Understanding Flood Insurance as New Threats Emerge
The dramatic start to the hurricane season in southern states has thrown
into sharp relief the 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
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
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
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:
New York State's Department of Environmental Conservation has a useful
questions-and-answers page at:
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 thinks 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
- 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
- Flood maps are sometimes changed and updated, introducing new high-risk
areas. Keep up to date here:
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.
Newbridge Coverage is your source for NY Flood Insurance! Contact us today for your free quote 1-516-781-9000.