This is no April Fool's joke, but a big change is coming to the claims process and rating for federal flood insurance.

In this article, we want to discuss the changes to the claims variable and how your flood insurance premiums are going to be impacted by the new claims rating system with the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP). We want to discuss three (3) things that you to know about this upcoming change to flood insurance on April 1st, 2023.

Flood Insurance Claims

First, let's cover how flood insurance claims can impact not only your flood insurance policy but also how risks are viewed for your property or home.

When it comes to the federal side of flood insurance under the National Flood Insurance Program (NFIP), flood claims can directly impact your rates. This happens in two forms with Risk Rating 2.0: the Severe Repetitive Loss (SRL) and the Claims Variable. As a policyholder, it's important to keep in mind these keywords.

The Severe Repetitive Loss (SRL) list for properties indicates that the property has filed more than one flood claim in a 10-year period. Generally, this indicates a higher risk for flooding and will in turn impact the flood insurance premiums of a certain policy.

The claims variable on the other hand is the newer claims rating factor that was introduced with Risk Rating 2.0. Initially, this new system will clean the policyholder's flood claim history and start from scratch.

However, if a claim is filed and paid out, the policyholder will see a potential increase in premium rates as FEMA will conduct a 20-year lookback where they will count all of the flood claims made during that period. This claim variable will produce a number that becomes a multiplier for the rates and is dependent on the number of claims made during that period.

But what are the coming changes to claims with FEMA for April 1st, 2023?

3 THINGS CHANGING WITH CLAIMS

1. 10-YEAR WINDOW & CLAIM DATES

One of the big things to have changed when it comes to federal flood insurance claims rating factor is dates.

Previously, if you were to file a claim under Risk Rating 2.0 with FEMA, they will start to do a 20-year lookback which means that they will look at all the claims made on the property for flood insurance for the past 20 years. The number of claims made will be used as a claim variable which acts as a multiplier for your flood insurance rates.

This lookback is changed to only do a look back for 10 years only. This can make it easier for property owners to avoid a higher claim variable.

Another change that involves dates is more focused on when FEMA's claim rating factor kicks in. Previously, any and all claims made during Risk Rating 2.0 will immediately trigger the claim review. These claims may be from any time prior to April 1st, 2023.

Basically, all of the claims made in the past 20 years regardless of the date will be sent as part of the review. Generally, this could also mean that there will be higher rates due to having a higher claim variable. 

For this new update, you will have to file a claim on April 1st, 2023, or later for the claim review triggered. This simply gives more leniency and a chance for property owners to get more breathing space before claims impact their rates.

This is important because...

2. WHAT TRIGGERS THE CLAIM REVIEW

Before this upcoming update, even if you file just a single claim during Risk Rating 2.0 — which means any flood insurance claims made before April 1st, 2023 — will immediately trigger the review. This can really hurt especially with how flooding behavior has changed in the past decade.

With this update, you will now have to file 2 claims within this 10-year period for the claim review to be triggered.

 

We recently had a customer who had these troubles with the previous system where they had two flood claims made in the last 20 years but only one in the last ten years. In the Risk Rating 2.0 claim review, this meant that both claims will be part of the claims variable however with this update, only one of them will be considered. 

3. WHAT CLAIMS ARE EXCLUDED

Let's move into another category in this update which concerns more about what types of claims are excluded in the Risk Rating 2.0 review and which ones are excluded in this April 1st, 2023 update.

Previously, the only exclusions are for Increased Cost of Compliance (ICC) and Closed Without Payment (CWP). So this meant that if you filed a Loss Avoidance Claim, you will see this included. Generally, this meant that the previous system also uses Loss Avoidance Claims to trigger the claim review.

With this new update, Loss Avoidance Claims will be added to the exclusions. These are claims made for helping your property avoid damage from flooding which includes things like sandbagging, and creating temporary levees, or water pumps to name a few. Generally, this goes around for $1,000 with a standard flood insurance policy.

So you can imagine that if these are still to be included with the rating factor for claims, it could really become a burden for policyholders, but that won't be the case anymore.

You can see the full breakdown of what we discussed here:

These are the upcoming changes to how flood insurance claims work with federal flood insurance. 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:

Last year, September 1st, 2021, marked the beginning of the changes to how flood insurance works with the Federal Emergency Management Agency (FEMA). You might be one of the property owners who faced these changes head-on. This initially impacted the newly acquired policy on the aforementioned date.

