The Added Protection of Flood Insurance

By: Mary Thompson, Capstone Brokerage President October 15, 2015

First, it is VERY important to mention that homeowner’s insurance and property insurance DO NOT cover damage from floods. Even buildings and dwellings that are not in a flood hazard area or a high risk zone can still suffer from flooding. A few weeks ago, Las Vegas experienced some really strong rain (for Vegas standards). It rained so hard and fast many homeowners were watching as pools overflowed, roofs leaked, and water crept inside of buildings causing damage. Hopefully those affected had flood insurance in place.

Flood insurance is available for commercial, home, and property coverage. Flood insurance can cover two types of property and it is important to purchase both when getting flood insurance. The first is Building Coverage which will pay to repair or replace the insured building and its foundation. The second is Contents Coverage which will cover the possessions in the building. It is important to remember that the land the building is on will not be covered.

Building Coverage includes the following:

• The building as foundation
• Electrical and plumbing systems
• Built in appliances including, stove, refrigerator, dishwasher etc.
• Central air-conditioning equipment, water heaters and furnaces

Contents Coverage will cover the contents of the home or building which includes the following:

• Furniture, window coverings, and home décor
• Small portable appliance such as Microwave, Toasters etc.
• Personal clothing and washer and dryer units.

Flood insurance is an additional policy that is typically placed with the National Flood Association. A standard policy would include both Building and Contents Coverage. Nearly ¼ of flood claims in the United States are generated from areas that are considered low hazard flood zones.

Basic flood insurance policy coverage limits:

• Building Coverage up to $250,000 for a private residence and $500,000 for a commercial property.

• Basic Contents Coverage of up to $100,000 for home and $500,000 for commercial.

There are higher limit options available in the form of an Excess Flood Policy that is only available to those who meet specific requirements.

The two requirements for an Excess Flood Policy:
• The standard or preferred Flood Policy must be provided by the National Flood Insurance Program (NFIP) or an independent carrier.

• The property must be insured for the maximum limits available from the NFIP or independent carrier.

A knowledgeable insurance agent or broker is able to place coverage, determine you risk, and insure you are properly covered. It is always important to maintain a relationship with your agent to ensure you are insured properly.