Flood Insurance


Flood InsuranceA homeowners policy can have many exclusions – some of the biggest exclusions are typically damage from flooding, sinkhole, and earthquake.  A separate flood policy is needed to have flood insurance coverage.  You may want to consider flood insurance even if your property is not located in a high-risk flood zone.  Actually, 20% of flood claims are paid in preferred flood zones.  In Florida, it is prudent to have flood insurance, because Florida is flat and is subject to torrential rains caused by low pressure systems, tropical depressions, tropical storms, and hurricanes.


Understand flood insurance coverage before you get a flood insurance quote

Is my house in a flood zone?

Flood zones are geographic areas that the FEMA has defined according to varying levels of flood risk. These zones are depicted on a community’s Flood Insurance Rate Map (FIRM) or Flood Hazard Boundary Map.  Each zone reflects the severity or type of flooding in the area.  The Federal Emergency Management Agency’s (FEMA) maps are important when it comes to flood insurance, because if they show that your home sits in a 100-year flood plain, you must buy federal flood insurance in order to get a mortgage. If you live outside a high-risk zone, or if you no longer have a mortgage, then flood insurance is optional.

High Risk Areas: Within these, which are also known as Special Flood Hazard Areas (SFHAs), there’s deemed to be a 25 percent chance of a residence being flooded within 30 years–which is the length of term for many mortgages. The federal government mandates that all homes in these areas with mortgages from federally insured lenders have flood insurance policies.  Lenders might even require a homeowner to have flood insurance policy even if it is not federally mandated in order to protect their own risk in extending you a mortgage.

Many coastlines are considered to be “high-risk” areas for flooding, because hurricanes and tropical storms frequently flood coastal regions.  Their heavy rains can result in flooding hundreds of miles inland, but property near the coastline also is susceptible to a storm surge, or abnormal rise in the astronomical tide.  Some regions that might fall into this highest risk category are the Florida panhandle (Panama City Beach, Destin, Ft. Walton Beach, Pensacola), coastal regions off the Gulf of Mexico (Naples, Ft. Myers, Sarasota, Sanibel Island), and along the Atlantic Coast (Cocoa Beach, Miami Beach, St. Augustine, Fernandina Beach).

Moderate-To-Low Risk Areas: In these areas the likelihood of flooding can be substantially less than high-risk. However, nearly 20 percent of all claims to the National Flood Insurance Program come from this category. Flood insurance is not federally required in these areas but it is still recommended.

Undetermined-Risk Areas: These are areas where no flood analysis has been conducted. This does not mean the areas are without risk of a flood and that uncertainty is usually reflected in the cost of a policy. The majority of the U.S. has been mapped.

You can determine your flood zone using the search by address feature on the FEMA Flood Map.   You can download a detailed explanation of each flood zone here: FEMA Flood Zone Definition

Will FEMA pay for flood damage?

Many people incorrectly believe that the government will take care of all their financial needs if they suffer damage due to flooding. The truth is that Federal disaster assistance is only available if the President formally declares a disaster. You must consider the fact that if your home is flooded and disaster assistance isn’t offered, you’ll have to shoulder the massive damage costs alone. If you’re looking for secure protection from financial loss due to flood damage, Federal disaster assistance is not the answer.

How can I minimize flood losses?

Buy flood insurance and stay protected no matter what. When disaster strikes, flood insurance policyholder claims are paid even if a disaster is not Federally declared. Flood insurance means you’ll be reimbursed for all your covered losses.  When your insured home is in imminent danger of being flooded, you may receive up to a $1,000 reimbursement for your damage-preventing expenses. Things like renting storage space to protect your belongings, buying sandbags and lumber to make a barricade, and renting pumps are all things that qualify for reimbursement through coverage under the National Flood Insurance Program (NFIP). No deductible is applied to this coverage.

What does flood insurance cover?

