Living in Florida, you’re aware of the constant threat of floods. Part 1 of this series explained why – the state’s low elevation, proximity to water, and frequent severe weather make most areas susceptible to 100-year flood events. Part 2 covered key concepts like Base Flood Elevation (BFE), freeboard, and elevation certificates.
Now, let’s explore the flood insurance options that are available to you.
National Flood Insurance Program (NFIP): The Main Course
Most Florida property owners rely on the National Flood Insurance Program (NFIP). Here’s a breakdown of NFIP coverage and limitations:
- Availability: Most Florida communities participate, but a handful opt out.
- Coverage Limits: Coverage limits vary depending on your property type. For single-family homes, the maximum is $250,000 for building coverage and $100,000 for contents. Higher limits are available for multi-unit structures and businesses.
- Mandatory in Some Cases: Some mortgages and some insurers now require flood insurance, mainly if your home is located in a high-risk flood zone. Be sure to check your specific requirements.
- What’s Covered: NFIP covers only direct flood damage from the ground up, not other water damage sources like plumbing issues or a damaged roof.
- Waiting Period: There’s typically a 30-day waiting period for coverage to begin (exceptions may include a new property purchase). Don’t wait until a storm is brewing!
Making the Most of NFIP
Homes built to current BFE and freeboard standards typically suffer minimal damage during floods. However, older homes built below BFE can experience significant water intrusion (6-12 inches) during even moderate floods.
Many homeowners opt to accept the risk of catastrophic floods, especially along coasts or rivers. These events are statistically rare, and some find NFIP coverage sufficient for most flood scenarios.
Cost Factors for Flood Insurance
Several factors influence your flood insurance premium:
- Flood Zone: Your flood risk zone (low, medium, or high) significantly impacts cost.
- Elevation Certificate: An elevation certificate documents the height of your living area relative to BFE. The higher your living area compared to BFE, the lower your premium.
- Property Value: Your property’s value and contents affect coverage costs.
- Foundation Type: Your foundation type affects your insurance rate.
- Number of Floors: A higher floor can be a significant cost saver for condominiums.
- Flood Mitigation: Installing breakaway walls, flood openings, or raising utility heights can reduce your premium.
- Deductibles: Choosing higher deductibles lowers your premium. Consider how much risk you’re comfortable assuming.
- Exceeding NFIP Limits: If you desire coverage beyond NFIP limits, read about your options later in this post.
Reducing Flood Insurance Costs
Here are some ways to potentially lower your flood insurance costs:
- Accepting NFIP Limits: If you’re comfortable with the potential risk of exceeding NFIP coverage, you can lower your premium.
- Raising Deductibles: Increasing your deductible, especially for contents coverage, can offer significant savings.
- Flood Mitigation: Investing in flood mitigation measures can significantly reduce your premium.
- Location Matters: If you own a property within a community that has invested in community-wide mitigation, you may realize discounts of 10% to 25% on your NFIP policy.
Special Flood Hazard Area (SFHA) Requirements
Suppose you live in a Special Flood Hazard Area (SFHA). In that case, your mortgage company or primary insurer will likely require you to purchase flood insurance to cover replacement costs. The NFIP program’s $250,000 maximum is unlikely enough to cover those costs. In this case, you have two primary options to cover replacement costs.
- Excess Flood Policy: You can purchase an excess flood policy on top of your NFIP coverage, which kicks in only after your NFIP limits are exhausted.
- Private Flood Insurance: Private flood insurance companies offer alternative coverage options, though they may be more expensive than NFIP.
Conclusion
Consult a qualified insurance professional to determine the best flood insurance option for your needs and risk tolerance. Proper coverage can save you from significant financial loss in a flood.
For more information on flood insurance, check out our related articles or request a flood insurance quote from Term Brokers Insurance.