NFIP Flood Insurance FAQs for Agents - Pt 1

Q. Do homeowners insurance policy cover flooding? 

A. No. Flood damage is not covered by your homeowners insurance policy.

The Definition of a flood:

Q. What does the "100-year flood" mean? 

A. The term "100-year flood" is misleading. It is not the flood that will occur once every 100 years. Rather, it is the flood elevation that has a 1- percent chance of being equaled or exceeded each year. Thus, the 100-year flood could occur more than once in a relatively short period of time. The 100-year flood, which is the standard used by most Federal and state agencies, is used by the National Flood Insurance Program (NFIP) as the standard for floodplain management and to determine the need for flood insurance. A structure located within a special flood hazard area shown on an NFIP map has a 26 percent chance of suffering flood damage during the term of a 30-year mortgage.

Q. What is a Base Flood Elevation (BFE)? 

A Base Flood Elevation (BFE) is the height of the base flood, usually in feet, in relation to the National Geodetic Vertical Datum of 1929, the North American Vertical Datum of 1988, or other datum referenced in the Flood Insurance Study report, or average depth of the base flood, usually in feet, above the ground surface.

Q. What is a Special Flood Hazard Area (SFHA)? 

A. In support of the National Flood Insurance Program (NFIP), FEMA has undertaken a massive effort of flood hazard identification and mapping to produce Flood Hazard Boundary Maps, Flood Insurance Rate Maps, and Flood Boundary and Floodway Maps. Several areas of flood hazards are commonly identified on these maps. One of these areas is the Special Flood Hazard Area (SFHA), which is defined as an area of land that would be inundated by a flood having a 1% chance of occurring in any given year (previously referred to as the base flood or 100-year flood). The 1% annual chance standard was chosen after considering various alternatives. The standard constitutes a reasonable compromise between the need for building restrictions to minimize potential loss of life and property and the economic benefits to be derived from floodplain development. Development may take place within the SFHA, provided that development complies with local floodplain management ordinances, which must meet the minimum Federal requirements. Flood insurance is required for insurable structures within the SFHA to protect federally funded or federally backed investments and assistance used for acquisition and/or construction purposes within communities participating in the NFIP.

Q. What is the policy period for a flood insurance policy?

A. One year.

Q. If I don’t live in an area with a high flood risk, why do I need flood insurance?

A. The National Flood Insurance Program states that between 20 to 25 percent of its claims are from outside high-risk flood areas.

Q. Can I buy flood insurance just before or during a flood?

You can purchase flood insurance anytime. There is a 30-day waiting period after you’ve applied and paid the premium before your policy is effective. 

Exceptions to this rule:
If you purchase flood insurance in connection with making, increasing, extending or renewing a loan, there is no waiting period.

Q. Who do I go to first for help with questions about my NFIP policy? 

A. You should call your insurance agent or insurance company first.

Q. Does my NFIP Policy cover all the buildings on my property? 

A. The Standard Flood Insurance Policy provides coverage for one building per policy. The only exception is 10% coverage for a detached garage. However, the total payment for flood damage to the detached garage and the house together cannot exceed the building policy limit. For coverage to apply, the garage can only be used for parking and storage. Any other use would void this coverage, i.e. if the garage has a workshop, the coverage would not apply. All other buildings on the premises need separate coverage. Policy limits for residential properties is $250,000 and $500,000 for commercial properties.


Frequently Asked Questions Continued >>

Know the Risk

According to the Federal Emergency Management Agency ( FEMA ), flooding occurs in all 50 states in every season. Whether you live by a river or stream, or reside many miles from a body of water, FEMA reminds you that everyone lives in a flood zone.

That’s because floods happen for many different reasons and can be caused by storms, melting snow, hurricanes, water backup due to poor or overloaded drainage as well as broken water mains.

Floods also develop at different rates of speed. Some happen over the course of several days, from things like slow moving storms and spring snow melt. Others develop very quickly, sometimes in a matter of hours or even minutes, in the case of flash floods caused by sudden downpours and water unexpectedly breaching dams, streams or spillways.

Whatever the reason, floods can be deadly and cause enormous amounts of property damage. You should be insured and prepared.

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