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Taking Another Look At Flood Insurance

According to an August 2006 article published on SmartMoney.com, the Federal Emergency Management Agency reported that only 40 percent of all residents in the flooded areas hit by Hurricane Katrina were covered by flood insurance. The majority of those insured were required to have the coverage in order to obtain a mortgage.

The other 60 percent who didn’t have flood insurance fall into two main categories: renters and homeowners without a mortgage.

The uninsured group faced a serious problem. Standard homeowner and renter’s policies cover damage from wind or rain. These policies, however, don’t cover damage as a result of flooding. These individuals’ only recourse was to rely on federal disaster aid.

Flood insurance is available through the National Flood Insurance Program to any property owner living in an area with an established flood plan. This is used to gauge the community’s vulnerability by creating an area flood map. Flood plans also help lessen some of the risk by establishing certain zoning and building policies, which include types of allowed construction, elevation at which building is allowed, permissible building materials, and construction reinforcement techniques.

The National Flood Insurance Program offers three different types of policies:

·   The Dwelling Form – this insures one to four family residential structures and/or contents. This form can also be used to insure residential condominium units.

·   The General Property Form – this insures residential buildings housing more than four families as well as non-residential and commercial buildings.

·   The Residential Condominium Building Association Policy Form – this insures associations operating under the condominium form of ownership.

There is also a Preferred Risk Policy designed for residential and non-residential properties in low-to-moderate risk areas. The policy can be written with one of several combinations of building and contents protections:

·   Renters pay $39 per year for $8,000 of contents coverage.

·   Business owners can buy $50,000 of building and contents coverage for $550 per year per building.

·   Business owners who lease their space can purchase $50,000 of contents coverage for $145 per year.

Finally, keep in mind that flood insurance is easy to obtain. While the federal government may administer the program, it is sold through regular insurance companies. To find out more about flood insurance, call us today or log on to www.floodsmart.gov.