Flood insurance is mostly purchased from the National Flood Insurance Program (NFIP).  Flood insurance protects two types of property: the structure of your home and the contents. This distinction is made because each have their own deductibles and limits, respectively.  A flood insurance policy also reimburses you for the work that you and other family members did to sandbag your home, move furniture, and remove debris.   Note that flood insurance policies do not cover the land your home sits on.

Coverage for the structure (building) – up to $250,000 for single-family residential
Coverage for the structure of your dwelling typically includes the following items as long as they are connected to a power source and/or installed in their functioning location:

  • Foundation
  • Electrical and plumbing
  • Central air systems and furnace
  • Water heaters
  • Refrigerators, cooking stoves and built-in appliances
  • Permanently installed carpeting over unfinished floor
  • Sump pumps
  • Well water tanks and pumps, cisterns and the water in them
  • Oil tanks and the oil in them, natural gas tanks and the gas in them
  • Pumps and/or tanks used in conjunction with solar energy
  • Furnaces, hot water heaters, air conditioners and heat pumps
  • Electrical junction and circuit breaker boxes and required utility connections
  • Foundation elements
  • Stairways, staircases, elevators and dumbwaiters
  • Unpainted dry wall and ceilings, including fiberglass insulation
  • Cleanup

Coverage for personal property (contents) – up to $100,000 for single-family residential
Coverage for contents inside your dwelling that can be protected by a flood insurance policy typically include:

  • Clothing
  • Furniture
  • Electronics
  • Portable microwaves and portable air conditioners
  • Dishwashers
  • Washers and dryers
  • Carpeting that is not covered as part of the structure
  • Food freezers and the food in them

What about…

Essential systems in the home. This includes electrical and plumbing systems, furnaces, water heaters, central air conditioners, heat pumps, and sump pumps. It also includes cisterns and the water in them, fuel tanks and the fuel in them, solar energy equipment, water tanks, and pumps.

Appliances. Refrigerators, ranges, and built-in appliances such as dishwashers, washing machines, and dryers are all usually covered. So, too, are portable window air conditioners, and freezers and the food in them.

Carpeting and window treatments. If you have permanently installed carpeting over an unfinished floor, or any other kinds of carpets over wooden floors, your policy should cover them. Your policy should also include window blinds and curtains.

Permanently installed paneling, wallboard, bookcases, and cabinets. If you have to replace your cabinets, your policy will pay only for the ones that were damaged. That means that if some cabinets were ruined but others were not affected, you might have trouble getting cabinets that match the older ones.

Foundation walls, anchorage systems, and staircases attached to the building. There is an exclusion for “loss caused directly by earth movement even if the earth movement is caused by flood.”

A detached garage, used for limited storage or parking. You can use up to 10 percent of your total building coverage toward your garage, but that amount will be subtracted from the total amount of building coverage available to you.

Personal property. This includes clothing, furniture, and electronic equipment—though only if they’re not stored in the basement.

Certain valuables. Your policy is likely to cover items such as original artwork and furs, up to $2,500 in value.

Other coverage. Some events are covered even if they’re not strictly floods, like groundwater seepage and mudflow. These would include a neighbor’s above-ground swimming pool collapsing, causing the water to flow into your home, or a water main break that damages your home and at least one other in your neighborhood. However, damage caused by a sewer backup is covered only if it’s a direct result of flooding.

Stuff in the basement. Basement coverage can be very limited and confusing when it comes to  what flood insurance covers.  First of all what is a basement? The NFIP defines a basement as any area of a building with a floor that is below the natural ground level on all sides; otherwise, it is considered the first floor. Flood insurance does not cover basement improvements or items not necessary in making the home safe, sanitary and functional, such as carpeting, finished walls, paint, floors, ceilings, furniture or personal belongings that may be kept in the basement. Necessary items are included under building coverage and some under contents coverage.

Does flood insurance cover all water losses?

