Flood Insurance 101
May 9, 2014
Floods are a natural disaster that most people do not think about until it is too late. Standard homeowners insurance does not cover damage done in the event of a flood, so it is vital to make sure you have to proper coverage in case of damage.
Flood insurance is available through a government program called the National Flood Insurance Program (NFIP) that works with approximately 90 private insurance companies to offer the coverage. Congress created the program in 1968 as a way for homeowners to financially protect themselves. Flood insurance is offered to homeowners, renters, and business owners in communities that participate in the NFIP. In order for a community to qualify to offer flood insurance, they have to join the NFIP and agree to enforce sound floodplain management standards.
The price of flood insurance is set by the NFIP and cannot change from company to company. The rate developed by the NFIP depends on a variety of factors, such as date and type of construction, proximity to flood-prone areas, and other risk characteristics primarily relating to elevation.
Flood insurance is available to protect the building and contents, but not land. The building coverage includes items such as the foundation, permanent carpet or flooring, electrical and plumbing systems, water heaters, and built in appliances such as dishwashers. The contents coverage includes items such as curtains, clothing, furniture, electronic equipment, washers and dryers, and portable appliances.
Flood insurance is mandatory for homes and buildings that are in high-risk areas, but those are not the only properties that may need it. Even properties in moderate to low-risk areas should consider flood insurance. People who are in moderate to low-risk areas typically file nearly 25% of all NFIP flood claims. Although flood insurance is not mandatory in moderate to low-risk areas, lenders may still require it.
Central Insurance Agency can help you get the proper flood insurance for those homeowners, renters, and business owners in the Austin, Texas area.