Risk & Business Magazine JGS Insurance Magazine Fall 2018 | Page 31

FLOOD INSURANCE
What’s The Deal With Flood Insurance?
IT MAY BE IMPOSSIBLE TO AVOID A FLOOD ONCE IT HITS, BUT YOU CAN TAKE STEPS BEFOREHAND
TO INSURE YOUR PROPERTY SO THAT YOU ARE BETTER PREPARED FOR IT FINANCIALLY.
A
fter 2017’s severe hurricanes
and flooding, did you ever
consider investing in flood
insurance? If so, you are
certainly not alone.
Flooding of your home or office can
be a trying experience that taxes both
your emotions and your finances. Even
if you don’t live in a low flood-zone area,
devastating flooding can still occur, often
with very little warning. Hurricanes,
heavy rainfall, or river or tidal surges can
quickly cause excess water to build up,
causing extensive damage to homes and
businesses and destroying their entire
contents. According to calculations on
floodsmart.gov, for example, a six-inch flood
in a 2,000-square-foot home can cost the
homeowner nearly $40,000 in damages and
repairs. In this example, some of the larger
repairs include flooring ($15,000), furniture
($6,000) and wall and door replacement
($7,000).
The average homeowner or business owner
may not be aware that coverage for water
damage for their property typically covers
water damage from burst pipes or rain
infiltration from a roof that may have been
compromised in a storm. These perils are
quite different than water damage caused
by flood.
involved. You are most likely dealing with
a flood damage claim if the water that is
causing damage to your property is coming
from one of the following sources: overflow
of inland or tidal waters; unusual and rapid
accumulation or runoff of surface waters
from any source; mudflow or collapse of
land along the shore of a lake or similar
body of water as a result of erosion or
undermining caused by waves or currents
of water exceeding anticipated cyclical levels
that result in a flood as defined above.
It may be impossible to avoid a flood once it
hits, but you can take steps beforehand to
insure your property so that you are better
prepared for it financially. Most standard
homeowner or business policies do not
cover flooding unless separate coverage is
purchased. Many victims of flooding may
assume that federal programs will kick in to
cover their losses, but this may not always be
the case.
In 1968, Congress created the National
Flood Insurance Program (NFIP) to help
property owners protect themselves in case
of flooding. The NFIP offers flood insurance
to homeowners, renters and businesses only
if their community participates in the NFIP,
agreeing to adopt and enforce ordinances
that meet or exceed FEMA requirements to
reduce the risk of flooding.
Although they sound similar, water damage
and flood damage are radically different
insurance terms. If your home has been
damaged by water, here’s how to determine
if you need to file a flood insurance claim or
a water damage claim.
Simply put, the main difference between
a flood claim and a water damage claim is
where the water comes from. With flood
damage, the water comes from a natural
source and two or more properties are
BY: BERNIE COSENTINO
VICE PRESIDENT, JGS INSURANCE
If your home or business is located in a high-
risk flood area, you must have separate flood
insurance in order to qualify for a mortgage
from federally regulated or insured lenders.
If you are located in a moderate- to low-
risk area, you are typically not required to
have flood insurance, but you may want to
minimize your financial risk by purchasing a
policy regardless.
You may wish to investigate Private Market
Flood insurance as well, which may be
available at lower rates than what is available
through the federal program. According
to privatemarketflood.com—which sells
policies as an alternative to government
FEMA-backed policies—“older homes,
second homes, nonprimary residences,
commercial properties and small apartment
buildings enjoy significant savings compared
to FEMA policies.” In fact, the Private
Market Flood insurance program now
insures more than $1 billion of property
value in 37 states.
There are myriad factors that influence the
cost of your premiums, including building
size, location, amount of coverage desired
and deductible amount, so it’s best to consult
with your insurance agent to determine
whether an NFIP policy or private flood
insurance policy makes more sense for your
particular situation. +
Bernie Cosentino is celebrating his 33rd year in the insurance
industry. Born, bred, and educated in NJ he is a proud father to
his adult children Joseph and Maria. Bernie is currently in his 17th
year at JGS Insurance as A Vice President and broker/producer
diligently pursuing the most competitive and comprehensive
insurance program to a wide range of customer base.
31