Flood Insurance is one of the most confusing and frustrating insurance policies for Home buyers. If you are interested in buying a home, and it is determined to be in a flood zone, you will most likely have to buy a Flood Insurance Policy to satisfy your Mortgage Loan Company. When you get a quote for the Flood Policy and it turns out to be really expensive, it can totally shoot down a contract to purchase the home. Some people already own a home and have a flood insurance policy still are not sure what it covers.
I have listed some of the most common questions we get about flood insurance to try to help you be a more informed buyer and homeowner!
What is the difference between Flood and Sewer backup?
Water flooding in from outside is flood water excluded from coverage on a homeowner’s insurance policy. Backup of sewers is when a sump pump fails allowing water to flood your basement. This can be covered on a homeowner policy if you have the endorsement. It is good to review your homeowner’s policy to make sure you have this coverage if you have a basement. A homeowner’s policy WILL NOT cover water that leaks in through a crack in the foundation. This is considered deterioration and that is not a covered cause of loss.
Who insures flood losses?
National Flood Insurance Plan (NFIP) insures all flood risks. There are private insurers that have a system in place to quote and issue flood policies through the NFIP. These may have the name of the company on your policy, but it is still insured through the NFIP. Hurricane Katrina caused all private insurers to stop insuring properties for flood, due to the risk of catastrophic loss. The government stepped in through the NFIP to offer this coverage to property owners in the vacancy of private insurers.
Is my property inside the home covered?
Flood insurance will not cover any property kept below grade. This means if you have a below-grade basement that you have property in, the belongings will not be covered. It will cover above grade property. If you have a slab foundation or crawlspace and the water enters the first floor of the home, the property will be covered if you have property coverage on your policy. You can have property coverage for an extra premium or exclude it for a premium reduction. Again, review your policy to make sure you have property coverage.
Who determines if my home is in a flood plain?
There are local authorities that work in conjunction with FEMA to determine if your property is in a flood plain. In the Louisville area, Metropolitan Sewer District (MSD) is the local authority. The look at thing like elevation of the land, location near a body of water, and if there has been flooding at that site in the past 100 years.
Remember, if you are unsure about your coverage or your quote, review your quote or discuss your policy with your Insurance Agent. Don’t wait until something happens and then have a loss that is not covered!