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lood:AreYouProtectedfromtheNextDisaster?
evastatingfloods occur throughout theU.S. every
ear. Changingweather patterns, coupled with over-evelopment and
levelingof forests that reduce theand's natural ability to absorb
water, are increasinghe flood risk for many... even those who dont
liveear water.
loodingcauses more than $2 billion in propertyamageeach year,
and losses due to floodingareot covered under most homeowners or
businessolicies. However, flood insuranceis available torotect
homes and businesses and their contents inommunities that
participate in the National Flood
nsurance Program(NFIP).LOODING ISA NATIONALPROBLEM
ntil the late 1960s, most propertyowners werenable to get
insurance coverage against floodamage. Private insurance firms,
aware of theotential for catastrophic losses, were unwillingo
assume the financial risk alone. This put theurden on taxpayers to
provide costly disaster reliefo a growingnumber of flood
victims.
n 1968, Congress addressed this issue by creatingtheFIP. This
Federal programprovides flood insurance
t a reasonable cost in exchange for the careful man-gement of
flood-prone areas bylocal communities.
oday, the NFIP insures more than 3.8 million policy-olders in
morethan 18,700 communities acrosshe U.S. It is administered by
theFederal Emergencyanagement Agency(FEMA).
ACTS YOU SHOULDKNOW
1. Compared to afire, peoplein floodplains arefour times more
likelyto havea flood duringtheir30-year mortgage.
. Find out if you are located in a floodplain, which is
considered a special flood hazard area. If you are,
you arestill eligible for flood insurance. In fact, insome
cases, you mayberequired bylaw to haveflood insurance. Your cityor
countygovernment (start with theBuildingor PlanningDepartment) has
Flood Insurance RateMaps, pub-lished byFEMA, which are available
forpublic inspection. If your buildingis located ina flood zone
that begins with the letter Aor V,you are in a special flood hazard
area.
3.The averagepremiumis a little more than $300per year for an
average of $100,000 in coverage.
4. In low to moderate risk areas, coverage can bepurchased for
just over $100 ayear.
5. Buyas much flood coverage as you can. Primaryresidences
insured for 80%of their value, orthe maximumamounts available, get
replacementcost coverage. It pays the amount needed to repairor
replace the buildingelements up to thepolicylimits, without
deduction for depreciation.
6.There is a 30-daywaitingperiod fromthe time apolicyis
purchased until you arecovered, with thefollowingexceptions:
There is no waitingperiod if you have anexistingflood
insurancepolicyand an additionalamount of flood insurance is
required withthe making, increasing, extendingor renewingof aloan,
such as a second mortgage, homeequityloan, or refinancing.
Coverageis effectiveimmediately, as longas the premiumis
presentedat or prior to loan closing.
Thereis no waitingperiod when floodinsurance is required as a
result of a lender deter-miningthat aloan which does not have
flood
insurance should be protected byflood
insurance. Coverage is effectiveimmediately,
as longas the premiumis presented at thecompletion of a loan
application.
There is aone-daywaitingperiod when anadditional amount of
insurance is required asa result of a map revision. The increased
amountof coverage will be available 24-hours after theamount of
coverage is applied for and the addi-tional premiumis made.
There is aone-daywaitingperiod when anadditional amount of
insurance is beingobtainedin connection with the renewal of a
policy. The
increased amount of flood coverage will be effec-tive 24-hours
after providingthe premiumfor theincreased coverage is received
before the expira-tion of the grace period.
7. Flood insurance is required bylawin someinstances. To get
Federally secured financingto buy, refinance, build, repair,
reconstructor improve structures in special flood hazardareas you
may be required to purchase floodinsurance. This includes most
types ofmortgage loans, as well as FHAand VAloans.
8. Aflood insurance policy also reimburses you foractions you
taketo prevent flood damage. Forexample, costs for movinginsured
contents to asafe location are reimbursed up to $500 with
nodeductible. Other costs, such as for sandbags,plastic sheetingand
lumber, pumps, fill for tem-porarylevees, and wood to save
thebuildingcanbe reimbursed up to a limit of $750 with
nodeductible.
For moreinformation about theNFIP and flood insur-ance, contact
your insurancecompanyor agent, or call
theNFIPat1-888-CALL-FLOOD, ext.314.
