Flood insurance is what might be one of the most important coverages you can get nowadays. A single flood policy can provide flood protection for thousands of dollars. However, did you know that not only residential homes and commercial buildings can get flood insurance?

In this article, we want to talk about how you could protect your flood insurance premiums as a landlord, or apartment building owner, and make flood insurance easier for you, your property, and your renters.

Flood Insurance for Apartment Building Owners

When it comes to flood insurance as an apartment building owner, you want to make the most out of your investments. Considering how most of your properties will be one of the sources of your income, it's best to help them avoid getting ravaged by flooding. This will not only impact your property but also the potential customers you may have in the future.

So let's talk about the things you can do to make utilize your flood insurance best. We will talk about the following things:

• Blanket Flood Insurance Coverage
• Loss of Use
• Replacement Cost & Elevation of Structure

Blanket Coverage

First, it's important to know the type of flood insurance coverage you need to get for your property. This may be through individual/specific flood coverage or blanket flood coverage.

The difference between these two is that individual coverage is only specific to a single property. So the building and personal property coverage with your flood policy will only be applicable to a single structure. This is not really ideal if you have multiple properties.

On the other hand, you may be able to get a blanket flood insurance policy; which really eliminates most of the limits you will see on an individual flood policy alone.

Blanket insurance means that you may get the same flood insurance coverage for multiple properties with just a single policy. This means that flood coverage for flood damages may apply to more than one type of property at the same location or the same type of property at multiple locations.

It's important to note however that the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP) generally don't offer blanket flood insurance coverage however you can still get one through other private flood insurance companies.

Loss of Use Coverage

Now, let's jump into one of the things that you should be looking to include with your flood insurance policy: loss of use coverage.

Loss of use is generally an additional coverage that you can get with flood insurance. The purpose of this coverage is to provide you with actual cash or any form of reimbursement for you as the property owner of a rental property.

When your property gets hit by flood, as the repairs are ongoing, you won't really have use of the property. With this coverage, instead of not being able to earn anything as the repairs are ongoing, the flood insurance policy may provide you with whatever potential income you are losing during that period.

Replacement Cost & Elevation of Structure

Last on our list is the replacement cost value of your property and why protecting it from flood damage can directly impact the profitability of your property as an apartment building owner.

Replacement cost is simply the amount or cost of the property's structure if you were to sell it on the market. For flood insurance, this is generally considered because the replacement cost will be the basis for your flood insurance rates. So if you have a higher or more expensive amount for the building, you may also start to see some form of an increase in your rates.

It's equally important to also consider the elevation of your property because this generally shifts your risk of flooding. An elevation of your property will also help show that you are at a reduced risk for flooding.

This is why despite elevation certificates being no longer required for flood insurance, it still is a helpful document in lowering your risk and sometimes even removing your property from a flood zone.

Protecting Your Premium Rates

When you start processing the purchase of flood insurance, it's best to consider these three things in order to protect your premium rates. This is really important especially if you have a building that sits in a high-risk area where the chance of flooding is not only high but also sometimes unpredictable.

As a property owner of apartment buildings, you may want to make the most out of your flood insurance coverage. For the federal flood insurance side of the market, you may start seeing a max of $500,000 on your building coverage.

Although the private flood insurance market has more flexibility with coverage amounts, meaning you can go further than $500,000 for your building coverage, this won't really guarantee that you can lock in on your premium rates.

One of the biggest risks of a flood-prone property is that you also lose interest and appeal to your potential customers. If people start to see that your property is a high-risk one when it comes to flooding and damages, renters might choose another option. This in turn will hurt the profitability of your property long-term.

If you are ready to take the next steps to get the right flood insurance coverage then there are three simple steps.

• Fill out this form —
• Talk with our flood education specialist.
• Get back to the important things in your life.

Got more flood insurance questions? Visit our Flood Learning Center below to know more:

The flood insurance market has been constantly changing for a couple of years. We've seen this happen for federal flood insurance and even for flood insurance availability.

One of the biggest changes came in form of allowing private flood insurance for property owners who have an FHA loan, USDA, or even VA loan. In this article, let's talk about how the private flood insurance market is changing the whole flood industry.

Coverages

When it comes to understanding how the private flood is changing flood insurance coverage, we first need to get a basis or some form of comparison to the National Flood Insurance Program (NFIP).

So, let's just mention here that when it comes to federal flood insurance, you only get a maximum of $250,000 in building coverage and $100,000 in contents coverage or personal property coverage for residential flood policies. This coverage amount can go up to $500,000 if you're doing a commercial flood policy.

