balance premium rate with deductible cost, understand the distinction between replacement cost and cash value, and know who to call in case of a claim.