Will my NFIP or FEMA flood insurance pay out in Alabama?
It's a question we get from property owners in Birmingham, Tuscaloosa, Montgomery, Anniston, and Huntsville Alabama everyday.
What is a Flood?
We are specifically looking at what the National Flood Insurance Program or NFIP and how they define a flood. In regards to private flood insurance in Alabama they normally follow the same guidelines for defining what is considered a flood.
According the NFIP manual a flood is defined as a normal dry area that is inundated with water. It specifically states that it must be 2 acres or 2 parcels.
When taking out a flood insurance policy many property owners are confused about coverages. They also are confused about what the real risk of flooding exist.
Growing up in Birmingham Alabama I can tell you the flood threat exists across Alabama. I remember watching the Vestavia bowling alley parking lot flood every time it rains. Flood damage in these areas was very common but many times not filed as a flood insurance claims.
This occurred many times as flash flooding in the area. Many areas like South Shades Creek or the Cahaba River could rise quickly.
After the 2019 flooding in Alabama some people on Lake Logan Martin were surprised to find out they didn't have flood insurance coverage for things like docks.
Whether you live in a low risk, moderate risk, or high risk flood zone it's important to know if your flood insurance policy will actually pay out on a claim.
It's important to know that generally most homeowners insurance policies will not cover flood.
So what exactly does FEMA or NFIP consider a parcel? According to the NFIP manual a parcel can be considered a roadway if it touches another property. This is important to understand if your home is the only building flooded. You want to make sure flood coverage you pay for would actually pay out.
So if coverages do pay out after a flood in Alabama what does flood insurance cover? It depends if you have a private flood insurance policy or an NFIP policy. Coverages provided can be different. Let's look at coverages that can be provided on an NFIP flood insurance policy.
- Building coverage
- Contents coverage (Personal property)
Depending on what coverages you select flood insurance costs could range and you could end up with affordable flood insurance. NFIP offers up to $250,000 on residential buildings and up to $100,000 on contents coverage.
Just because policies have a certain amount of coverage does not mean you would receive that on a flood insurance claim.
NFIP has an 80% rule when paying out claims. This means in order to have replacement cost on the building in Alabama you have to insure for 80% of replacement cost or get the max amount of building coverage through the National Flood Insurance Program. Many private flood insurance companies also have this guideline.
We have actually seen some private flood insurance companies require 90% of the replacement cost and not look at the max amount of coverage available.
Contents coverage on flood insurance policies work a little bit differently in Alabama. If doing a flood policy through the National Flood Insurance Program these are written on an actual cash value basis.
So what does this mean?
Think of it like this replacement-cost-depreciation = actual cash value.
So if you have some antiques in your home you could be disappointed come flood insurance claim time.
The good news is many private flood insurance companies do offer replacement cost on contents in Alabama. We recently saw this as a benefit with the hurricane claims in Alabama and the 2019 flood claims in East Alabama.
So you have a good understanding of what is a flood and flood insurance coverages.
Where can you buy flood insurance?
When purchasing flood insurance you can purchase it from any insurance agent in Alabama that offers flood insurance.
Are all flood insurance companies the same?
Will flood insurance rates be the same?
If you are purchasing flood insurance through the National Flood Insurance Program rates should be the same unless you have an elevation certificate or you are doing a policy assumption.
An elevation certificate can give you the most accurate rate with NFIP, but many times private flood insurance companies do not use them.
When selecting a flood insurance agent or agency you want to make sure you pick someone who offers NFIP and private flood insurance.
You also want to pick someone who is educated about what homeowners insurance policies will cover when it comes to flooding.
You also want to work with someone who can help you understand the true flood risk. We are not talking about just what your flood zone is but about understanding flood threats and the history of flooding in the area.
You also want someone who understands floodplain management ordinances and how it can impact your property.
What about the insurance company?
Are they all the same?
No they are not you want to look for a write your own carrier that administers flood insurance through FEMA.
What about after purchasing the flood insurance policy in Alabama?
Read over your flood insurance contract to make sure everything is correct including the flood insurance premium
Can you make a claim right away?
Generally NFIP has a 30-day waiting period on policies that are not for loan closings or newly mapped areas.
So maybe you have more questions about the flood insurance policy purchasing process?
Make sure to checkout our YouTube channel where we do daily flood education videos. You can also tune into our daily flood podcast where we provide up to date information on flood education and flood insurance.
You can also get a better understanding of your flood zone by visiting the flood mapping service
If you would like a flood insurance quote then click here.
Remember we have an educational background in flood mitigation. So we are here to help you understand your flood risks, flood insurance, and mitigating your property long term.