The dramatic start to the hurricane season in southern states has thrown into sharp reliefthe question of flood insurance much further north.
Experts say there's a stronger than usual chance New York could be hit by a major storm this season.
But there's also a big problem looming on the horizon -- the impending expiry of the US National Flood Insurance Program (NFIP).
The Federal program, which provides subsidized flood coverage, is due to expire December 8, ahead of so-far incomplete new legislation.
It seems likely that Congress will grant a short-term extension while the longer-term future of the program is thrashed out.
Why all the fuss? Well, the underlying issue is that standard homeowners' insurance and renters' insurance does not cover most flood risks. You need a separate policy. This applies to vacation and second homes too. (Note that comprehensive auto insurance does cover your car for flood damage)
Because the effects of a flood can be devastating, the Federal Government stepped in in 1968 to encourage more owners and renters to get protected at a relatively low cost.
According to Senator Chuck Schumer, tens of thousands of Long Islanders have NFIP coverage. He recalls that in 2013 there were more than 91,000 NFIP policies in force on Long Island and, after Superstorm Sandy, around 144,000 policy holders filed claims.
If the program is not extended until the new legislation is complete, owners and renters with NFIP coverage might be unable to renew their policies when they expire.
If that includes you, please talk to your insurance agent.
However, what follows assumes for now that the program will be reauthorized.
Flood Risks and Flood Insurance Basics
How does flood insurance work?
The idea is to make good on the costs of damage to both the building (for homeowners) and contents (for homeowners and renters).
Flood risks are assessed based on whether a home is inside what the Federal Emergency Management Agency (FEMA) identifies as "flood zones"?
A flood is defined as an area of normally dry land that has been inundated with water. It can be caused by overflow of inland or tidal waters, runoff of surface waters from any source, mudslides or the collapse of land along a shore.
NFIP coverage is only available if your community has agreed to adopt and enforce rules that are meant to reduce the risk of future floods.
So far, around 1,500 communities in our state participate in the program. Each of these has a local law with special rules to tackle flood risk. If you're not sure if your community participates, your agent can tell you
Flood zones are areas where there's a risk of a major flood at least once in 100 years.
Do you live in a flood zone?
You can find downloadable maps online by keying in your address on FEMA's site, starting here: https://msc.fema.gov/portal
Again, your insurance agent will also be able to tell you if you live in a high-risk area.
The NFIP provides coverage for up to $250,000 for the structure of your home and up to $100,000 for your personal property.*
These days, those sorts of numbers don’t always add up for homeowners. Fortunately, private flood insurance is also available, either to top up the NFIP coverage or as a full standalone policy if your community does not meet NFIP requirements.
* For businesses, the NFIP provides coverage of up to $500,000 for building structure and another $500,000 for contents.
Do I Need Flood Insurance?
If you live in a flood zone it'd be unwise not to be insured. And if you live in a high-risk area and have a mortgage, your lender is obliged by law to insist on it. Some lenders may even require flood insurance if you live outside a danger zone.
You don’t have to live in a flood zone to obtain NFIP protection. Almost any home is at some degree of risk of flooding, not just those in flood zones. More than one-in-five flood insurance claims are for homes outside the designated zones. 98 percent of US counties have been impacted at some time by a flood.
Yet, latest estimates suggest only 12 percent of Americans are insured against this risk.
Floods are the most common and costly natural disaster in the US, costing more than eight billion dollars every year. Recovering from just one inch of water inside your home costs an average $27,000.
With uncertainties about climate change, rising sea levels and increased incidence of storms, flood insurance is definitely worth considering. Talk to your agent to find out more.
How to Buy Flood Insurance
You can't buy insurance directly from the NFIP. You must obtain your policy either directly from an insurance company or through an insurance agent like Newbridge Coverage.
Keep in mind that if you purchase a flood insurance policy, it does not become active until 30 days after you take out the policy. That means, you can't wait for an imminent flood warning then race down to your agent in hopes of getting protected!
Where to Get More Information
In addition to the FEMA mapping website mentioned above, you should also visit the agency's Floodsmart site at: https://www.fema.gov/national-flood-insurance-program#
New York State's Department of Environmental Conservation has a useful questions-and-answers page at: http://www.dec.ny.gov/lands/40564.html
Your insurance agent should also be able to answer many of the questions you have about zoning and insurance requirements.
Here are some further important things to know about flood insurance:
- If you suffer flood damage and there's a presidential disaster declaration, you can still file an insurance claim in addition to any Federal help. (Federal disaster coverage is usually in the form of repayable loans.)
- You can buy insurance even if your property has been flooded in the past provided it's in a participating NFIP community. You can't be charged more because of the past history.
- The program includes basement structural coverage (but not contents)
- Wind-driven rain that enters a property via, say a broken window or hole in the roof, is covered in a homeowners' or renters' policy, not by flood insurance.
- Flood maps are sometimes changed and updated, introducing new high-risk areas. Keep up to date here: https://www.fema.gov/important-information-recent-upcoming-map-changes
If you have further questions about flood insurance and, particularly, the current state of play with regard to expiry of the NFIP, contact your agent. Your agents should also be on stand-by to help you with a claim in the event of a flood.