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PEYTON SMITH — Flood insurance basics



Most people assume when they purchase homeowner’s insurance that flood insurance is included in their policy. It is very important to read your policy and find out whether or not there is flood exclusion because a typical homeowner’s policy does not include flood insurance. Since flood insurance is federally regulated, there are myths and misconceptions with the general public. One of the most common misconceptions that I have come across with flood insurance is that you have to be in a special flood hazard zone to purchase flood insurance. Flood insurance is available to any property owner and is significantly cheaper if you are not in a special flood hazard zone. FEMA reports that 33% of all flood claims are not in a special flood hazard area.

Flood insurance is federally regulated and has certain requirements that are not common with most insurance policies. For example, there is usually a 30 day waiting period from the date that the policy is purchased until the policy actually goes into effect. According to www.floodsmart.gov, the following are the only exceptions to this waiting period: “if flood insurance is being purchased in connection with the making, increasing, extending or renewing of your loan. If a building has been newly designated in the SFHA and flood insurance is being purchased within 13 month period following a map revision. If flood insurance is required as a result of a lender determining that a loan that does not have flood insurance coverage should be protected by flood insurance. If an additional amount of insurance is selected as an option of the renewal bill. If a property is affected by flooding on burned federal land that is a result of, or is exacerbated by, post wild-fire conditions when the policy is purchased within 60 days of the fire containment date.” One of the main reasons that there is a waiting period for flood insurance is because people use to purchase flood insurance whenever a hurricane was a approaching and the risk of flood was much higher than usual.

The National Flood Insurance Program determines the rates. Unlike rates for most insurance policies, flood insurance rates do not differ from servicing company to servicing company. Several factors that affect the premium rate include the construction date of the property, the construction type for the property, flood zone and elevation of the building.

It is very important to pay attention when there are changes to the flood zone map in your area. Every few years the flood maps change, so a property may not be in a special flood hazard area during the time of a purchase, but it could be in a special flood hazard area the next time that there is an update to the flood map. Most mortgage companies will require flood insurance to be purchased if the property is in a special flood hazard area, but if there is a re-zoning after the purchase, you don’t need to rely on the mortgage company notify you. Homeowners that do not have a mortgage are not required to purchase flood insurance, but they also will not be covered in the event of flood damage.

There are several ways to find out whether or not you are in special flood hazard area. One of the easiest ways is to go the FEMA website and type in your address on the Flood Map Service Center. This will pull up flood zones in your area and let you know if you are in a special flood hazard area.

With it being hurricane season, it is very important to make sure that you understand whether or not your property is covered in the event of flood. Finding out whether or not you are in a special flood hazard area and whether or not you have flood insurance are a few easy steps to help prevent huge out of pocket expenses in the event of a flood in your area.

» Peyton Smith is a Risk Advisor for SouthGroup Insurance and can be contacted at 601-326-5312 or peyton.smith@southgroup.net


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