From Anchorage to Juneau, to towns and neighborhoods on the outskirts of the Alaskan wilderness, spring melt and torrential downpours cause floods big and small nearly every year. Is your home protected with the essential coverage of flood insurance? Many Alaska residents do not realize that their traditional homeowners insurance policy will deny their flood damage claim until it is too late.
Before you search for flood insurance quotes, there are several factors to consider.
According to the National Flood Insurance Program (NFIP):
Unlike damage caused by fire, flood water damage is typically not covered under a traditional homeowners insurance policy. That means, in order to be covered in the likely event your home will be impacted by a flood, you need to purchase a separate policy from the National Flood Insurance Program (NFIP) to protect your finances and your property. The NFIP is the only source for flood insurance in Alaska and the nation.
Since standard homeowners insurance doesn't cover flooding, it's important to have protection from the floods associated with winter storms, snow melt, heavy rains and other conditions that impact Alaska.
In 1968, Congress created the National Flood Insurance Program (NFIP) to help provide a means for property owners to financially protect themselves. The NFIP offers flood insurance to homeowners, renters, and business owners if their community participates in the NFIP. Participating communities agree to adopt and enforce ordinances that meet or exceed Federal Emergency Management Agency (FEMA) requirements to reduce the risk of flooding.
To that end, the NFIP has partnered with private insurance companies in Alaska and nationwide for nearly 50 years to offer home and business owners a level of protection when their property is damaged by flood waters.
There are instances where you may be required to purchase a flood insurance policy from the NFIP and its private insurance company affiliates. Congress mandated federally regulated or insured lenders to require flood insurance on properties that are located in areas at a high risk of flooding.
Homes and buildings in high-risk flood areas with mortgages from federally regulated or insured lenders, such as VA loans and FHA loans, are required to have flood insurance. In high-risk areas, there is at least a one in four chance of flooding during a 30-year mortgage.
Homes and businesses located in moderate-to-low risk areas that have mortgages from federally regulated or insured lenders are typically not required to have flood insurance. However, flood insurance is highly recommended because anyone can be financially vulnerable to floods. People outside of high-risk areas file nearly 25 percent of NFIP claims and receive one-third of disaster assistance for flooding. When it's available, disaster assistance is typically a loan you must repay with interest.
Also keep in mind that your lender can require flood insurance, even if it is not federally required. It's a good idea to check the federal flood plain maps to discover if you are in a high-risk area and to ask your bank or financial institution if you are required to carry flood insurance on your Alaska property.
Flood insurance protects two types of insurable property: building and contents. The first covers your Alaska home, the latter covers your possessions; neither covers the land they occupy.
The two most common reimbursement methods for flood claims are : Replacement Cost Value (RCV) and Actual Cash Value (ACV). The RCV is the cost to replace damaged property. It is reimbursable to owners of single-family, primary residences insured to within 80 percent of the buildings replacement cost.
All other buildings and personal property (i.e. contents) are valued at ACV, which takes depreciation into account. Therefore, your Alaska insurance company will reimburse you the actual value of the item and not necessarily at the cost you purchased it.
One great thing about the partnership between the federal government (the NFIP) and private insurance companies is that the rates and quotes you will receive are regulated and therefore should not vary from company to company. However, quotes will vary depending on a variety of factors.
The NFIP and the Alaska insurance company handling your quote will consider a number of details when determining your flood insurance premium. These factors include:
For example, a typical flood insurance quote for a downtown Juneau residence can run anywhere from $50 to $100 per year for building coverage only, to $200 to $400 per year for building and contents coverage, depending on the factors. With most flood damage claims amounting to more than $35,000, the rates are considerably affordable for the coverage and protection they offer.
The last thing you want to worry about as you lead your family to safety during an extensive flood is whether or not you have sufficient insurance coverage to help you recover.
Knowledgeable, independent insurance agents on the Trusted Choice network are always available to answer your questions, suggest coverage options, and even assist you in filing a claim. These agents have years of experience working with Alaska insurance companies and the NFIP alike, enabling them to offer you straightforward and valuable advise. Contact a Trusted Choice member agent near you to find out how you can obtain the perfect flood insurance policy that meets your needs and budget.