FLOOD INSURANCE:
Floods Can Happen Anywhere, Any Time; Evaluate Your Need for Flood Insurance Now

This fall, many Americans found out the hard way that floods can happen anywhere, at any time. According to the National Flood Insurance Program (NFIP), even one inch of water in your home can cause up to $7,800 in damage. And NFIP statistics show that a home in a high-risk area is three times more likely to be damaged by a flood than a house fire during a 30-year mortgage.

Flooding is not covered in a standard homeowners, renter’s or business insurance policy and between 20 and 25 percent of all flood insurance claims come from low-risk areas. So before you’re faced with rising water in your area, the following is information to help you get smart about your flood insurance options.

What is a flood?

Flood – an excess of water (or mud) on normally dry land – is the most common natural disaster in the U.S. The NFIP defines flooding as a general and temporary condition where two or more acres of normally dry land or two or more properties are inundated by water or mudflow.

How do I know what kind of flood area my home or business is in?

Everyone could sustain a loss from flooding, but not everyone faces the same level of flood risk. The NFIP helps communities understand their flood risk with flood maps. Risk levels are broken into three categories:

• High-risk areas have at least a 1% chance of flooding annually. All homeowners in these areas with mortgages from federally regulated or insured lenders are required to buy flood insurance.
• Moderate-risk areas have less chance of flooding annually, but the possibility is not completely removed. Flood insurance in these areas is not required, but it is recommended for all property owners and renters.
• Undetermined-risk areas are where flood-hazard analysis has not been conducted, but a flood risk still exists.

The Federal Emergency Management Agency (FEMA) is in the process of updating flood hazard maps across the country. When a new map for your community is issued, you may find that the understanding of your level of risk has changed – along with your flood insurance requirements. To find out if the flood map in your area has been updated, go to www.floodsmart.gov – in the ‘Flooding and Flood Risks’ section, click on ‘Flood Map Update Schedule.’

How do I buy flood insurance?

The NFIP offers flood insurance to homeowners, renters and business owners if their community participates in the program. NFIP estimates that more than five million people have flood insurance policies in more than 20,000 communities across the U.S.

Flood insurance is sold by licensed insurers. If you are in a high-risk area, or would like to find out more about flood insurance, contact your insurance company or agent to find out if your community participates in the NFIP and to get a quote. To protect yourself from fraudulent insurance agents, before signing your application or paying for your coverage:

• STOP.
• CALL the Arkansas Insurance Department at (800) 852-5494; and
• CONFIRM the agent and insurance company you’re dealing with is licensed to sell flood insurance in your state.

Be aware, flood insurance does not go into effect immediately. Most flood insurance policies have a 30-day waiting period.

What does flood insurance cover?

The standard flood insurance policy pays for direct physical damage to your insured property up to the replacement cost or actual cash value (ACV) of actual damages or the policy limit of liability, whichever is less.

Homeowners: You may purchase flood insurance covering up to $250,000 of flood damage to your home. A standard flood insurance policy covers structural damage, including damage to the furnace, water heater, air conditioner, floor surfaces (carpeting and tile) and debris clean-up.

The contents of your home are not covered under a standard policy, but coverage for up to $100,000 of damage to your personal property is available for an additional premium.

Coverage for basements, crawlspaces and ground-level enclosures on elevated homes is limited. If your home has these spaces, be sure to ask your insurance agent about any restrictions in your coverage.

Renters: Flood is not covered under a basic renter’s insurance policy. Talk with your insurance agent about your flooding risks to decide if you need flood coverage for your belongings.

Business Owners: A flood insurance policy covers up to $500,000 on a non-residential building and its contents.

Preparing For Disaster

You never know when disaster may strike. Make a home inventory of your personal property including photos or video of your belongings. Store this inventory in a safe place to help file an insurance claim after a disaster. For more information about preparing for disaster, please visit the Department's Disaster Preparedness and Resources Web page and the NAIC’s special disaster preparedness Web page (www.naic.org/index_disaster_section.htm).