Now that we've established this, it's important to highlight that private flood insurance companies don't have these coverage limits. You can definitely still get more than $250,000. Even when it comes to personal items or content coverage, you can definitely go more than $100,000 for flood damage. That coverage also comes with the loss of use, additional living expenses, and/or replacement costs.

Pricing

When it comes to pricing, private flood insurance also offers more flexibility and is generally cheaper. This is especially true if we look at how the National Flood Insurance Program (NFIP) Risk Rating 2.0's impacts which will cause around 77% of the properties to get an increase in premium rates.

To know more about private flood insurance pricing, watch the video below to know more:

Claims Payout and Wait Period

Now, let's jump into what may be the most crucial parts of your flood insurance policy: claims and wait periods.

When it comes to wait periods, private insurers generally have a quicker turnaround time for your policy to take effect on your property. Most private flood insurance policies can be available and take effect on your property within a maximum of 15 days.

This is relatively shorter than federal flood insurance with a strict 30-day period. This can be helpful since you immediately get coverage and flood protection on your property quicker.

This type of faster wait time is also applicable for a claims payout. When filing for a flood insurance claim with private insurers, you may get the payout on your private policy within a maximum of 60 days. Now, it's important to note here that this generally depends on private carriers, so your flood claim may be available at an earlier time.

Payment Options

Payment options with private flood are almost similar to the National Flood Insurance Program (NFIP). So you can pay this out of your pocket or through your mortgage bank. When we say that you pay out of your pocket, this means that you pay for the whole premium via cash or using your own funds.

This is drastically different from mortgage payments since carriers would generally bill your bank for your flood insurance. What is important to note here is that there will be more mortgage payment options moving forward as the private flood is now available even for FHA, USDA, or VA loans.

Additionally, some private flood carriers may offer quarterly payments. This may provide more flexibility in paying your flood premiums, but there will be no delay in your flood protection and coverage. This can really be beneficial for premiums that are relatively high. Although banks may not be able to push through with this, paying $2,000 quarterly is way easier than paying it whole upfront.

It's also important to mention here about payment grace periods which, depending on your carrier, may have a 29-day grace period, 7-day, or even no grace period at all for payments to be made.

Want to know more about the difference between NFIP & Private flood in 2023?
Watch this video below to get started:

CHANGING FLOOD MARKET

So this is how the private flood is adapting to the constant changes in the flood insurance market. It's important to keep in mind that this generally doesn't guarantee that it's the best option for your needs. Sometimes, private flood may not be available because most of its assessment isn't based on flood zones alone.

If you want an in-depth understanding of private flood insurance, make sure click below to access our Private Flood Insurance Course:

We will have to wait and see if federal flood insurance will also follow the path that private flood insurance is taking or one-up it by doing more to fight flood risks and provide more substantial flood protection for residents across the United States.

If you want to start your flood insurance, follow these three simple steps:

• Fill out this form —
• Talk with our flood education specialist.
• Get back to the important things in your life.

If you have additional questions that are related to flooding and flood insurance, make sure to visit our Flood Learning Center where we try to answer all your questions. Click below to start your flood learning with us!

When it comes to coverage on flood damage, it's important to know what insurance policy can provide this for you. Sometimes, you may receive a flood coverage rejection letter. Now, you might be wondering what is this document and why is it important.

In this article, we talk about this flood coverage reject letter, your flood insurance coverage, and how knowing this can really help your property be saved from flood loss.

Understanding Insurance Coverages

In order to understand this letter, first we need to go back to the coverage process and terms when it comes to other insurance policy types.

This is the best time to really mention that when it comes to homeowner's insurance policy, you don't really have coverage for flood damage built-in or included with your standard homeowner's insurance. Most of the protection that this insurance will provide will be for water damage, disaster damage like tornadoes, fires, earthquakes, and sometimes even mold damage. However, this does not really cover damages or losses from flooding. 

You also have auto insurance on this topic, but the coverage with this policy is only for your vehicular damages. This can be through natural causes like disasters that we mentioned or accidents.

But one thing that you may get from your insurance agent for both of these policies is the flood coverage rejection letter.

What is Flood Coverage Rejection Letter?

This letter is a document that you are expected to sign to acknowledge that when it comes to your homeowner's or auto insurance policies, you are aware that you won't get coverage for the damages due to flooding from these policies.

The purpose of a flood coverage rejection letter is to really get your confirmation that you are aware that you won't get any flood insurance coverage from these policies.

Sometimes, your agent might send you this letter and if you sign it, you directly reject or decline the flood coverage offered by them. Now, this is important because when a flood loss happens, you may not file for a flood claim since you already signed the rejection letter.

Basically, signing this letter simply means that you agree to not get coverage for flooding.