No.  So let’s discuss what is a flood.  A flood is a great flowing or overflowing of water, especially over land areas that are normally dry. National Flood Insurance Program (NFIP) flood insurance policies use a more specific definition. Flood is a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is the policyholder’s property) from one of the following: overflow of inland or tidal waters, unusual and rapid accumulation or runoff of surface waters from any source, mudflow, collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above. A water event that does not meet this definition is not, for flood insurance purposes, a “flood.”

Also, there are different types of water losses.  There are two types of water losses we want to discuss. There is ground water and surface water.  Groundwater is the water found underground in the cracks and spaces in soil, sand and rock. It is stored in and moves slowly through geologic formations of soil, sand and rocks called aquifers. Surface water is water on the surface of continents such as in a river, lake, or wetland.  When it comes to ground water being covered flood insurance is a waste of time. Flood insurance will only cover surface water that inundates two acres of land or more than one property.

So what about docks?  Generally flood insurance is not going to cover docks or any structure that is over water. This would include boat houses as well.  Understanding when flood insurance is going to cover something and when it is not can be tricky. ​ This is one of the reasons why we always recommend reaching out to a flood insurance expert.

What is not covered by flood insurance?

Like all insurance policies, there is a list of exclusions that apply to flood insurance. Currency, precious metals and any valuable paperwork are generally not covered by policies. Most self-propelled vehicles, including cars, are not covered, either.

The area underneath what is typically the first floor in a house or property might enjoy only limited flood insurance protection.  Specifically, only select items are covered in any areas of a dwelling below the lowest elevated floor (such as a crawl space) and in basements. For example, in a basement, only the foundation, drywall, insulation, staircases, electrical outlets and switches and central air conditioners are insured when it comes to the structural coverage in your flood insurance policy.  Coverage of personal property in the basement is generally limited to washers and dryers, food freezers (excluding walk-in models) and portable air conditioners.

Most other personal property you might store in your basement will not be covered. For example, clothing, electronic equipment, kitchen supplies, furniture, bookcases, shelving and window treatments will not be covered in the event of a flood if they are stored in the basement. This can be problematic for homeowners who’ve turned their basement into a recreational space.

Examples of items typically not covered by flood insurance:

  • Accounts, bills, deeds, evidences of debt, money, coins, postage stamps, manuscripts, etc.
  • Fences, piers, seawalls, outdoor swimming pools, bulkheads, wharves, bridges, docks, boat houses on or over water.
  • Land values, lawns, trees, shrubs, plants, growing crops, livestock, animals, birds, fish.
  • Walks, driveways, and paved surfaces outside building foundation walls.
  • Motor vehicles (with exceptions), aircraft, watercraft.

Flood insurance has eligibility requirements and numerous exclusions. According to the National Flood Insurance Program (NFIP), the following kinds of damage are not covered by flood insurance:

  • Damage caused by moisture, mildew, or mold that could have been avoided by the property owner or which is not attributable to the flood
  • Damage caused by earth movement, even if the earth movement is caused by flood
  • Additional living expenses, such as temporary housing, while the building is being repaired or is unable to be occupied
  • Loss of use or access to the insured property
  • Financial losses caused by business interruption
  • Property and belongings outside of an insured building, such as trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs, and swimming pools
  • Currency, precious metals, and valuable papers such as stock certificates
  • Most self-propelled vehicles, such as cars, including their parts

How do I obtain flood insurance coverage?

The National Flood Insurance Program (NFIP) is run by the Federal Government as part of the Federal Emergency Management Agency (FEMA). They set the rules and rates and allow private insurance companies to write the flood policy on their behalf. FEMA ultimately pays your claim when they reimburse your insurance carrier for your claim. FEMA offers maximum limits of $250,000 Dwelling and $100,000 Contents for single-family residential policies. Higher limits are available through the private flood insurance marketplace which is called Excess Flood.

Depending on the policy, sometimes coverage does not take effect until 30 days after you purchase flood insurance. So, if the weather forecast announces a flood alert for your area and you go to purchase coverage, it could be too late.

How much does flood insurance cost?