In this article, we look at Risk Rating 2.0 and understand its overall impact on federal flood insurance, addressing flood risks, and how it impacted property owners throughout the United States.

Risk Rating 2.0: A Lookback

It's been years on end before the federal flood insurance was able to overhaul and update how they approach flood insurance. This came through the Risk Rating 2.0 program which aimed to address the risk of flooding across the United States.

This goal looks to provide a more accurate flood risk rating across the country. This also meant that your flood risk will be measured for multiple items. Here's how your policyholders are being rated based on Risk Rating 2.0. Here's how your rating methodology is changing:

• Zone designation in the flood insurance rate map (e.g. special flood hazard areas (SFHA); preferred flood zones)
• Distance to a body of water such as a river, lake, or even the coastline
• Prior flood insurance claims or flood claims made with the property
• Policy assumption and grandfather rule

The new things that will come with the Risk Rating 2.0 are as follows:

• Flood type that your property experience. This can be either pluvial or the accumulated water due to heavy rainfall, runoff of collected water that flows from higher areas, storm surge and coastal erosion, dam/levee damage or overflow, and even a combination of these things.
• First-floor height and elevation of the structure. A new feature that determines your flood risk score is the distance between the ground (grade) from your first floor or the first habitable floor of your property.
• Flood Risk Mitigation Measures made on the property. Is the lowest floor above the base flood elevation? Are there enough flood openings to let floodwaters through?

These changes were the goals of Risk Rating 2.0, but how did it really impact flood insurance a year after the implementation of this program?

Are Flood Risks Being Addressed?

After so much talk about the changes to federal flood insurance that FEMA will bring to homeowners and property owners across the United States, it's only common to ask if the risks are being addressed by these changes to flood insurance policies with the NFIP.

In order to answer this, we need to dive deep into its impacts. Let's start with the flood insurance premium rates with the National Flood Insurance Program (NFIP) after Risk Rating 2.0.

Flood Premiums

We've covered this in our multiple blogs about Risk Rating 2.0 and this might be one of the questions that you are asking yourself: how does Risk Rating 2.0 impact my premium rates?

Generally, in FEMA's own report, about 77% of homes will be seeing some form of an increase in flood premiums with the Risk Rating 2.0. These premium increases vary from $1 up to more than $20 in monthly premiums.

To break it down for you, FEMA estimated even before the Risk Rating 2.0 program happened that at least 66 percent of homeowners will be seeing an increase of $0 to $10 per month or simply up to $100 annually with the policies.

This is because the Risk Rating 2.0 is showing more of the risks that each property is facing compared to simply just basing it on flood zones from flood insurance rate maps. Now, this part is important on how the changes to flood zone impacted flood insurance overall.

Flood Zone Requirements

One of the biggest things that came out with the Risk Rating 2.0 is how it addresses flood zones. In the Legacy Program — you might call it Pre-Risk Rating 2.0 or NFIP 1.0 — your flood zones generally tip the scales of whether or not your rate increases.

With the NFIP Risk Rating 2.0, these flood zones in your community's respective flood maps will only be used to see who's required to buy flood insurance. This means that if you're in a high-risk flood zone, like Flood Zone A also known as Special Flood Hazard Area (SFHA), you will definitely be required to carry flood insurance either by the state or your mortgage.

How did this impact risks for properties across the U.S.? A lot of insurance agents like us saw that people find that they have to adjust when selling individual properties due to the property value being impacted by these risks and the flood insurance requirement.

Number of Flood Policies

You might think that these changes are going to encourage more people to get flood insurance. We can't blame you, but considering the economical status of the United States with things getting more expensive, these increases on flood premiums might just be a thorn against buyers' and policyholders' side.

In August of this year, PreventionWeb reported that at least a 9% decrease happened to the total number of FEMA flood policies between the months of September 2021 and June 2022. This is around 4.96 million going down to 4.54 million across the country.

We also saw the same pattern where most of the residents of Mississippi don't have an active flood insurance policy. In this case alone, only 3% of Mississippi properties will have protection against flood damage in any potential flood event.

This is equally observable, especially in preferred risk areas wherein a 34% drop was noticed in the reports of E&E News. This means that policies decreased from 1.91 million on Sept. 30 to 1.26 million on June 30.

