Residents of Virginia are well acquainted with floods. You can protect your assets with flood insurance. A local agent can get you quotes on a policy from the National Flood Insurance Program. Whether you live in Richmond, Hopewell or Lexington, floods can and do happen. Some people think their homeowners insurance will cover any and all damage caused by flooding, only to realize it doesn't when their insurance company denies their claim. Only a comprehensive flood insurance policy, or rider, can fully protect homeowners against flood damage.
Flooding in the U.S. and Virginia
According to the National Flood Insurance Program:
- Floods are the No. 1 natural disaster in the United States.
- From 2008 to 2012, the average flood claim amounted to nearly $42,000.
- From 2003 to 2012, total flood insurance claims averaged nearly $4 billion per year.
- In 2012, the average flood insurance policy premium was about $650 per year.
- People outside of mapped high-risk flood areas file nearly 25 percent of all National Flood Insurance Program flood insurance claims and receive one-third of Federal Disaster Assistance for flooding.
- The NFIP paid more than $7.7 billion in flood insurance claims to all policyholders in 2012.
- In VA, 1,147 flood claims were made in 2012 alone, totalling more than $21.6 million in damages.
What is the NFIP?
The National Flood Insurance Program (NFIP) is a program that was created by Congress in 1968 through the National Flood Insurance Act of 1968. The program allows property owners in participating communities to purchase insurance from the government against losses from flooding. This insurance is designed to provide an alternative to disaster assistance to meet the escalating costs of repairing damage to buildings and their contents caused by floods. As of April 2010, the program insured about 5.5 million homes.
Participation in the NFIP is based on an agreement between local municipalities and the federal government, which states that if a community will adopt and enforce a floodplain management ordinance to reduce future flood risks to new construction in Special Flood Hazard Areas (SFHA), the federal government will make flood insurance available within the community as a financial protection against flood damage. The SFHAs and other risk premium zones applicable to each participating community are depicted on Flood Insurance Rate Maps (FIRMs). The Mitigation Division within the Federal Emergency Management Agency manages the NFIP and oversees the floodplain management and mapping components of the program.
Am I Required to Carry Flood Insurance?
Homes and buildings in high-risk flood areas with mortgages from federally regulated or insured lenders are required to have flood insurance. That's because in high-risk areas there is at least a 1 in 4 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 more than 20 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.
It's a good idea to take a look at the SFHA map of your Virginia neighborhood to find out the risks inherent to your area.
What Does Flood Insurance Cover?
Most Virginia insurance companies will give you the following options to choose from as you consider a quote on flood insurance:
- General property policy: This can be used to cover five or more residential buildings and non-residential buildings.
- Residential condominium building association policy: Insures condominiums and townhomes
- Standard flood insurance policy, dwelling: The most common form of coverage, this policy is used to insure up to four residential buildings and single family dwelling units in a condo/townhouse building.
For standard dwelling coverage, you have two options:
- Building property coverage: up to $250,000
- Personal property coverage: up to $100,000
The NFIP strongly recommends homeowners purchase both coverage options. It's a good idea to speak with your lender, as a mortgage company can also require you to carry a certain amount and type of flood coverage.
These two combined coverage types will cover most things in your home, with some exceptions. For example, you will not be reimbursed for damage to most cars and ATVs, or any belongings outside of the building. You may wish to look into comprehensive or catastrophe insurance quotes for your vehicles, boats or Virginia business, to protect yourself from additional losses due to flood damage.
How Does Flood Insurance Work?
A flood insurance policy won't ever pay out any more than the exact amount of the policy. For example, if you have $250,000 in flood insurance, it will never pay more than $250,000 for structural damage. You will have the option to buy building property flood insurance at replacement cost value (RCV) or actual cash value (ACV). You can only buy personal property flood insurance at ACV coverage amounts. These two types of reimbursement have significant differences.
- Replacement cost value: This reimbursement option will pay to replace your damaged item at the price it would cost brand new. For example, say your 10-year-old stove was damaged beyond repair in a flood. This insurance option will reimburse you for the amount it takes to purchase a brand new stove.
- Actual cash value: This reimbursement option takes depreciation into account when you file a claim. Your insurance company will only pay you for what that item is worth today. That 10-year-old stove? The insurance company will reimburse you the price of a 10-year-old stove, not a brand new one.
Flood insurance is complicated. It's highly recommended that you speak to a professional agent who can help you get the coverage you need and fully understand your options.
What Would My Flood Insurance Quote Look Like?
The National Flood Insurance Program (NFIP) is administered by the Federal Emergency Management Agency (FEMA), which works closely with nearly 90 private insurance companies to offer flood insurance quotes to property owners and renters. In order to qualify for flood insurance, a community must join the NFIP and agree to enforce sound floodplain management standards. Fortunately, most Virginia cities and counties participate in the NFIP.
One great thing about this partnership between the federal government and insurance companies is that quotes and rates are set and do not differ from company to company or agent to agent. These quotes depend on many factors, which include the date and type of construction of your home, along with your building's level of risk.
A number of factors come into play when determining your flood insurance premium. These factors include:
- The amount and type of coverage being purchased
- Your location and flood zone
- The design and age of your structure.
For homes in high-risk areas (Special Flood Hazard Areas or AE, VE Zones) built after the first Flood Insurance Rate Maps were drawn for that community, the elevation of the building in relation to the base flood elevation is also required.
An experienced agent can help you gather the information needed to find you an accurate quote.
How Can I Find Flood Insurance?
An independent Trusted Choice® insurance agent is always close by, to help answer your questions, search for flood insurance quotes, and even help you file a claim. These local agents have ample experience working with the NFIP and can help you navigate uncertain waters. Contact a Trusted Choice agent in your area to find out how you can be better prepared for floods.