The Shepherd Insurance Blog

Spring can be a bummer.

Flooding is a risk to any property, whether you are inland or near the coastline. In fact, one in four businesses that shuts down from a natural disaster never reopens, and more than 80 percent of all presidentially declared natural disasters involve flooding. According to the U.S. government property damage due to flooding usually adds up to more than $6 billion annually.

Floods have many causes and can occur anywhere in the country, but here are some of the most common events that lead to flooding:
• Storm surges in hurricane-prone areas.
• Flash flooding, caused by periods of intense rainfall.
• Mudslides, caused by long, heavy rain periods on a hill or mountainside.
• Snow melt, caused by the still-frozen ground unable to absorb excess water.
• Ice jams, when an ice chunk flowing in a river or stream blocks, dams or narrows passageways, causing overflow.
• Urban development, such as new construction and or ground paving, which alters the topography by not allowing the land to drain properly.

You should be aware that a general policy will not cover flood damage, and this type of insurance is only available through the National Flood Insurance Program (NFIP). The NFIP will cover all the types of floods discussed above, including mudslides, though it is important to note that it does not cover landslides even if they are caused by heavy rain. To make sure you get a fair price, every commercial flood agent answers to this government agency; therefore, flood insurance is backed by the government but sold through private insurers.

There are plenty of misunderstandings about flood insurance. We have compiled some information about the NFIP and its coverage to help you realize its benefits.

NFIP Coverage: Who Should Buy It?
If your property is in a high-risk flood area and you have a mortgage from a federally regulated or insured lender, then you are required to purchase a flood insurance policy. However, the NFIP reports that in 2008, a third of all claims paid were for policies in low-risk communities. Because new land development can increase flood risk by changing natural runoff patterns, it is a good idea to purchase flood insurance even if you are not near a large body of water.

Most of Indiana sits in a moderate-to-low risk area when it comes to flood risk (you can check your risk at floodsmart.gov) and qualifies for coverage at the preferred rate.  Preferred rate policies are the lowest premiums available through the National Flood Insurance Program (NFIP).  This policy will protect your house and its contents starting as low as $129 per year.  It takes 30 days after purchase for a flood policy to take effect, so don’t wait until the water starts rising.