What If You Didn't Get One?

On the other hand, if you didn't get a flood coverage rejection letter from your insurance carrier for your property or vehicle, then that simply means that they didn't offer any coverage.

Generally, you might need to get a separate flood insurance policy if you want to be covered for flood damages. So, you might be wondering, what are your flood insurance options?

A standard flood insurance policy with the National Flood Insurance Program (NFIP) can provide you coverage for a maximum of $250,000 for building coverage and a maximum of $100,000 for content or personal property coverage for flood losses. This is especially true if you have a policy with the NFIP and even with its recent Risk Rating 2.0 update.

On the other hand, private flood insurance is where you can find more flexibility as their standard flood policy coverage doesn't really have limits. You can generally go way above that $250,000 and $100,000 coverage with federal flood insurance.

To learn more about the NFIP and Private Flood insurance, WATCH the video below:

Get Flood Insurance

Nowadays, flood insurance is a must because flood damage can happen anywhere. As we always say, all properties should have coverage from flooding since floods can happen anywhere even in places that aren't considered high-risk areas for flooding.

Getting the right flood coverage with your home can really help you reduce the impacts of flood risk and bounce back from a natural disaster like this.

So if you have additional questions that are related to flooding and flood insurance, make sure to visit our Flood Learning Center where we try to answer all your questions. Click below to start your flood learning with us!

Let's start simplifying your flood insurance. You only need to follow our three easy steps:

• Fill out this form —
• Talk with our flood education specialist.
• Get back to the important things in your life.

The flood insurance industry is now changing more than ever. These changes are really to lock down on ensuring that your flood risks are well covered so that you won't get lopsided by a flood event.

Some of the changes we've seen in recent years are how the National Flood Insurance Program (NFIP) updated to Risk Rating 2.0 and another would be the availability of private flood insurance for FHA loans.

In this blog, we will talk about parametric insurance for flood policies and how it could impact the flood industry as a whole.

What is Parametric Flood Insurance

Parametric insurance in general is a form of coverage wherein the policyholder will be rated on the overall impact or severity upon an occurrence of the event. This is drastically different from simply basing it on the impacts or losses to the insured.

In the case of a natural disaster like earthquakes, wildfires, or floods, this means that the coverage that will be provided will be based on the actual impact of that disaster on your property.

For flood insurance, this could mean that you will be covered based on the general impact of the flooding instead of simply how much flood damage your property occurred. Generally, parametric flood insurance also kicks in as the flood event is hitting you instead of having the insurance coverage kicking in after assessing the damage to the insured building.

This real-time analysis is done by using technologies from satellites and other data that detect things like the level of water impacting the installed device on the property. This allows the insurance companies to also provide the necessary claims as soon as possible since the assessment is being done during the flood event and not simply after.

To set an example, FloodFlash — led by Mark Hara — one of the leading parametric flood insurance that's recently adding the United States to the areas where they are looking to provide coverage, mentioned that they use a specific tool that immediately notifies them whenever a policyholder gets flooded.

So, you might be wondering, how is this different from the standard flood insurance policy that you can get through the NFIP or private flood insurance?

Difference Between Parametric and Standard Flood Insurance

When it comes to what sets parametric flood insurance from standard flood insurance policies, we will look into its coverage, claims payout, and overall timeframe for your policy to kick in. So, let's discuss each of these.

Coverage

A standard flood insurance policy can provide you coverage for a maximum of $250,000 for building coverage and a maximum of $100,000 for content or personal property coverage for flood losses. This is especially true if you have a policy with the NFIP and even with its recent Risk Rating 2.0 update.

On the other hand, private flood insurance is where you can find more flexibility as their standard flood policy coverage doesn't really have limits. You can generally go way above that $250,000 and $100,000 coverage with federal flood insurance. 

So, how is parametric flood insurance different?

Well, since your flood insurance claim will be paid out through cash or generally directly to your bank, you can get more than what a standard flood policy offers. This means that even additional living expenses or business loss of use will be part of that coverage.

These coverages are something that traditional insurance doesn't generally include especially for federal flood insurance. Hence, parametric flood insurance can really fill in for that coverage gap that standard flood coverage generally misses. This is no surprise as it is, after all, one of the goals of parametric insurance.

It's important to note, however, that parametric insurance policies are based on a pre-agreed sum of money when it comes to coverage. This means that if you agreed to get only $250,000 for coverage with your parametric flood insurance policy, that is the only amount you will be getting.

Claims Payout & Turnaround Time

Now, when it comes to claims payout, parametric flood insurance also has its fair share of beneficial factors because of how the system works.

