The Peril of Flood
The impacts of a flood can be devastating and far-reaching. Regardless of where a property resides, property owners are still susceptible to significant losses and damage. Some areas are at a higher risk than others, but ultimately, a flood can happen anywhere. The National Flood Insurance Program (NFIP) was established to provide much needed relief for flooding events. After FEMA introduced a new flood insurance pricing methodology–Risk Rating 2.0–quoting and writing flood insurance became much easier. Producers are now in a vital position to help consumers be prepared and covered in the event of a flood.
The purpose of federal disaster relief is NOT to return consumers to their pre-loss conditions; it is to provide financial assistance with critical expenses that cannot be obtained in any other fashion.
Federal disaster assistance is not insurance.
Before an individual or business may apply for disaster relief because of property damage caused by flood, the property loss must have occurred within a geographic area covered by a disaster declaration issued by the president. Federal disaster assistance cannot duplicate payments made by other sources, including insurance policies.
In reality, property policies do not contain flood exclusions; instead, they contain water exclusions, as can be found in the Insurance Services Office (ISO) policies and forms. Called Water Damage exclusions in some policies, current policies exclude flood, surface water, tidal waves, tsunami, overflow of any body of water, spray from any of these, and storm surges, among others.
What You Should Know
Prior to applying for a flood insurance policy, you will have to know your property’s (House Dwellings, Apartments, Commercial Buildings and Location) eligibility based on NFIP’s flood requirements:
- The Causes of Floods
- Flood Maps and Zone Determination
- Building and Property Eligibility
- Flood Policies and Products
- Deductibles
- Loss Settlement Procedures
- Claims Handling Process.
A flood insurance policy is the only method of purchasing insurance protection for loss or damage to a home, condominium unit, or commercial building (and their contents) when land is inundated by water.
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