Flood insurance premiums can be complicated, and at times confusing. That’s why here at Paradiso Insurance, we’ve put together a few facts about flood insurance premiums to help our customers understand what factors can influence the price of your premium.
Flood Insurance Premiums are Government Regulated
This isn’t always common knowledge, but the government does indeed regulate the cost of flood insurance premiums across the United States.
Flood insurance is sold and regulated through the Federal Emergency Management Agency or FEMA. FEMA itself does not sell flood insurance directly to property owners, rather, independent insurance agencies like ours can provide the product to you and explain your options.
Elevation certificates can influence the cost of your flood insurance premium as well. If you live in a high risk or coastal flood area, an elevation certificate needs to be completed in order to ensure you have the proper coverage on your flood insurance policy. What is an elevation certificate? It’s a certificate filled out by a land surveyor or engineer and lists the specifics of your home or business including the square footage and the height of each floor from the ground.
If a building isn’t high enough off the ground in a high risk or coastal area, your flood insurance premium will be much higher because it has a greater chance of becoming flooded or damaged.
Flood zones can make a huge difference on your flood insurance premium as well. Flood zones determine whether your private or commercial property is at a risk for flooding, and is marked using a combination of letters on a geographical map.
Even if a small piece of your property is in a certain flood zone, it’s still considered at risk, and therefore, can increase your overall flood insurance premium. The good news is, you can often request a letter of map change in the event you feel your property is incorrectly marked.
Additionally, property owners in low to moderate risk areas are often eligible to be a part of the preferred risk premium, which can help to lower the overall price of their flood insurance premiums.
Why Flood Insurance?
Unfortunately, not everyone invests in something like flood insurance, because many believe they don’t need it. In fact, a common question we hear at the agency is, “Why do I need flood insurance?”
In order to qualify for a loan, certain mortgage companies require that you have flood insurance in certain flood zone areas, because flooding is not covered under a standard homeowners or commercial property policy. Therefore, if your property becomes completely damaged after something like a natural disaster, you’ll incur a great financial loss.
Hurricane Harvey, for example, had greatly impacted Texas last year, and cost the state billions of dollars in clean up efforts. Ultimately, this forced residents to abandon their properties, because around 80% of them did not have flood insurance. Additionally, many of those same residents are still displaced to this day.
Imagine all of the hard work you’ve put into your home or business, only to have your efforts destroyed within a matter of minutes.
Federal funding after an emergency does not cover everything after a natural disaster, and it isn’t a permanent solution to helping you and your family recover. That’s why it’s important to have flood insurance in place.
Disasters do unfortunately strike any second, so don’t wait to make flood insurance a priority; talk to one of our licensed insurance agents today!