You see, once your insurer detects that the water levels hit that certain spot — generally about 8 inches of water — the insurers' system immediately gets notified about this as if it's saying "Hey! This property is legit getting flooded right now".

Generally, this means faster turnaround time and assessment. Since parametric flood insurance basically has the amount of coverage ready to fight against flood damage and the data confirms the flooding, flood claims may be paid out as soon as 24-48 hours.

Again, since most companies who provide parametric flood insurance tend to provide coverage through cash, this means that you get the payout immediately or the coverage is generally transferred to your bank.

RELATED: 3 Things that Must Happen for Flood Claim to Pay Out

On the other hand, a standard flood policy will generally pay out in less than 90 days. This is because there's a process such as assessing the damage, filing the flood insurance claim, and waiting for the claims payout.

Although this timeframe generally depends on your insurance provider, it can still take days (if not weeks) for a flood policy to pay out with traditional flood insurance.

Why Parametric Flood Insurance is Good

Now that we've covered what parametric flood insurance can do, it's easy to see why this could really help homeowners and business owners in the United States.

Since it fills in the potential gaps in standard flood insurance and has a relatively quick turnaround time for payouts, this can really improve our resilience to the risk of flooding.

Considering how the impacts of climate change and the behavior of water are drastically changing for the worse especially in recent years, having this type of insurance protection will really help more people find security and certainty.

Moreover, adding this option in the flood insurance sector may also increase property owners' motivation to get flood insurance for their property.

Got more questions on flood insurance or parametric flood policies? Is there a flood question that you need answered? Click below to go to our Flood Learning Center where we try to answer all your flood-related questions.

Ready to start simplifying your flood insurance? Just follow these three simple steps:

• Fill out this form — 
• Talk with our flood education specialist.
• Get back to the important things in your life.

Home insurance companies are offering a new water endorsement for homes across the country.

In this article, we're going to talk about the dangers of using these water endorsements as a replacement for flood insurance. We're going to cover important things to know about these insurance products, and we're going to show you how you could lose your home if you have either of these insurance products.

Water Endorsement Dangers

Now, it seems that this new water endorsement from your homeowner's insurance policy might be the best deal since it will help you avoid getting another policy just for flood damage. However, one of the biggest dangers of using this as a replacement for flood insurance is coverage.

Let's do a quick review first of what flood insurance offers for your protection against flood damage.

Flood Protection

First, let's define what flooding is. This is when at least 2 acres or 2 properties are inundated by water. This may be due to heavy rain, overflow of rivers or any body of water, or snowmelt. This is the same rule that flood insurance follows.

If you go through federal flood insurance and the National Flood Insurance Program (NFIP) under the Federal Emergency Management Agency (FEMA), you will be able to get at most $250,000 for building coverage with a maximum of $100,000 for contents or personal property inside that home.

On the other hand, this water endorsement will generally cover ten to fifteen percent (10% - 15%) of what a standard flood policy offers. This means that you're only going to get around $20,000 to $30,000 for flood coverage.

Although it follows the same rules of what is considered a flood, since different homes have different prices, this may present some benefits or potential disadvantages. Depending on your insurance provider, this amount may have the same limits as your sewer or drainage backup up to the dwelling limit.

As much as this water endorsement may be beneficial for you, it may not be able to really address the coverage needs you may have when it comes to flooding. Generally, this amount may not be able to fully cover the replacement costs of your home.

It's also important to note that, unlike flood insurance services, water endorsement won't be able to cover all of your property that's been affected by flooding. This is especially true if you're living on a property in a high-risk flood area or near a body of water where flooding can happen drastically in a short period of time. 

This coverage may only cover your basement and the first floor however anything past that might not be part of your coverage.

Availability

You might be thinking of saving more of your money by canceling your flood insurance and using water endorsement as your flood protection. We generally discourage this since it also presents a danger when it comes to your insurance coverage.

Water endorsement availability also depends on your insurer as there may be insurance providers that don't have this type of additional coverage.

Generally, by doing this it may also mean that if your homeowner's insurance is nonrenewed, it will take your flood coverage with it. Once your homeowner's insurance is canceled or nonrenewed by your insurance company, you might not be able to get this water endorsement from a different insurance provider since it's basically embedded with the policy.

This is a different case with flood insurance being a separate policy that won't really be impacted if such that situation happens.

This water coverage is not going to be easily acquired too. This is because your mortgage lender or bank will likely be the one to determine if the policy limits of this new water endorsement will be enough for your home. Simply put, if your bank will not accept this coverage, you might still need to get a separate flood insurance policy.

