Flood Insurance

The truth about Flood Insurance...

Everyone in Florida is aware of Flood Insurance and many homeowners have a Flood Insurance policy already in force.  But, according to the Insurance Information Institute, only about 19% (in 2017) had purchased a Flood Insurance policy for their home or business.  Mostly, people don't understand the reasons for having a Flood Insurance policy, or they are misinformed as to why they need one.  We've put together the top 10 Myths about Flood insurance so you can see for yourself why Flood Insurance is a vital part of your insurance policy portfolio.

Top 10 Myths about Flood Insurance

Myth #10 - My area has never flooded and there's no chance of flooding here. 

If it rains where your property is located a Flood is possible.  While there are areas more or less flood prone as identified on the official Flood Maps issued by the Federal Government, each year over 25% of flood claims paid are in "low risk" areas.  The truth is, any place can be inundated with rain that can overwhelm the ability of water to run off before it enters buildings or structures and cause flood damage.

Myth #9 - I already have Home or Business Insurance and don't need a Flood policy.

Flood losses are normally excluded from Home or Business Property policies.  While your policy may indicate that water and sewer backup is covered, this specifically refers to coverage for a loss that is caused when your sewer or waste line is damaged or blocked and excludes a "Flood" loss.  When your home is inundated with rain, storm surge or other flooding, the backup of your waste line will be the least of your problems.  The truth is, a Flood policy is the only way to protect from the costly repairs needed after a flood.

Myth #8 - I don't need coverage, FEMA will provide aid by Government Grant.

While true that the Federal Government can provide aid to Flood victims once a Disaster Declaration is made by the President, this can come days or even weeks later and will require completing all kinds of forms, waiting in long lines and waiting for the processing of your disaster claim.  In addition, the aid may not be a grant at all, and be in the form of low or no interest disaster loans that must be repaid to the government.  The truth here is that having a Flood Insurance policy eliminates the need for all of this hassle and inconvenience, assuring you the quickest settlement, faster claim payment and return to normal life at the utmost speed possible.

Myth #7 - My town invested in flood control so I don't have to worry about a Flood.

Many Florida Cities and Towns have invested in major infrastructure programs to move water away from populated areas and pump that water out to sea or inland to lakes or rivers.  While these programs relieve some of the risks of flooding rains, those systems are still subject to being overwhelmed by rain that falls at rates higher than those contemplated.  A Tropical Storm or Hurricane that moves slowly through your area can drop more than a foot of rain water each hour it remains near your property.  Even the best storm water pumping systems will become overwhelmed by rain at this level after just a few hours.  Should the storm stall and remain stationary for many hours, there is no way to remove all the rain water that can accumulate.  The truth again is that having a flood insurance policy is the only way to assure that should this type of event happen, you will be able to recover financially from the flood losses you will sustain.

Myth #6 - Flood Insurance is just too expensive and not worth the premium paid.

Flood Insurance rates depend on your property location, and the elevation above the predicted 100 year flood plain your structure is built.  Only those at the highest risk of flooding pay high rates for flood insurance.  In Florida, the average base flood policy costs around $600 with coverage up to $250,000 on the building and $100,000 for its contents.  If these limits are inadequate, additional "excess" flood coverage is available up to your actual building and contents value.  The truth is, in comparison to the rates on your Home or Business Insurance policy written already, a Flood Insurance policy is an excellent value providing needed coverage at very reasonable rates.

Myth #5 - I know it will never flood.  You're just looking to make money.

OK, we will admit that there are areas less prone to flooding than others and those less prone areas pay far less for Flood Insurance than say someone who resides beachside, but there are no property owners in Florida that can make this statement with certainty.  If you are able to be clairvoyant enough to know with absolute certainty that no flood loss will ever befall your location, then by all means sleep well knowing that you don't need flood coverage (and if you wouldn't mind, please call our office with the next set of Powerball numbers).  For the rest of us, the truth is that risk of flooding still exists and for less than $1.65 per day we can cede that risk to the insurance company and know that if a flood does occur, your property will be covered for its losses.  Sleep soundly because you know you're protected.  That's better clairvoyance.

Myth #4 - I'm built on the highest point in my town.  I don't need Flood Insurance.

No man is an island, but if you're on the highest point in the entire state of Florida you won't need a Sherpa to reach the summit 365 feet above sea level on top of Britton Hill in Walton County, the lowest state "high" point in the USA.  You will pay the lowest rate for Flood Insurance in the state soaring up that high, but the truth once again is a bit lower.  The average mean height above sea level in Florida is just 6 feet and for many of us, that don't stand 6 feet tall, the real danger of storm surge or tidal inundation is a very true and scary thought.  In fact, there is no point within 3 miles of the coast that is outside of being affected by a tidal surge brought on by a storm.  A loss caused by just two inches of flood waters that seep into your home averages over $50,000.  The truth is, flood insurance is the only way to cover this type of loss.

Myth #3 - Floods only occur in Special Flood Hazard Areas.

FEMA, the Federal Emergency Management Agency, develops the set of Flood maps for areas of the USA and identifies zones of concern that are more prone to flooding than others based on their predictions for a once in 100 year flooding event.  These zones are labeled V-zones for the most at risk properties, A-zones for the next highest risk, then B, C and X.  Those buildings located in V or A zones are considered to be in Special Flood Hazard Areas, while B, C and X zones are not.  While the majority of flood losses occur in zones V and A, in any given year over 25% of flood insurance claims are paid to policyholders located in zones B, C and X.  Accordingly, the rates are highest in V and A zones and lowest in B, C and X zones.  Regardless of which zone you are located in, the rule is still the same.  If it rains there, it can flood there.

Myth #2 - I'll just wait until a storm is coming to buy Flood coverage.

Flood Insurance can only be purchased at the time you buy or lease your home or business premises, or if you refinance that purchase.  At any other time you wish to add flood coverage, a 30 day waiting period applies.  Truth is, waiting for a storm to be approaching is too late.  Floods can happen from a bad thunderstorm that pops up out of the blue on trash day.  Imagine you go to work, dropping your trash bags at the curb for pickup.  Later that day, before the garbage truck arrives, a inundating thunderstorm strikes your neighborhood and floats your trash bags down towards the storm drain.  A plastic garbage bag can easily clog a storm drain and that means the water has no place to run off.  A thunderstorm dropping just a few inches of rain per hour can cause your home to flood.  I'll just wait to buy Flood Insurance is the 2nd greatest myth out there.  Truth is, you need the coverage and waiting to buy is is like playing roulette with your financial future.

Myth #1 - My bank said I don't need Flood Insurance.

What the bank is telling you is that you don't need a Flood Insurance policy to secure your mortgage loan.  But, should a flood hit your location, you can be sure they will still want your mortgage payment, even if your home is destroyed and becomes uninhabitable from the flood damage for months to come.  The truth is your bank isn't in the insurance business and will only require flood insurance so they can meet Federal requirements for FNMA or FRMA loan consolidation and sales practices.  Basically, if your home is in a V or A flood "Special Flood Hazard" zone, they are required to show proof that you have Flood Insurance on the property to be able to resell your mortgage to other banks or to "Fannie Mae" or "Freddy Mac" as part of a mortgage portfolio.  Don't confuse their ability to write a mortgage without the proof of Flood Insurance with your need for the coverage.  The bank's requirement for you to buy or not to buy has nothing to do with your security, and everything to do with what the Federal Government requires from them to later market that mortgage freely.  This is the #1 myth in Flood Insurance.  Truth is everyone in Florida needs Flood Insurance, whether the bank requires it or not is irrelevant to your risk of loss.

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January 1, 2021