Hurricane season is quickly approaching, which brings about thoughts of high winds, storm surges and flooding. However, flooding is not confined to hurricanes. Flooding often happens in the Midwest with melting snow and spring rains. And, of course, there was the historic flooding seen in California earlier this year. In fact, everyone is at risk of suffering a flood loss. Everyone.
The general public shares a number of misconceptions about flood coverage, which affects your ability to sell a flood policy. Here are five of the most common:
1) My property is not in a flood zone, so I don't need—or can't purchase—flood insurance. Some people misinterpret their mortgage company's decision not to require flood coverage to mean that their property is not in a flood zone. The truth is that virtually all property is in a flood zone. The only difference is that someone who is in a low-risk flood zone will be able to purchase flood coverage at a cheaper rate than someone in a medium- or high-risk flood zone, which makes the decision to purchase flood coverage even more appealing.
2) My property is not on a body of water, so I don't qualify for flood insurance. Flood insurance is available to anyone living in one of the 23,000 participating NFIP (National Flood Insurance Program) communities.
3) My property policy covers flood risk. Neither homeowner nor business peril policies cover flooding. While you may purchase sewer backup coverage, that is not the same thing as flood coverage.4) I can't buy flood coverage because my property flooded in the past. Previously flooded properties can be covered under the NFIP program.
5) If my property floods, federal disaster assistance will pay for my damage. Federal disaster assistance is only available if your property is located in a federal disaster area. Less than half of flooding events qualify as federal disasters. Furthermore, federal disaster assistance does not make homeowners whole; it is designed as a stop-gap while they find permanent housing. Property owners will still have to pay to make repairs to their property.