How Flood Insurance Helps

This new water endorsement may not really be able to give full coverage unlike a separate policy like flood insurance. So relying everything on your homeowner's policy may not be the best line of defense as a property owner for property damage due to floods.

Although it may be risky to rely your flood protection on water endorsements solely, it may also be of great help if you combine it with an existing flood insurance policy. This could mean that you can go past certain policy limits of flood insurance coverage by using water endorsement from your homeowner's insurance policy as excess flood insurance.

You may also find more comfort and security by knowing that you can get around $270,000 just for building coverage alone with the water endorsement and your standard flood policy coverages combined.

At the end of the day, you shouldn't settle for less when it comes to the protection of your property and investment. Floods can happen anytime and most times, even just an inch of flood can cost thousands of dollars in property damage.

If you've got questions regarding this new endorsement with homeowners policies, how flood insurance premiums are determined, or anything related to flood insurance, click below to access our flood learning center.

Ready to solve your flood insurance problems? Here are the steps you can take:

• Fill out this form —

• Talk with our flood education specialist.
• Get back to the important things in your life.

Flood insurance can be complicated especially when it comes to the coverage it offers. We're here to clear things out so you can make the most of your flood policy and get time back so you could focus on the best things in life.

In this article, we want to discuss full coverage when it comes to flood insurance. Does it exist? How does it work? What does it mean?

Full Coverage

When it comes to flood insurance, it's best that we settle things straight. Technically, there is no such thing as full coverage. This phrase is only used by some insurance agents to describe the potential coverage that you will get for your property with a standard flood insurance policy.

It's important to remember that your homeowners' insurance policy generally does NOT have coverage for flood damage. Since a separate insurance policy is needed for flood damages, knowing your coverage can really help you avoid unnecessary headaches and flood loss.

So, you might be wondering what are your coverage options when it comes to flood insurance. In order to answer that, we'll have to break it down to your two options: federal flood insurance and private flood insurance.

NFIP Risk Rating 2.0

Your first option and you might already know about this is the federally-backed National Flood Insurance Program (NFIP). This is also sometimes known as a Federal Emergency Management Agency (FEMA) flood policy.

When it comes to NFIP, and even with their recent overhaul of the program with Risk Rating 2.0, you will be seeing some coverage limits there. Let's say that you need to get flood insurance for your home, so this falls under a residential flood policy.

Residential flood policies actually have coverage limits with the National Flood Insurance Program (NFIP). This limit indicates that you can only get a maximum of $250,000 for the building or structure of your home and only a maximum of $100,000 for personal property and contents of that insured home.

On the commercial side of things, the NFIP will offer only a maximum of $500,000 for building coverage and another $500,000 for business content within that insured building. This may make you ask, will this be enough?

Well, that really depends, but the way we see it now with increasing costs of materials, these limits might not be the comprehensive coverage you really need. Keep in mind as well that your flood insurance also needs to follow the 80% Rule.

This 80% Rule states that you should have a building coverage that is 80% of the total costs to replace or rebuild the property if you can't max out the coverage limit set.

Private Flood

On the other side of the coin, you have private flood. Being handled by private companies, insurers don't really have certain limitations on the coverage they can provide. Before we move forward, let's mention one of the biggest things you should know about private flood: flexibility of coverage.

Unlike the National Flood Insurance Program (NFIP), private flood insurance companies can provide additional living expenses and business loss of use with their flood policy. Although this may cause some form of an increase in premium rates, you might also be looking at an increase in protection against flood damages.

Private flood insurance can provide more than $250,000 and $100,000 in building and content coverage respectively for residential flood policies. The same can be said for commercial flood insurance policies with private flood, you can go more than $500,000 on your coverage.

This really helps a lot of property owners bounce back from flood events and if you have a somewhat expensive home or business, this coverage flexibility might be the best option for you.

Additional Living Expenses

As mentioned before, you may also get additional living expenses coverage. You might be wondering what this could be for and that's no worry since this may be new to you too considering that the NFIP doesn't really offer it for policyholders.

Picture this, you just got flooded and a lot of repairs are bound to be made to your home. Basically, during this time, the house would be unlivable in order to give way to rebuilding or repairs.

Additional Living Expenses coverage is what you can use to pay for the costs of rent or utilities. This can really be helpful relieve yourself of the stress of what just happened and the worry of finding a way to financially support yourself during this time.

This additional coverage can go up to $25,000 with private flood and this will only kick in with private flood insurance or when a presidential disaster declaration is announced for your community. 

Your Vote on Flood Insurance

Although there might not be full coverage with flood insurance, you still get all the necessary security you need. It's now left in your hands which one you would choose: the NFIP or private flood insurance.

