Insurance for floods a good idea

Whether or not you were hammered by the recent hurricane, it's important to understand the limits of your insurance coverage, and what you can do to beef it up before the next Big One hits.
The good news is that the National Flood Insurance Program can protect you from losses caused by many kinds of water damage that are excluded from typical homeowners' or renters' policies.
It's not cheap. The average annual premium for 4.4 million policies now in force, most of them residential, is $403. But in a high-risk area, sample premiums for a $100,000 home range from $985 to $2,855 a year.
Weigh the difference
Before you dismiss the idea of flood insurance, though, weigh those prices against what it would cost to recover from a catastrophic flood. And bear in mind that more than a quarter of flood-insurance claims are by people with properties at low or moderate risk of flooding.
Another factor to consider in looking at your overall coverage is that residents in coastal regions may be less protected than they once were by their standard homeowners' policies.
That's because insurers, stung by losses from Hurricane Andrew in 1992, have quietly imposed special "hurricane deductible" clauses on policyholders in 17 coastal states.
In some areas, the hurricane deductible can range from 2 percent to 4 percent of your total coverage.
Be warned that hurricane-force winds don't have to hit your house to trigger the higher deductible, says Bill Heine, a spokesman for the New Jersey Department of Banking and Insurance. They just have to hit somewhere in the state.
Bucket of money
Otherwise, check your liquidity, because you may need a bucket of money if your roof ever blows off.
"Most hurricane damage comes from flooding, not wind," says Mark Stevens of the Federal Emergency Management Agency. "People don't realize that."
Flood insurance isn't offered everywhere. Residents and small businesses in about four-fifths of the nation's communities qualify, Stevens says. You don't have to live in a floodplain or storm-surge zone to get it -- if your community participates, by adopting regulations designed to mitigate flood risks, you qualify.
Actually, flood insurance is mandatory for some property owners in high-risk areas, because mortgage lenders are required to insist on it. So if you're in such an area -- generally referred to as a "100-year floodplain," which means that there's a 1 percent risk of flooding each year -- you probably already know it.
But many homeowners, renters, and owners of small businesses qualify, on low ground or high ground. To find out whether your community participates, check the flood insurance program's online Community Status Book: www.fema.gov/fema/csb.shtm. For general information on the program or referrals to agents who handle the insurance for the 92 private insurers who administer it for FEMA, call (800) 427-4661.
What's covered
What does flood insurance cover? The basic standard is "inundation of normally dry land," Stevens says.
"It doesn't cover basement seepage from saturated ground," he says. "It has to be water -- it can be an inch of water or 10 feet -- but not just saturation."
The source doesn't matter. It can be from thunderstorms or runoff, rain-fueled snowmelts, or a wind-driven storm surge. But it can't be a truly isolated event. In rural areas, flooding has to affect at least two acres of land; in urban areas, at least two adjacent properties.
For residential properties, the maximum coverage is $250,000 for a home and $100,000 for contents. Premiums depend on the flood risk in your area. If you want to check your risk level, look online at www.fema.gov/hazards/floods (click on "The FEMA Flood Map Store," then "Map Search") or call an agent. FEMA sets the rates and rules.
One other tip: The waiting period for coverage is usually 30 days, but that's waived if you buy the policy in connection with a new mortgage or a refinance.
XJeff Gelles is a columnist for The Philadelphia Inquirer. Write to him at: The Philadelphia Inquirer, P.O. Box 8263, Philadelphia, PA 19101 or e-mail consumerwatchphillynews.com.