When we think about flood in the US, perhaps we picture the great plains of the Midwest or the low country of New Orleans or coastal waters of Florida - but New Hampshire? Though it does not seem likely, it certainly does happen and can devastate any home or business owner very quickly.
Why Consider Flood Insurance if I am not in a Flood Zone?
- According to the Federal Emergency Management Agency (FEMA), flooding is the most common natural disaster in the US. It affects every state with no home or business being immune from it given it rains everywhere and downpours are seemingly more frequent.
- Damage from flood is almost always excluded from coverage on most property insurance policies, whether personal or commercial.
- More than 20% of all flood claims come from properties outside a high-risk flood zone.
- Should you experience a flood and request Federal disaster assistance from the US Small Business Administration (SBA), you are required to pay this loan back.
- The insurance premium may be less than you think, especially if you are in a lower-risk flood zone.
- Resulting damage from just one inch of water can be more than $20,000!
- Between 2010 and 2014, the average commercial flood claim filed through the National Flood Insurance Plan was $89,000.
Can my Lender Require Me to Purchase Flood Insurance?
The short answer is yes- if the property for which you are obtaining a loan is from a federally insured and regulated lending institution, Congress has mandated that the lender requires flood insurance on mortgage properties located in high-risk flood zones. If it is determined that the lender should have but did not require the flood policy, it could face fines in the thousands of dollars.
What are the Basics I Need to Know about Flood Insurance?
As with any type of policy, it is critical that you know what is and what is not covered. The policy language is very specific and does not always follow the customary logic of other property coverage forms. (Example: Refrigerators, stoves and window blinds are considered building property and not personal property). It is also important to know that you have to specifically add property coverage onto the policy as it not automatically included.
It is also important to know that basements and areas below lowest elevated floor (floor used for living purposes) have limited coverage for flood regardless if you have a flood insurance policy or not. Please speak with an insurance professional or review the What is Covered (and Not Covered) Under My NFIP Policy fact sheet.
Flood insurance policies and premium issued by the NFIP do not differ from agent to agent or even company to company (even though there may be different companies printed on the policy.) The premium is determined by several factors including the date of construction, the type of building construction, and the specific area's flood risk as determined by flood maps. Most premiums will also include federal and policy fees as mandated by the NFIP.
There is typically a 30-day waiting period from when you purchase a flood policy and when it is effective. The reason is to avoid clients from purchasing insurance only when there is a storm in the forecast. That said, there is an exception if you need to purchase a flood insurance policy in connection with obtaining, increasing, extending or renewing a loan on the property in question. The waiting period is waived.
There are no pay plans for a flood policy issued through NFIP; however, check and credit card payments are accepted.
How can I Get a Quote for Flood Insurance for my NH Home or Business?
The only way to purchase flood insurance is through a licensed insurance agent. The NFIP does not sell flood insurance directly to the public. HPM Insurance of Bedford and Amherst NH sells flood insurance as do other local agents. An insurance professional can help you navigate the murky waters of flood and figure out how to best protect your home or business.
This material is for informational purposes only. All statements herein are subject to the provision, exclusions, and conditions of the applicable policy, state and federal laws. For an actual description of all coverages, terms and conditions, please refer to the applicable insurance policy or check with your insurance professional.