It's only fair to mention however that Risk Rating 2.0 also began to eliminate elevation certificates as a required document for buying flood insurance. Only time can tell whether or not this change with elevation certificates will positively impact the number of flood policies considering that getting an elevation certificate can really help lower flood insurance rates.

Are Flood Risks Being Addressed?

So, we go back to this question: does Risk Rating 2.0 really address the risks of both floods or is it creating a bigger risk with how it managed to approach flood policies across the country? In our take, Risk Rating 2.0 is a big uphill climb in addressing the actual needs of homeowners when it comes to flood insurance.

Just like anything, only time can tell where we'll go from here. Let us know your answer to this question.

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 rates can hurt the wallet. Wouldn't be nice if your wallet was impacted less? The NFIP is trying to modernize the program to do that.

In this blog we will discuss this problem, the solution that is being offered, and how to put time and money back into your life by simplifying these changes

However, even with this update — which was made live for all policyholders on April 4, 2022 —, a new legislative proposal is still at hand. Let's talk about the seventeen (17) proposal reauthorization with the Federal Emergency Management Agency (FEMA) and how it can impact flood insurance.

The NFIP Reform

Congressional leaders outlined in their Legislative Package Reform some of the principles they are planning for the National Flood Insurance Program (NFIP)'s priorities in the long run.

It's important to note that despite the changes with Risk Rating 2.0, there are still a lot of concerns that flooded residents outside of flooding alone. One of the biggest concerns is flood insurance premiums being too high for most policyholders.

Hence, the NFIP proposal for reform is intended to include the following things which boil down to the following:

• Affordability of flood insurance for low-and-moderate income families
• Risk communication and flood risk mitigation
• Reducing flood risks and addressing repetitive loss properties
• A sound and transparent financial framework

So what do these four entail? Well, look no further as we'll discuss it here.

Financial Framework

First, we need to address the biggest concerns that residents have with federal flood insurance: flood insurance rates.

It's no secret that there are bound to be some increases on your premium rates once that RIsk Rating 2.0 kicks in. We can owe this to the fact that your full flood risk is being taken into account when it comes to your policy.

1. Making NFIP Sustainable

One of the biggest concerns with the Federal Emergency Management Agency (FEMA) and the NFIP is that it's still reeling from the debt it has which increases per year.

The proposal looks to clarify the National Flood Insurance Act of 1968 (NFIA) to support full-risk rates. This way, a sounder financial framework is being established for policyholders.

A full-risk premium rate with flood insurance is the rate that's being charged to a group of policies. Generally, this causes the premium rate of flood policies to be calculated as a group to make it more sufficient to pay any anticipated losses and expenses.

This means that if you're doing a policy that covers multiple buildings, you might find it easier to manage your premium rates as this will follow a full-risk rating method.

2. Borrowing Authority

Another thing coming up with this proposal is aiming to eliminate interest for future debt and decrease how much the NFIP can borrow. This means that the National Flood Insurance Program (NFIP) is only allowed two-thirds of total premiums in force.

It's important to note that this has a direct impact on the availability and affordability of flood insurance with the NFIP.

3. Financial Resilience

The NFIP proposal also looks to provide some form of resiliency and reliability with the federal flood insurance option.

This comes in the form of allowing liquidity in order for you to be able to quickly get your flood insurance claim paid. This also looks to provide that without any problems in the future.

Communicating and Analysing Risks

Another thing — what might be the most important one — that the proposal is looking to reform is how residents get information on their property's flood risk.

Here are the new provisions that this NFIP reform is looking to propose.

4. Risk-Informed NFIP

There are two things that this item covers: flood maps and information on flood risk.

FEMA is looking to simplify and provide clarity on how flood insurance rate maps really impact federal flood insurance. So, instead of simply saying that your house is in a flood zone, this reform aims to provide an understanding of where flood insurance is required.

This is really important considering how Risk Rating 2.0 is moving flood zones as a regulatory basis for flood insurance and not premium rates.

Now, when it comes to risk information, the proposal aims to enhance flood insurance products that help understand what flood risks really are and, rates-wise, how they impact flood insurance quotes and policies.

5. Flood Risk Disclosure

Another concern that this NFIP reform is looking to change is how flood risk is being shared with property owners.

Generally, the property's flood risk is either made known to the buyer after the real estate transaction or during the sale. This also applies to renters and not just property owners. Hence, the proposal looks to require full disclosure for participating communities on what risks the houses are facing when it comes to flood risk.