It varies based on individual factors for each home.  Some of the factors that will determine how much you will pay for flood insurance include: the year your home was built, your flood zone, the elevation of your home, the deductible you choose, and whether or not your home has flood venting.

What are typical flood damage costs?

You can download estimates of flood damage costs based on national data from FEMA:  Flood Damage Cost Guide

What is base flood elevation (BFE)?

The BFE is the elevation that floodwaters are estimated to have a 1 percent chance of reaching or exceeding in any given year. The higher your lowest floor is above the BFE, the lower the risk of flooding. Lower risk typically means lower flood insurance premiums.

Do I need an elevation certificate?

For certain high-risk structures, an elevation is required by an insurer as a condition for issuing flood coverage. There are exceptions. For example, if your building was constructed before your community’s first FIRM became effective (known as pre-FIRM) and you are eligible for a subsidized rate, you do not need an elevation certificate to purchase coverage. However, subsidized rates for pre-FIRM buildings are being phased out through annual premium increases. Your full-risk rate is specific to the property, and an EC will be needed to calculate the property-specific full-risk rate. Depending on your elevation, the full-risk rate could already be lower than the subsidized rate.  If you make substantial changes to your building in a high-risk area—for example, you make an addition to your home or convert the garage to living space—you likely need a new EC to reflect the new building characteristics and Lowest Floor Elevation.

Elevation certificates are not required and are not used for rating in moderate-risk to low-risk areas (Zones X, B, and C), undetermined risk areas (Zone D), or certain high-risk areas eligible for other subsidies (e.g., Zones AR and A99).

In certain situations, money could be wasted on an elevation certificate when it would not change the rate; In other situations the certificate would improve the rate.  However generally when looking at 500 year flood zones if there is no base flood elevation then the certificate will not change anything.  The reason being the point of the elevation certificate is to see where your home sits in relation to the base flood elevation, so if there isn’t one there is nothing to compare it to.  Also when looking at the private market compared to NFIP, elevation certificates generally are not required.

What are ways to reduce flood insurance premiums?

The community rating system credits community efforts beyond those in minimum standards by reducing flood insurance premiums for the community’s property owners. The community rating system is similar to the private insurance industry’s programs that grade communities on the effectiveness of their fire suppression and building code enforcement efforts. Community rating systems discounts on flood insurance premiums range from 5% up to 45%. Based on the community rating system credit points that are awarded to communities, the discounts provide an incentive for communities to implement new flood protection activities that can help save lives and property when flood occurs.

The community rating system provides credit under 19 public information and flood planning management activities. To get credit, community officials will need to prepare documentation that verifies these efforts. The community rating system assigns credit points for each activity. To be eligible for a community rating system discount, your community must do elevation certificates. If you’re a designated repetitive loss community, you must also do flood plain management planning.

Based on the total number of points your community earns, the community rating system assigns you to one of 10 classes. Your discount on flood insurance premiums is based on your class. For example, if your community earns 4500 points or more, it qualifies for class one and the property owners in special flood hazard area get a 45% discount on their insurance premiums. If your community earns as little as 500 points, it’s in the class nine and property owners in the special flood hazard area get a 5% discount. If a community does not apply or fails to receive at least 500 points, it’s in a class 10 and property owners get no discount, which can have a major impact on flood insurance premiums. Now, what’s very important to understand is that this is not a one-time discount program. This program comes up frequently, and normally some of these discounts are done on a yearly basis. So if a community gets a discount one year, the opportunity to lose out the next year can easily happen if certain mitigation efforts are not taken or guidelines are not followed correctly.

Your community can get additional credit for regulating development outside the special flood hazard area to the same standards as development inside the special flood hazard area. There is also credit for assessing future flood conditions, including the impacts of future in development and changing weather patterns. Many communities can qualify for what the community rating system calls state-based credit based on the activities or regulations a state or regional agency implements within the communities. For example, some states have disclosure laws eligible for credit under the hazard disclosure. Any community in those states can receive a state-based credit. Your community may want to consider flood plane management activities. You should evaluate these activities for the ability to increase public safety, reduce property damage, avoid economic disruption and loss, and protect an environment. The main purpose of this program, through FEMA, on the community rating system is to minimize loss of life, minimize loss of property, and minimize environmental impact on flooding.  Participation in this program is completely voluntarily.

