Flood Coverage

Flood coverage is insurance that compensates a property owner for financial losses experienced as a result of property damage or loss subsequent to a flood. It is a purchased as a rider attached to a homeowners insurance policy, condo insurance policy, or as a separate policy altogether. It is not included as part of standard form homeowners coverage because a flood is classified as a natural disaster, and natural disasters are considered extraordinary events that merit coverage separate and distinct from the other perils and hazards to which property owners are vulnerable.

The United States Department of Health and Human Services defines natural disasters as "naturally occurring events which can directly or indirectly cause severe threats to public health and/or well-being." Because they occur in nature, they are unavoidable and uncontrollable events. Human beings can take steps to mitigate the effects on lives and property, but cannot normally do much to prevent them from occurring in the first place.

The Federal Emergency Management Agency (FEMA) considers flooding one of the most common hazards in the country. It affects such large numbers of people so much more frequently than do many other such types of events that it has been difficult for insurance companies to provide coverage and remain viable commercial entities. As a result, the federal government has had to assume the responsibility of making such coverage available.

The National Flood Insurance Program (NFIP) was instituted in 1968 by an act of Congress and is still the entity providing insurance coverage for property owners in flood prone areas. The NFIP says that a flood is "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." There are many different types of floods, occurring in a number of different ways, sometimes affecting people in several states at the same time. The NFIP says floods can be caused by hurricanes, broken levees, outdated or clogged drainage systems, and by rapid accumulation of rainfall and it offers flood insurance to homeowners, renters, and business owners who live in communities which participate in the National Flood Insurance Program.

Getting Flood Insurance

Communities that which to participate in the NFIP are required to adopt and enforce certain ordinances and building codes so that they can meet or exceed the requirements set by FEMA to reduce the risk of flooding, and the danger to life and property from such flooding.

Although flood coverage is backed by the federal government and governed by the NFIP, policies are available through commercial insurance carriers. Flood coverage is provided either as separate policy entirely, or as a rider attached to the standard policy. Mortgage lenders require that property owners in certain of the most flood prone areas of the country purchase flood coverage when they are granted a mortgage to purchase a property, and maintain that coverage for the duration of the loan. Homeowners in high-risk flood who receive mortgages from lenders that are federally regulated or insured are also required to have flood insurance. It is made affordable through the NFIP so as to reduce the financial burden on these and other homeowners at greatest risk of flooding.

With a few exceptions, flood coverage takes effect only after a thirty day waiting period from the date of purchase. A full year's premium must be paid at a time. Flood insurance covers buildings and contents generally, but does not apply to land, financial losses due to flooding, or to structures and possessions outside of the insured building, and it applies deductibles separately to buildings and contents.

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