If you want to know more about your flood risk, click below to see your flood risk and price.

Learn more about flood insurance with us by visiting our Flood Learning Center where we try to answer all your questions when it comes to flooding and flood policies.

Ready to solve your flood insurance problems? Here are the steps you can take:

• Fill out this form — 
• Talk with our flood education specialist.
• Get back to the important things in your life.

Flood Insurance can be complicated and confusing. In fact, these are two of the top reasons why captive insurance agents do not offer flood insurance to their clients. 

So what exactly is a captive insurance agent? This an insurance agent that generally represents one company like a good neighbor mayhem agent. As a captive insurance agent flood insurance can be challenging especially if it only comes across your desk a few times a year.

We are going to discuss 5 things to know about flood insurance, so you can better help protect your clients when it comes to flood insurance and flood damage.

Flood Insurance Options

As an insurance agent, it is important to know what flood insurance options are available,  Most captive insurance agents have access to the National Flood Insurance Program (NFIP) either through a Write-Your-Own carrier or NFIP direct.

Both of these options are through what many refer to as federal government flood insurance. These flood insurance policies will offer the same pricing and the same amount of coverage. 

Before we talk about some differences here remember home insurance policies generally do not cover flood damage.

Let's take a look at the Write-Your-Own carrier option first.

These can be great options as they provide great support for the insurance agent and property owner. They can also help the property owner through the flood insurance claim process. However, Write-Your-Own flood insurance policies do not meet every scenario with flood insurance through FEMA.

On the other hand, a few policies have to go through something called NFIP direct. These types of policies are generally properties that have had flood insurance claims or flood damage in the past. These are properties generally with severe repetitive losses (SRL) or repetitive losses (RL).

This is when a property has had multiple flood losses within a 10-year period. It is always a good idea to be appointed with NFIP direct if you can be. You can click here to get an appointment or visit our insurance agent program for more information.

While Write-Your-Own and NFIP direct are two flood insurance options, they are not the only options. Let's take a look at private flood insurance.

Private Flood Insurance

What is private flood insurance? Unlike the National Flood Insurance Program which is through the federal government private flood insurance is through a private insurance company. 

Private flood insurance has many benefits over the National Flood Insurance Program (NFIP). The table below shows some of those differences. As you can see, private flood insurance can offer higher amounts of flood insurance coverage compared to the National Flood Insurance Program. In many situations, they can offer cheaper flood insurance pricing as well. 

There are many private flood insurance companies out there and each one looks at risk differently. So maybe your insured has received a non-renewal notice this does not mean all private flood insurance companies are going to non-renew the customer.

If you would like to see what private flood insurance pricing looks like click below to get a flood insurance quote.

Will Bank Accept Flood Insurance Policy

In reviewing these different options with your client it's important to understand if the bank will accept the flood policy. There are many situations where the bank would not accept a flood insurance policy. It could be that there is not enough coverage on the policy or the reason we are going to discuss now which is the loan type.

Loan types can have a big impact on flood insurance options. One reason is currently as we write this article FHA loans only accept policies through a write-your-own carrier or the NFIP direct. Regardless it has to be a FEMA-backed flood insurance policy.

This is one of the benefits of doing loans like conventional loans. It gives you more flood insurance policies on

 the property.

Now let's take a look at deductibles.

Deductibles

On a standard homeowners insurance policy you are going to have one deductible. However, because flood insurance is a separate policy deductible work differently. On a flood insurance policy with NFIP, you could have two deductibles. One for the building and one for personal belongings. 

On private flood insurance, you could have 3 deductibles. One for the structure, one for personal belongings, and one for additional living expenses. So when picking a deductible you have to be careful picking a high deductible because it could add up quickly. 

Now let's take a look at actual coverages on a flood insurance policy.

Replacement Cost and Actual Cash Value

When helping a customer set up a flood insurance policy you need to understand what type of loss settlement payout will happen on a claim.

This is where replacement cost plays a crucial role. When it comes to the National Flood Insurance Program the rule is 80% of replacement cost or the max amount of coverage available through the National Flood Insurance Program. If it meets this condition then replacement cost would pay out up to $250,000 on a residential flood insurance policy.

On private flood insurance, the general condition is 80% as well. If not it would default to an actual cash value policy.

This means depreciation would be pulled out of the total flood claims amount before you would receive a claim payment.

Claims Impact on Flood Insurance Rates

When educating clients on flood insurance claims it's important to understand how these can impact flood insurance rates with the National Flood Insurance Program and private insurers. Let's look at NFIP first. FEMA recently switched over to a new program called NFIP Risk Rating 2.0.

