Your Flood Insurance Questions Answered


Your Flood Insurance Questions Answered

The 2017 Atlantic hurricane season has truly been a devastating one. Harvey was followed closely by Irma and then Maria. The Northeast was fortunate enough to avoid a direct hit, but as we watch the coverage of our neighbors to the South, we can’t help but wonder if this is the new normal with rising water levels noted around the globe. Maybe George Strait’s “Ocean Front Property” isn’t just a song about a lover scorned after all, but rather a new possibility that places like Arizona could offer waterfront living soon enough.

Fueled by reports of people being impacted by hurricane-induced floods in areas where it had never flooded before, panicked thoughts crossed many minds: “Would my homeowner’s insurance protect me from this?” “How can I purchase flood insurance?” “What does it cost?” “What does it cover?” We’ll try and answer those questions today. You might be surprised to find that buying some peace of mind isn’t that expensive if you don’t have property in a designated flood zone.

“Would my homeowner’s insurance protect me from this?”

The short and simple answer is; no. Most homeowners or rental insurance policies do not cover floods. Flood insurance is sold as a separate policy, with some particular rules in place about how it can be purchased.

“How can I purchase flood insurance?”

You’ve probably heard a lot of talk about single payor insurance relating to healthcare recently, but did you know it already exists for flood insurance? Flood insurance can only be purchased from the federal government via the National Flood Insurance Program (“NFIP”). However, it cannot be purchased directly from the federal government. It must be purchased through a local insurance agent or insurer participating in NFIP.

“What does it cost?”

In areas that are not traditionally flood zones, all flood insurance policies have set annual premiums up to covered property value limit of $250,000 and covered contents limit of $100,000. The premiums are set annually by NFIP and range from $202 to $499 per year for property and contents for a single family home that is not over water and serves as a primary residence, and from $96 to $305 for contents-only – Please see the chart below for the breakdown. In addition, depending on your location and if you have a basement or any covered equipment in that basement, you can qualify for credits to lower these premiums further. If additional coverage is needed, it can be obtained through the insurance agent.

Building and Contents

Contents Only



Contents Value Annual Premium Contents Value Annual Premium
$ 20,000 $ 8,000 $ 202 $ 8,000 $ 96
$ 30,000 $ 12,000 $ 240 $ 12,000 $ 126
$ 50,000 $ 20,000 $ 302 $ 20,000 $ 170
$ 75,000 $ 30,000 $ 352 $ 30,000 $ 194
$ 100,000 $ 40,000 $ 385 $ 40,000 $ 214
$ 125,000 $ 50,000 $ 403 $ 50,000 $ 235
$ 150,000 $ 60,000 $ 425 $ 60,000 $ 256
$ 200,000 $ 80,000 $ 467 $ 80,000 $ 280
$ 250,000 $ 100,000 $ 499 $ 100,000 $ 305

“What does it cover?”

Policies can cover either the building’s property and contents or contents-only. Covered building property consists of things like HVAC systems, kitchen appliances, permanently-installed carpeting, permanently-installed cabinets or bookcases, window blinds, foundation walls, stairs, or even a detached garage. Covered personal contents are clothing, furniture, electronic equipment, curtains, portable air conditioners, washer and dryers, valuables like original artwork or furs (up to $2,500), and food freezers and refrigerators. Things that aren’t covered are any living expenses such as temporary housing, loss of use or access to the property, financial losses incurred by business interruption, currency, and most self-propelled vehicles, such as cars. All of this is impacted as well if it is stored in the areas such as basements or below the lowest elevated floor and will be clarified in your specific insurance policy.

Hopefully the above has given you a better understanding of the coverage that can be obtained and how to do so. And we wish all those affected by these recent storms a speedy recovery and safe times ahead.

For additional information around your insurance coverage or if you have additional questions, fill in the form below and one of our experts will respond!

Author:Devon Desmond, CPA | [email protected]

To ensure compliance with U.S. Treasury rules, unless expressly stated otherwise, any U.S. tax advice contained in this communication is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.

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