Understanding The Flood Basics

You may be familiar that only flood insurance covers flood damage, but you probably  don't know all of the details. Here are some of the most common terms:

Insurance Agent
Flood insurance can on be purchased through an insurance agent and you cannot buy it directly from the federal government.

Coverage
As with any other type of insurance, it's important to know what your policy does and doesn't cover. An example would be damage caused by a sewer backup is only covered by flood insurance if it is a direct loss resulting from a flood. The damage is not covered if it is the backup is caused by some other source.

Deductible
Deductibles apply separately to building and contents with different amounts to choose from. Like other insurance forms, a higher deductible will lower the premium you pay, but will also deuce the your claim payment. Your mortgage lender can also set a maximum amount for your deductible.

Mandatory Requirements
Homes and businesses with mortgages from federally regulated insured lenders in high-risk flood area are required to have flood insurance. While flood insurance is not federally required if you live in a moderate-to-low flood risk area, it is still available and recommended.

Rates
The NFIP, a federal program, offer flood insurance, which can be purchased through most leading insurance companies. Rates are set by NFIP and do not differ from company to company or agent to agent. These rates depend on several factors including the date and type of construction of you home or business, along with your area's level of risk. All premiums including a Federal Policy Fee and ICC Premium.

ICC Premium  *********

Waiting Period
There is a 30-day waiting period from the "date of of purchase" before a new flood policy goes into effect. The following are the only exceptions:
  • If your lender requires flood insurance in connection with the making, increasing, extending, or renewing of your loan;
  • If an additional amount of insurance is required as a result of a map revision;
  • Flood insurance is required as a result of a lender determining that a loan that does not have flood insurance coverage should be covered by flood insurance;
  • If any additional amount of insurance is being obtained in connection with the renewal of a policy.

FIRM
FIRM is the acronym for Flood Insurance Rate Map.

Write Your Own
The Write Your Own (WYO) Program began in 1983 and is a collaboration of the insurance industry and the FEMA. The WYO Program allows participating property and casualty insurance companies to write and service the standard flood insurance policy in their own names. The companies receive an expense allowance for the policies written and claims processed while the government retains responsibility for underwriting losses. The WYO Program operates as part of the NFIP, and is subject to it's rules and regulations.

The goal of the program is to increase the NFIP policy base, improve service to the NFIP policyholders through the influence of the insurance industry's experience and knowledge