For floodplain management of participating NFIP communities, this means that there must be at least a minimum flood-risk report sent to the seller and lessors before they even close the deal.

Simply, this means that you will get to see firsthand the flood risk you are facing.

6. Replacement Cost Value & Premium Rates

For this one, the proposal is more concerned with how premium rates are being calculated. This reform looks to use the replacement cost value (RCV) or the value of the property in determining the flood insurance rates.

Generally, this looks to help you get a sign and understand the true risk for flooding that your property is facing. This proposal somewhat echoes what Risk Rating 2.0 aims to do which is to accurately provide flood risk.

7. Coastal Zones and Inland Areas

Another thing that we're seeing with this proposal is how coastal zones and areas are being separated from inland locations.

We have seen how flood zones are being overhauled to also address the flood risks for coastal areas such as the Coastal AE zones. This is being done in order to get a better understanding and rating for the two different areas.

Improving Resilience

8. Multi-Year Reauthorization

One thing that most people might not know about the National Flood Insurance Program (NFIP) is that its original authorization expired in September of 2017. You might be wondering by now, how were they able to provide flood insurance in the past few years?

This is because the NFIP is clinging to short-term extensions. However, the proposal is looking to extend the reauthorization up to September 30th, 2031.

Getting authorization means that FEMA and the NFIP will be able to provide flood insurance for residents across the country until the next 9 years. This also means that they get to sell and service flood policies even during a lapse of appropriations.

9. Means-Tested Assistance

Now, this is one of the biggest things coming out of this NFIP reform program is how low-to-moderate incomes are being considered when rating properties.

What does this mean? Flood insurance policies will be easier to manage because of the graduated discount benefit for both current and potential residential properties that will purchase flood insurance from these areas.

You might be wondering what's being considered low-to-income households. According to the proposal, these households are those that fall at or below 120% of the Area Median Income.

At the time of writing, the initial estimate of median household income is around $76,000 in a report from April 2022. Now, it's important to note that this consideration depends on where you are.

10. Excessive Loss Properties

A new form of loss properties is being added with this proposal termed "Excessive Loss Properties" or simply XLP. A property is going to be listed as XLP if four or more flood claims and their respective payments of at least $10,000 were made in the life of the property.

Due to this indication of constant flood loss on the property, FEMA will have the discretion to not provide flood insurance. This means that if your house is listed as XLP — due to more than 4 instances of incurring flood damage — you won't be able to go through federal flood insurance for your policy.

It's important to note that an update to repetitive loss (RL) and severe repetitive loss (SRL) definitions are also in place with the existence of the XLP. A property will be considered a repetitive loss (RL) if it incurred two or more separate claims payments of any amount that goes beyond the loss-deductible in your flood policy.

On the other hand, a property will be listed as severe repetitive loss (SRL) if it incurred flood damage and receive a claim payment for four times or more. The claim must be $5,000 with a total amount of $20,000.

How To Get Out of Repetitive Loss

It's important to note that it's not the end of the road if you were to get listed as an RL, SRL, or XPL, you can still have your property removed from that list and avoid increased rates and/or unavailability of NFIP insurance.

The only way to do this is to have your property follow and comply with flood mitigation standards set by your state's floodplain ordinances.

11. Compliance & Mitigation Coverage

Another good thing coming from this proposal is that following and complying with flood mitigation standards will allow policyholders to get higher coverage limits.

It's important to note that the NFIP still follows the $250,000 limit for residential policies and the $500,000 limit for commercial policies when it comes to building coverage. This also includes the $100,000 content coverage limit.

This is being proposed to change depending on how much mitigation you have on your insured property. Simply, the more mitigation you have against flood, the higher coverage limits will be offered for your flood insurance.

12. Effectiveness of Mandatory Flood Insurance

Flood insurance with the NFIP would automatically be required for properties that are in the high-risk zone. It has been this way from the Legacy Program up to the current Risk Rating 2.0.

However, the proposal looks to study if the NFIP's requirement when it comes to mandatory flood insurance meets Congress' goal to increase the number of residents, both renters and property owners, covered by flood insurance in low-income areas.

13. New Construction Properties

An important proposal that the NFIP reform includes is that there might not be a federal flood insurance option for properties that are new construction or under construction in high-risk areas like Flood Zone AE. This proposal is also applicable to commercial properties.