What causes a flood rating or flood zone to change?

Many times additions to a home can change a home from being in a low risk flood zone to a high risk flood zone.  With either an addition or more than 40% of a property is improved within one give year, you then have to use that year as the year built for flood insurance.

For example, if you have a pre-FIRM structure which is a structure built for the first flood map when the addition is put on the home you have to use whatever year the addition was put on as the year built now. This can have a huge impact as pre-FIRM and post-FIRM structures have different guidelines and rating models.  When looking at adding this addition you want to contact a surveyor to make sure that when you add the new structure it does not move the structure from a low risk flood zone to a high risk flood zone.  This could lower the value of the home instead of increasing it and even making it harder to sell.

FEMA allows homeowners to submit an Online Letter of Map Change (LOMC). This can be used for property that was incorrectly included in a flood zone or if the addition of fill has elevated the property above the flood zone.

What is a flood insurance policy transfer, also known as a flood insurance policy assumption?

Generally, a policy transfer or a policy assumption is when a national flood insurance policy is moved from one property owner to the next.  A benefit of doing a policy transfer would be if a flood zone on a property has recently changed to a much higher risk zone.  In that case, a policy transfer locks in the rate for what the current property owner has if that property owner took out a flood policy before the flood insurance map changed.  A new owner of the same property would receive a preferred flood insurance policy through continuous coverage by doing a policy transfer.  Another benefit to a buyer is that flood premiums are paid up until the renewal.   So a buyer will not have to pay anything until renewal, thereby significantly saving on closing costs.  Keep in mind that if the property being sold is currently a rental house, but the individual buying it is going to use it as a primary residence, then a flood insurance policy transfer may not be available, because it will be a different type of policy.  FEMA rates rental properties differently compared to primary residence policies.

What changes are happening to the National Flood Insurance Program (NFIP)?

The Federal Emergency Management Agency (FEMA) announced an initiative called Risk Rating 2.0, which will tie premiums to the actual flood risk facing individual homes nationwide starting in October 2020. Currently, flood insurance pricing is based largely on flood zones. Risk Rating 2.0 will determine flood risk by incorporating information such as different types of flood, the distance a building is from the coast or another water source, or the cost to rebuild a home. By reflecting the cost to rebuild, it could deliver more equitable rates for policy holders of lower‐value homes.  Conversely, rates are likely to go up in neighborhoods with the greatest exposure to flood risks, which could hurt property values in those areas.

How will current flood insurance rates be impacted by Risk Rating 2.0?

As an example of how Risk Rating 2.0 would affect flood insurance policy holders, FEMA uses a scenario of two homes in a 100‐year flood plain. The first home, at the edge of that zone, faces low risk of flooding from inland flooding or storm surge; the second faces higher risk from both. Under the current system, each home pays the same premium. With changes under Risk Rating 2.0, the first home’s premiums would fall by 57 percent, while premiums for the second home would more than double.

Are there alternatives to the National Flood Insurance Program (NFIP)?

Often, standard flood insurance policies offered by the National Flood Insurance Program (NFIP) don’t provide adequate coverage. Fortunately, there are alternatives available through private market flood insurance. Private market providers offer flood insurance with increased limits and additional coverage.

Selecting the most suitable insurance coverage for the best value is important. That’s why Florida Insurance Hub represents multiple providers offering solutions to fit individual resources and
needs.  Florida Insurance Hub is an independent insurance agency serving all of Florida, including Titusville, Melbourne, Palm Bay, and Orlando.  We provide personal and commercial insurance quotes for homeowners insurance, auto insurance, flood insurance, and business insurance. For a complimentary risk assessment, contact Florida Insurance Hub at 321‐219‐7600.