Tuesday, April 12, 2016

Does My Home Need Flood Insurance?

If you’ve lived in Colorado for very long, you know that with the warmer temperatures and summer season, we get a lot of rain as well. In fact, sometimes we get monsoons! Depending on where you live in El Paso county, you may find a lot of water making its way toward your home over the next 4-6 months. If you’re worried that some (or a lot) of that water may find its way into your home, you may want to consider flood insurance. Here’s what you need to know:
Your home insurance probably will not cover any type of flood damage. To be clear, a flood is NOT water that comes from inside of your home from a broken pipe or leaky dishwasher. A flood is from external, natural running water that enters your home, either from rainfall, standing or running water or even from underground.

Home insurance typically excludes flood damage to both your home and your belongings. Occasionally, there could be some coverage provided if the actual flood damage was preceded by another event that allowed the flood damage to happen. For example, if wind blew out your windows, allowing the rain to enter your home or (with some companies) if your sump pump fails and allows water to enter through your basement, there MAY be coverage. However, coverage for flood damage under your normal home insurance is rare and should not be relied on.
Insurance companies typically provide flood insurance through the National Flood Insurance Program. In 1968, Congress created the National Flood Insurance Program (NFIP) to help provide a means for property owners to financially protect themselves. The NFIP offers flood insurance to homeowners, renters, and business owners if their community participates in the NFIP. Participating communities agree to adopt and enforce ordinances that meet or exceed FEMA requirements to reduce the risk of flooding. El Paso county and most of Colorado participate in the NFIP.

Does the National Flood Insurance Program cover everything that happens to my home and belongings if it is flooded? Unfortunately, not, but it does cover a lot. For homes that do NOT have a basement, most of your home and contents should all be protected by your flood insurance policy (up to the coverage limits that you purchase). However, things work differently if your home DOES have a basement. Here is what is and isn’t covered, according to the NFIP:
Flood insurance covers your home's foundation elements and equipment that's necessary to support the structure (for example: furnace, water heaters, circuit breakers, etc.). It's important to note that some items in your basement are covered under building coverage (like a furnace, hot water heater and circuit breaker) and others are covered under contents coverage that must be purchased in addition to building coverage (for example, your washer and dryer, or your freezer and the food in it). The NFIP encourages people to purchase both building and contents coverage. Flood insurance does not cover basement improvements, such as finished walls, floors, ceilings or personal belongings that may be kept in a basement.”

Is flood insurance expensive? It depends. If your property is not in an actual flood zone, it would qualify for a Preferred Risk Policy. Preferred Risk Policies cover everything that a regular policy covers but at a substantial discount. Most homes in El Paso county (but not all) qualify for a Preferred Risk Policy. Depending on your coverage choices, a Preferred Risk Policy will cost between $130 - $460 per year.
If, however, your home lies within a flood zone, flood insurance prices will vary dramatically. There are 26 different flood zone levels, each with its own insurance rates. The higher the flood zone, the more likely the property is to experience a flood and the more expensive the flood insurance will be.

Can I start my flood insurance right before a storm starts? Unless you are required to have flood insurance for a home loan closing, there is a 30 day waiting period before coverage begins on flood insurance policies. The time to buy your flood insurance and get the coverage for your property is 30 days (or more) before the rain clouds gather above your home!

To find out if you’re property is in a flood zone or to get a flood insurance proposal, contact our office at 719-685-8585 and we’ll be happy to help.