This aims to promote the private flood insurance market which is constantly growing. The NFIP will be looking to increase the competition for flood insurance companies on the private side to provide coverage for these highest-risk areas and commercial properties.

14. Increasing Coverage Limits

Considering the increased housing prices in the country, the endorsement is also looking to increase the limits on flood insurance coverage provided by the NFIP.

This means that we might not be seeing a $250,000 and $100,000 limit in building and content coverage respectively. The proposal mentions that this is due to property owners being underinsured in the event of a total loss. We will have to wait and see what this coverage increase will offer for NFIP policyholders.

 

Technical and Operational

Lastly, there are some technical and operational changes coming from this proposal as well. This involves filing a suit, reporting complexities, and removing barriers to switching to private flood.

15. Period to File Suit

Now, it's possible that there might be an instance where your flood claim with the NFIP will not go through. Although this is the worst-case scenario, it's still good to know the clarifications being made when you file a suit.

The proposal states that you must exhaust the administrative appeals process before starting a lawsuit. This also means that you only have no later than 90 days from the appeal decision date to file a suit if any.

16. Reducing Reporting Complexities

The NFIP is also expected to get a reduced number of reports to file for congress. The proposal is looking to change the 15 reports in a span of two years will be brought down into 4 reports only while making sure that the information being provided is still timely and sufficient.

17. Removing Barriers for Private Flood Insurance

Although this proposal is offering the thirteenth item in somewhat favor of private flood, they are also balancing this with this removal of barrier when switching to private flood.

What does this mean? The proposal says that policyholders who have a lapse of NFIP coverage, generally due to switching to private flood, won't have the premium discounts they have with the NFIP.

This means that if you ever switch to private flood and eventually switch back to the NFIP, you might be seeing a very different increase because they won't allow you to retain the discounts on premium rates you once had.

As we mentioned, there are a lot of changes coming to federal flood insurance, but will these proposals be better for policyholders and give you a competitive option with FEMA and the NFIP? For now, only time can tell.

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

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

We want to help simplify flood insurance for you so that you can find more time in enjoying life's beauty.

Business is booming as some would say to the real estate market in Alabama. Despite being in a pandemic, somehow real estate was able to keep up with the times. 2021 was one of these proofs as Alabama had an increase of 3.9% year-over-year (Y/Y) in real estate sales during the month of August.

It's no secret that some of these listings sit on a high-risk flood zone, so today, we want to talk about things every realtor needs to know when it comes to buying and selling a property that's in a flood zone.

This is part one of a two-parter blog and for this article, we want to focus on the buyer's side of real estate.

Loan Types & Flood Insurance Options

When it comes to closing a house, most buyers don't really have the luxury to pay it all in cash. This is why loans exist to help ease up the expenses in maintaining a roof above your head. If you're reading this blog, you're most likely to be familiar with mortgages and how it works.

What you might not know is that mortgages and loan types can actually impact your flood insurance too.

You see, depending on the type of loan you have for your property, you'll get different options when it comes to flood insurance. We have different types of loans and we actually covered this topic on our podcast blog, but to further understand the situation especially after the Risk Rating 2.0 update with federal flood insurance let's give an example.

If you have the Federal Housing Administration or FHA loan, you won't be able to get flood insurance through any private insurance carrier because your bank won't accept it. This only means that your only flood insurance source will be from the federal side which is through the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP).

There was a time that if you have a loan that's under the government such as an FHA loan, Veteran Affairs (VA) loan, or United States Urban Development Administration (USDA) loan, the only option you have is through the NFIP when it comes to flood insurance.

This meant those people with conventional loans are the only ones who can get flood insurance through private companies before. This was changed way back and only homeowners with an FHA loan are required to get flood insurance through FEMA and the NFIP.

So this is important to keep in mind. Consider first what loan type you have in order to get a proper expectation on where you can get flood insurance from.

Flood Insurance Claims

Another thing you want to consider when buying a property is its history of flooding and flood claims history. This way you get to have an immediate idea of the flood risks or flood hazards that the house might face.

It's also important to note that when it comes to flood insurance, you might not get a policy from the private insurance companies once they detect that the previous owner or the property is prone to flooding.

It's important to keep in mind that flood claims aren't like medical insurance claims where it goes wherever you go. What we mean by this is that when you file a flood claim on the property, regardless of who the owner is, the claims will stay with the property basically for its entire life.

