Editorial
Front Page - Friday, December 04, 2009
Insurance Insights
Evaluate your need for flood insurance now
Jay Bradford
With the heavy rains we have had over the past few months, many Arkansans have found out the hard way that floods can happen anywhere, at any time. According to the National Flood Insurance Program (NFIP), even one inch of water in your home can cause up to $7,800 in damage. NFIP statistics show that a home in a high-risk area is three times more likely to be damaged by flood than a house fire during a 30-year mortgage. I remind you that flooding is not covered in a standard homeowners, renters, or business insurance policy, and between 20 and 25 percent of all flood insurance claims come from low-risk areas.
The NFIP helps communities understand their flood risk with flood maps. Risk levels are broken into three categories. High-risk areas have at least a 1% chance of flooding annually. All homeowners in these areas with mortgages from federally regulated or insured lenders are required to buy flood insurance. Moderate-risk areas have less chance of flooding annually, but the possibility is not completely removed. Flood insurance in these areas is not required, but it is recommended for all property owners and renters. The third category covers the undetermined-risk areas where flood-hazard analysis has not been conducted, but where a flood risk still exists.
It is my understanding that the Federal Emergency Management Agency (FEMA) is in the process of updating flood hazard maps across the country. When a new map for a community is issued, one may find that the level of risk has changed along with the flood insurance requirements.
The NFIP offers flood insurance to homeowners, renters, and business owners if their community participates in the program. NFIP estimates that more than five million people have flood insurance policies in more than 20,000 communities across the country. Flood insurance is sold by licensed insurers. If you are in a high-risk area, I encourage you to contact your insurance company or agent to find out if your community participates in the NFIP and to obtain a quote.
Homeowners can purchase flood insurance covering up to $250,000 of flood damage to your home. A standard flood insurance policy covers structural damage, including damage to the furnace, water heater, air conditioner, floor surfaces, and debris clean-up. The contents of one’s home are not covered under a standard policy, but coverage for up to $100,000 of damage to your personal property is available for an additional premium. Coverage for basements, crawlspaces, and ground-level enclosures on elevated homes is limited. If your home has these spaces, be sure to ask your insurance agent about any restrictions in your coverage.
The Arkansas Insurance Department is located at 1200 West Third Street in downtown Little Rock. 1-800-852-5494. www.insurance.arkansas.gov
Jay Bradford was appointed Arkansas Insurance Commissioner by Governor Mike Beebe on January 15, 2009.
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