This new flood insurance modeling program looks at flood risks differently. One thing they look at now is something called the claims variable. When a flood claim happens they do a 20-year look back and if multiple flood insurance claims have happened they use this as a driving factor for rates on the flood insurance renewal. 

Private flood insurance looks at claims differently. In many situations, they will non-renew a flood insurance policy. This means the property owner would have to find different coverage at the renewal date. 

As you can see it is important to educate the property owner on the claims process and how claims can impact rates and the availability of flood insurance. When it comes to natural disasters claims should be filed in catastrophic situations.

Knowing these 5 things can help you better protect your client from having a bad flood insurance experience. If you want to learn more about flood education you can visit the flood learning center here.

If you are ready to take the next steps to purchase the right flood insurance click below.

Shelby County's own University of Montevallo (UM) is celebrating its 125th anniversary and this is really something worth noting. However, during this time a concern that doesn't look like affecting flood insurance surfaced; local restaurants and the general population of Shelby County are experiencing supply chain issues.

Today, we want to talk about what this could mean for flood insurance, its coverages, and what to expect as we celebrate the 125th anniversary of UM.

Supply Chain Issues

Local restaurants in the southern parts of Birmingham are having a rough start to the year as supply chain issues resurface. This is causing a lot of problems not just for food supplies, but even necessary utensils and such. From containers to equipment, business owners are having trouble handling the potential economic impact of the issues with supplies.

This issue is just a few weeks after President Joe Biden implemented a presidential declaration to help homeowners across Jefferson County, Mobile County, and Shelby County when it comes to recovering from the October 2021 flooding.

A local business owner, Naseem Ajlouny, shared with Shelby County Reporter how he's struggling with the supply chain issues. He quoted to have "spent around 30% of work now trying to source product". Moreover, there are also concerns with food supplies through crops such as the availability of corn on the cob and other protein products.

This is creating an increase in costs for menus across the county just to make ends meet. Worst case scenario, the item just has to be removed from the menu.

So what does this mean for flood insurance?

Supply Chain & Coverages

Now, when it comes to the concern of the supply chain, it's important to keep in mind that this doesn't just impact how businesses run. This also means that there may be unwanted impacts to flood insurance.

Let's all remind ourselves that Alabama, especially Shelby County, can be very prone to floods. There are a lot of flood hazards in the area which only contributes to the high-risk flood zones that the county is in when it comes to flood insurance rate maps (FIRM). So, this isn't really just a concern for business owners, but it can also impact homeowners.

You see, when it comes to flood insurance coverages, those replacement costs for recovering and rebuilding the building still need to come from sourcing out materials — the same goes for content coverages or the personal items included with the insured building.

If business owners are having trouble getting materials outside of flood insurance coverages and to keep their businesses afloat, what more when water starts overflowing from the floodplain?

This type of issue can cause a limited amount of coverage when it comes to additional living expenses from your flood insurance claim. This means that you won't really get an increase in premiums or payment, but you can expect to face higher costs when it comes to repairing the building.

When flood insurance covers the repairs or recovery of an insured building, the market can still have an impact on the costs of materials like wood, bricks, metal, and things like that. Since the county is experiencing some challenges with importing these things, it's safe to expect that there will be higher costs on the materials.

This could also mean that if you have that $250,000 standard coverage for your $200,000 home, it will easily be maxed out when you file a flood claim when the reparation begins.

Even if we say that you will get 100% coverage on the repair of your insured building, there will be no room for flood mitigation measures since the building coverage or replacement cost is already maxed out.

This can be very concerning especially since we're moving out of the winter season very soon and that also means that Alabama will face runoff from all directions. We've seen this happen before and it's not impossible to happen again. Despite the clearer skies in North Alabama, it's important to mention that Cullman County in the north-central areas of the state, faced 2 to 3 inches of rain in September before the October flooding.

Are you prepared to face possible flooding in the next few weeks?

If you have any questions on supply chains and flood insurance, how to review your insurance coverages, where to get flood insurance or anything at all, you can click our Flood Learning Center where we try to answer all your flood insurance questions.

You can also click below to call us and we can discuss your flood insurance needs.

Remember, we have an educational background in flood mitigation which lets us help you understand your flood risks, flood insurance, and mitigating the value of your property long-term. 

Homeowners across the country are faced with a lot of insurance policies needed to sustain their property and homes. This ranges from your standard homeowners' insurance policy to other damage insurances. 

Today, we want to address one of the most common questions with insurance that homeowners usually ask. Does water backup insurance cover flooding?

What is Water Backup?