When it comes to the federal side, however, there won't be a refusal to provide flood insurance to properties like this however with the Risk Rating 2.0, having multiple claims on a property is sure to impact the overall costs of your flood insurance premiums with that house. This is what's called the claim variable.

For this one, it's crucial to always know the flood and claims history of the property. This way you protect yourself from unwanted non-renewals as per the carrier's discretion or expensive flood insurance rates.

Flood Insurance Premiums

One of the biggest questions asked by a potential buyer of a house concerns flood insurance rates. This opens the door for asking, "will my premiums skyrocket after I buy the property?"

The thing about flood insurance premiums is that the rate is generally guaranteed only for 12 months. This means that after that, you may see some changes like a minor increase or decrease. This is considering that you weren't flooded. On the other hand, if the property was recently subjected to flood damage and there was a claim filed for it, the flood insurance premium can increase substantially.

Verifying the Flood Zone

One of the most important things a buyer or realtor should know about a property when it comes to flood insurance is its flood zone. Despite being removed from the rating consideration in FEMA and the NFIP, the private flood insurance market still look at this factor when it comes to rates. This means that flood zones directly impact your rates and risk of flooding.

Additionally, regardless of it being removed from the rating system, flood zones still have absolute control on whether or not the property is required to have a flood insurance policy with that property. Keep in mind that if you fall in flood zone A or AE, also known as high-risk flood zones or special flood hazard areas (SFHA), you're going to be required to carry flood insurance.

There are many cases where an incorrect flood zone is put in a policy — maybe because there was a recent flood insurance rate map or flood map update that wasn't known by the seller or confusion between different flood zones.

As a realtor, it's important that you are aware of this as well, if not an expert when it comes to it. A lot of potential buyers get frustrated when they get surprised about this requirement, so as a realtor it's best you let them know ahead of time.

When it comes to selling properties, you really want to help your buyer consider what the flood risk is and the chance of flooding. Some states like Texas actually require realtors and sellers to fully disclose the flood history and claims on a property, but regardless it wouldn't really hurt being transparent about these things. After all, we're talking about the safety of someone moving into a residential property.

If you've got any questions on a flood policy, the flood zone status of the property you're looking to buy, how the floodplain impacts flood zones, or anything related to floods, click below to go to our Flood Learning Center where we try to answer these questions.

You can also call us if you need a second opinion from a flood insurance agent when it comes to your purchase of a property by clicking below.

Remember, we have an educational background in flood mitigation which lets us help you understand your flood risks, flood insurance, real estate selling and buying, and mitigating your property's value long-term.

Alabama is no stranger when it comes to flood. When it comes to the continuous development in the city due to its relative increase with the population as well as non-stop oversaturation of the ground due to consistent heavy rainfall, the city just couldn't get a break from floodwater.

Today, we want to talk about the four lessons we've learned from the Birmingham Alabama floods of October 2021 and how this can help flood recovery moving forward.

Flood Emergency

Rain is always the culprit when it comes to natural disasters like flooding. This is why understanding flood emergency is very crucial when it comes to preventing all unnecessary bad experiences when it comes to flooding.

A flood emergency is any disaster wherein water goes into areas that are usually dry and this doesn't just cover regular floods, but also flash flooding which is something that Alabama was warned about during the October flood. Ready defines floods as a temporary overflow of water onto land that is normally dry. Floods are the most common natural disaster in the United States.

However, sometimes these emergency warnings go on deaf ears as people still drive into pools of water and flooded roads. Unfortunately, this causes a lot of casualties. Reuters reported in one article that at least four people died during the October flooding disaster in Alabama; three of these deaths were found inside two washed-up cars.

Being ahead of these emergency warnings is enough to have awareness of the possible flood risk that the current weather or rainfall can cause the impacted area. On October 7th, 2021, al.com reported that there's an estimated 13-inch rainfall during that week.

We hope that everyone understands by now, not just in Alabama, but across the country how important and essential these warnings are. If you're not driving or maybe planning to stay at home, but it's expected to flood there, being aware of a flood emergency can help you evacuate.

Flooding Can Happen Anywhere

We were able to brush through this in the previous item, but it's important to always remember that flooding can happen anywhere.

We've seen a lot of homeowners get blindsided with the words "Not In a Flood Zone" which is one of the biggest misconceptions we see in flood insurance. The thing is no property is not in a flood zone especially in the United States. Even deserts get flooded after a long time of drought, so what more areas like Alabama experience a lot of rain during the year?

