It was in 1968 that the United States Congress initiated the National Flood Insurance Program to reduce related private and commercial property damage. Available through insurance companies and insurance agencies, coverage is administered and dictated by government laws and can protect the homeowner from damage caused by flooding.

A Standard Housing Insurance policy is understood to cover a residential building for one, two, three or four families, as well as a single-family home.

A general property flood policy can insure five or more family residential buildings, as well as buildings not used as residences.

A residential condominium building association policy can insure a residential condominium association building.

This type of policy must incorporate two types of related coverage: real estate and personal property, defined as the contents of its facilities.

Three essential things about a related insurance policy

• Contents coverage must be purchased separately from building coverage.

• Flood insurance is not valuable coverage, which means it only covers actual damage up to the policy limit.

• Flood insurance does not offer guaranteed replacement cost coverage that is not subject to limits. Flood insurance only pays for damage up to the policy limit.

more things to understand

It is important to note that the government-run program provides special consideration when there are numerous flood claims filed by the same policyholder. Officially considered “severe repetitive loss,” where intervention may be warranted to prevent future loss, these claims may result in an offer of a FEMA mitigation grant, if applicable.

Acceptance of the grant is voluntary, but any policyholder who declines the opportunity for government-funded improvements designed to reduce the likelihood of property damage from flooding may be subject to a rate increase equal to one hundred and fifty percent of the rate charged for the property when the grant was offered.

Policyholders with properties with severe repetitive loss may be eligible for the grant if the following conditions are met:

• 4 or more different insurance claim payments (including construction/content payments) have been issued and each is over $5,000

EITHER

• A minimum of 2 different flood insurance building claim payments have been issued that in total exceed the current value of the property

For more information on flood insurance and how a respective policy can be tailored to your individual needs, contact an experienced independent agency.