First thing's first, we have to address the actual definition of what a water backup is. Generally, water backup pertains to the incident(s) when something blocks or stops the natural flow of drains from the pipes that exit your home. This could be sewer backups that are clogged due to debris, overflow of rainwater, or when a sump pump fails so it forces water into your home.

Basically, the water that's coming from your home but failed to get out. This area covers things like septic systems, sump pumps, and/or sewer systems. This time of damage actually has coverage from your insurance however do you still need flood insurance when you're already covered for water backup coverage?

Is Flood Insurance Necessary?

To understand the difference between these two coverages, we first need to go back and understand what floods actually are. Generally, flooding is any incident where surface water from outside of your home inundates your property. This may be due to a storm, continuous heavy rainfall, or coastal flooding.

You might say that they should be covered within a single policy since they are both water damages to your property or home. However, it's important to keep in mind that these two things are different coverages.

Even if you already have water backup coverage, unfortunately, this won't really get you covered if we're talking about flood damage. This also means that flood insurance won't cover you for water backup since most insurance companies in the industry will be considering that "Rule of Two".

The rule of two on flooding, according to FEMA, states that surface water will only be considered a "flood" if it impacts at least two acres of normally dry land or two properties within the same area. Considering that water backup has a smaller scale which only impacts a single homeowner, it doesn't really fall into the coverage of flood.

Now, let's talk about your flood insurance options.

Flood Insurance Options

The NFIP

The National Flood Insurance Program (NFIP) is purely managed by the federal government since this is FEMA's answer to flood insurance. An NFIP flood policy can get you flood coverage on both your dwelling and the contents within it.

When we say dwelling, this simply pertains to either the residential property or commercial building that you're trying to insure with NFIP and FEMA; contents will be more about the personal property and items you have inside the insured building.

There is a coverage limit when it comes to federal flood policies. Flood damage to buildings will be covered to a maximum of $250,000 for residential policies and can only go up to $500,000 maximum if it's for a commercial property. Regardless of the type of property you have written, you can expect to get a $100,000 maximum contents coverage from an NFIP policy.

READ: National Flood Insurance Program Risk Rating 2.0 Update

There's also what's called the Increased Cost of Compliance (ICC) coverage. This is a $30,000 additional coverage for your property in order to make sure that there are flood mitigation efforts made on the property according to the federal government's standards.

Generally, this can include sandbagging your property, installing floodproofing walls, raising your lowest floor from the base flood elevation levels, and putting flood openings. The labor that goes into making these mitigation efforts happen will also be covered under the ICC.

There are also perks with your participating community. A participating community gets access to federal flood insurance and disaster assistance by meeting their standards on flood mitigation and disaster preparedness. The efforts put in by a community won't be unnoticed as this can help on raising your Community Rating System (CRS) score.

The CRS measures and rewards the overall flood mitigation efforts done by the community according to FEMA's standards on floodplain management. Simply put, the higher your CRS score is, the bigger the flood insurance discount you'll get from FEMA and the NFIP.

You can start enjoying your NFIP policy after a 30-day waiting period from the flood insurance purchase.

The Private Flood

If the federal flood insurance option doesn't really work for you then you can manage this new floodplain mapping through the private flood insurance market. It's important to note that this market will solely be managed and provided by private insurance companies which generally means that the red tapes FEMA and NFIP has to go through won't be there.

The first thing you'll immediately see with the private flood market is that there are significantly shorter waiting periods for your flood policy. Once you have everything settled and paid for, the wait period for the private flood carriers will follow a much shorter timeframe compared to NFIP. A private flood insurance policy can take effect on 7 or up to 14 days maximum. 

Another good thing coming out of private flood insurance is that there are no coverage limits. This means that you won't really need to stress over how to get covered for a $500,000 home since it will be fully covered by your policy. This is the same with contents coverage and you'll also get additional coverages like replacement costs, additional living expenses, and loss of use.

Fair warning, it's a known issue in the private insurance market in general that they will do moratoriums when there are risks that are too high for their comforts.

This simply means that they will either put a stop or take a break from providing flood insurance policies to a certain area that has higher risks. There's also a chance that you might not get to buy flood insurance from them once they decide to non-renew your policy.

What Really Matters

Understanding your insurance coverage from a homeowners insurance policy, renters insurance policy, water backup insurance, and flood insurance is the key to ensuring that you bounce back from any possible damages due to natural disasters or lack of maintenance. You want to get yourself a good insurance agent who can help you explain these coverages and how they differ.

If you have any questions about flood insurance, insurance coverages, or anything related to floods, click the link below to access our Flood Learning Center where we try to answer your questions on flood insurance and beyond.

Remember, we have an educational background in flood mitigation and we want to help you understand flood risks, your flood insurance, and mitigating your property long-term.