If you want to learn more on this "not in a flood zone" concept, we actually did a blog on it clearing the air. Click here to read this blog and know more about flood zones.

It's a new year and we hope that you too get to accept that you can get flooded at any given moment; be it through collected water from rainfall, runoff from higher areas, or simply being located near a water source.

The thing about flood zones as well is that it doesn't really indicate a wall or border because flood doesn't really start at one zone and stop at a lower-risk flood zone. 

Our team understands that flood loss is something one can ignore. In one blink of an eye, everything can be lost due to the inundation of water. This is why we want to discuss the most important lesson we want everyone to understand.

Flood Insurance

When it comes to time during a flood emergency, most homeowners and business owners don't want to leave their property's premises because they want to make sure they have fewer losses as much as possible. This can easily be avoided with flood insurance.

If you've been following us, you know by now that we really put great importance when it comes to flood insurance. Forget about sales and all that. It's always safety first and most of the time, this safety comes in form of the insurance that you won't even feel the flood losses despite its scale.

You see, flood insurance can really help you avoid doing all the stuff you want to do to lessen the damages and losses you'll incur during a flood emergency. A standard flood insurance policy has enough coverage for both building and contents that homeowners and business owners don't really need to worry about "saving as much as one can".

Federal Flood Insurance

On the federal side with the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP), coverages on building maxes at $250,000 for residential buildings and can go up to $500,00 in commercial buildings. Both property types also get a max of $100,000 when it comes to contents coverage or every personal item inside the insured building.

This is outside of other coverages like the disaster assistance from a presidential approved declaration, the Increased Cost of Compliance (ICC) which is about $30,000 in coverages for flood mitigation, and when it the Community Rating System (CRS) Score which can create discounts of up to 45% on flood premiums with FEMA and the NFIP.

Private Flood Insurance

On the other hand, if this doesn't really cover your needs for flood insurance, Alabama also has a lot of private flood insurance carriers that we are also connected to. These private insurance companies can go beyond the building and contents coverage limits with FEMA and the NFIP. That means that a single flood insurance policy can cover you for more than $250,000 in building damages and more than $100,000 in contents.

These coverages from a flood policy can easily save you the trouble of worrying about what gets damaged and focus on keeping yourself safe from the debris and hurt from all that floodwater. But how are flood insurance and its claims different from home insurance claims?

You can read our blog comparing these two sides of flood insurance from our NFIP 2.0 vs Private Flood article.

Flood Claims vs Home Insurance Claims

When it comes to insurance claims, as a homeowner or business owner, you should be aware of when your standard homeowner's insurance applies and when flood insurance kicks in.

When it comes to flood insurance claims, you can't really get the coverage written on your policy if the surveyor detected that the damages to your home are due to water damage or a water backup. This means that flood claims won't pay out if your house was damaged from the inside and not due to getting inundated by surface water.

You can remember this through the "Number 2 Rule" wherein FEMA and most private companies will only consider water as a flood if at least 2 acres of usually dry land was covered by water or when at least 2 property gets inundated with water. Obviously, one of the properties or acres of land must be yours in order for your flood claim to payout.

You won't get your flood claim and insurance coverages in flood insurance if this rule doesn't apply to your situation. Another thing to keep in mind about flood insurance claims is that it usually covers and expects that the property owner also set up necessary flood mitigation efforts to prevent the same damage in the future. This is why the ICC exists for federal flood insurance as a means to avoid the same losses from future disasters like floods.

Equally, you can't use flood claims to cover damages due to fire, earthquakes, or any other natural disasters. It simply is strictly for flood disasters only; regardless of whether it is a minor flooding, flash flooding, or major flooding events in Alabama.

It's a bit difficult to write about this especially since there were a lot of people who got their homes damaged, lost their loved ones, and even just found themselves at a loss after all the water subsided.

The thing about lessons is we need to learn from them in order for them to be valuable and we hope that this refresher will also help you understand how we can avoid getting blindsided by an event like this again. So, if you have any questions on flood insurance, how to best protect your property from floods, or anything related, click the links below.

You can click here to access our Flood Learning Center where we try to answer most of your flood insurance questions:

Or click here to contact us and we can talk about your flood concerns for the Alabama flood of October 2021.

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