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Friday, February 20, 2009

Flood Insurance FAQ's

National Flood Insurance Program (NFIP) FAQs
Q. What is the difference between a flood insurance policy issued by the NFIP and a policy issued by an insurance company? Does one provide better coverage than the other?
A. Flood insurance is provided by the federal government through the NFIP. The policies that are sold by insurance companies are usually NFIP policies sold through the write your own (WYO) program. This is done to make it easier to purchase flood policies through local insurance agents. Even though the policies are purchased through the insurance companies, they are NFIP policies. Claims are handled by NFIP adjusters and by insurance company adjusters that are certified by the NFIP to handle flood claims. Questions and complaints can be referred to the NFIP at 1-888-225-5356. Some insurance companies may also offer flood coverage other than the NFIP policy. You should check with your agent or company to see if flood coverage other than the NFIP policy is available, and to compare the coverages being offered to determine the best coverage for your needs.

Q. How can I obtain insurance coverage to protect my home and contents from damage caused by flooding?
A. The NFIP makes flood insurance available to people who live in communities that participate in the NFIP. Contact your agent or the NFIP at 1-888-225-5356 to purchase a NFIP policy. The home need not be near a body of water or in a floodplain to qualify.

Q. Is flood insurance expensive?
A. The average flood insurance policy costs a little more than 400 a year for 100,000 of coverage. People in low risk areas can purchase flood insurance for just over 100 a year.

Q. Why would I buy flood insurance if my property is in a low or moderate risk area?
A. Twenty to 25 percent of all flood insurance claims come from low to moderate risk areas.

Q. Can I buy flood insurance if I rent?
A. You can buy up to 100,000 of flood insurance for your contents.

Q. How much flood insurance can I buy?
A. You can buy up to 250,000 for the dwelling and 100,000 for your contents.

Q. Does the policy provide any coverage for additional living expense?
A. No, the NFIP policy does not provide coverage for additional living expense.

Q. How is damaged residential property valued after a loss under an NFIP policy?
A. If the property is insured to at least 80 percent of its value and is your principle residence, the dwelling will be valued at replacement cost if the dwelling is replaced. If the dwelling is rebuilt at a new location, the replacement cost won't exceed what it would have cost to replace at the former location. Contents, appliances, carpets and carpet pads and outdoor property are valued at actual cash value. Actual cash value is the cost to repair with new material of like kind and quality less depreciation.

Q. Is there coverage for the cost of debris removal? What about loss avoidance measures?
A. The cost of removing debris on your property, and the cost of removing debris of your property that is on someone else's property is covered, but it's subject to the limit of the policy. You will be compensated at the Federal minimum wage if you perform the work yourself. Loss avoidance is limited to 1,000 for the cost of sandbags, temporary levees, pumps and plastic sheeting and lumber, including the value of your work. An additional 1,000 is available for the cost of moving insured property to protect it from flood. These benefits do not increase the limit of insurance.

Q. If my automobile was parked on my property and damaged by flood, does the flood policy cover the damage?
A. No, automobiles are not covered property under the NFIP policy. If you have comprehensive or full coverage under your auto policy, flood should be covered by that policy. If you have liability only, there is no coverage for the auto.

Q. Does flood insurance cover damage to built-in appliances?
A. Check to see what flood insurance coverage you have. Then, call the NFIP at 1-888-225-5356 to determine what would be covered in a flood insurance policy. Generally, flood policies provide coverage for the structure and personal property. Built-in appliances may fall under either category.

Q. What coverage is available for commercial buildings?
A. Up to 500,000 is available for non-residential buildings, and an additional 500,000 for contents of non-residential buildings. Buildings and contents are valued at actual cash value.

Q. When does coverage become effective under an NFIP policy?
A. There is a 30-day waiting period before coverage goes into effect after an NFIP policy is purchased. However, there is an exception to the 30-day waiting period when a new policy is initially purchased in connection with a loan. In that case, the policy becomes effective at the time of the loan closing.

Q. What if my dwelling or commercial building is valued over the maximum limits available?
A. The insurance company that insures your commercial building for fire might add excess flood coverage. That coverage usually has the NFIP maximum limits as a deductible. Availability might depend on the flood zone of each location. There may be insurers that will write excess policies for dwellings over the 250,000 maximum limits. You should contact your agent to learn more about available coverage.

Q. Where can I get more information about flood insurance?
A. Visit

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