This is a guest post by Sandra Ghilarducci of MacCorkle Insurance Service in Burlingame, a local independent, full service insurance brokerage. Sandra works in the Personal Lines Department. This post is important for homebuyers in Burlingame, San Mateo, San Carlos, Belmont, Foster City, and Redwood Shores.
As images of waterlogged homes continue to dominate the news in the aftermath of Hurricane Sandy, homeowners are asking themselves if flood coverage is something they should have and what it covers.
Most homeowner’s insurance policies DO NOT cover damage due to flooding. To get that coverage, you can buy a separate policy through the federal government's National Flood Insurance Program (NFIP) or through other carriers that offer this valuable coverage. Flood coverage may be available to you whether or not you are in a high risk flood zone.
If you own or are purchasing a home in a designated high-risk flood zone, you may be required by your lender to obtain flood coverage for the life of the loan unless the flood zone designation changes. Flood zone designation changes are not common, however there was a recent mapping change that affected homes on the San Francisco Peninsula effective 10-16-2012. For more information visit FloodSmart.gov.
Even if your lender does not require flood coverage it is important that you be aware that 25% of flood claims are filed from areas that are designated as “moderate” to “low risk. So, if you feel your area may be exposed to flooding you should at least look into the price of coverage. Generally speaking, flood insurance is quite inexpensive.
Moderate to Low-Risk Zones (B/C/X) are eligible for coverage at a preferred rate. Preferred rate policy premiums are the lowest premiums available. The premiums usually run in the range of $375 - $500 annually with the maximum limit of $250,000 for the Dwelling and $100,000 maximum for Personal Property. A $1,000 deductible is the only option available in this category.
High-Risk Zones (A/AE/V) are eligible for coverage at a standard rate. If your home is located in one of these zones and you carry or plan to carry a federally backed mortgage (which are most loans) most likely your lender will require you carry flood coverage to insure the reconstruction cost of your home for the maximum limit of $250,000 Building Coverage. Personal Property coverage may be optional. The rate for this type of policy is in the range of $1,700 to $2,300 with maximum of $250,000 in Building Coverage and $100,000 maximum in Personal Property. The High-Risk policy may offer options for higher deductibles but you must check with your lender and refer to the terms of the loan.
What is Covered?
Building Property: Dwelling Coverage is offered up to $250,000 on a basic policy but may be eligible for excess coverage to cover the full replacement cost of the home. Building Property covers the insured building and its foundation, electrical and plumbing systems, furnaces, air conditioning and water heaters. Also included are permanently installed property such as refrigerators, stoves, dishwashers, carpeting and unfinished flooring. Generally, outbuildings such as a guest house, detached garages, pool houses, etc. cannot be insured. Please refer to your policy contract or agent to confirm coverage.
Personal Property: This coverage is offered up to $100,000 on a basic policy but may be eligible for increased limits on an excess flood policy. Your contents coverage would include personal belongings such as clothing, furniture and electronic equipment and portable appliances.
What is Not Covered?
Damage caused by moisture, mildew or mold that could have been avoided by the property owner. Currency, precious metals, valuable papers such as stock certificates are not covered. Property and belongings outside of the building such as trees, plants, wells, septic systems, walk, decks, patios, fences, seawalls, hot tubs and swimming pools are also not covered. Living expenses such as temporary housing is not covered.
Coverage is limited regardless of zone in areas below the lowest elevated floor such as basements, crawl spaces, walkout basements and enclosed areas under other types of elevated buildings.
What if my property is rezoned due to a map change?
A flood map change could affect the requirement by your lender to carry flood coverage or it could result in the requirement to carry flood coverage when not required previously.
If your zone has changed from a high-risk zone to a moderate or low-risk zone you may be eligible to cancel your flood coverage required by your lender or have an option to convert to a preferred rate if you wish to continue coverage.
If your zone has changed from a low to moderate-risk zone to a high-risk zone your lender may require flood coverage be purchased. In this case, if your zone has changed recently you may be eligible to be grandfathered into a preferred rate for a minimum of two years.
With the rainy months just ahead we recommend you look into your flood options as you may find flood coverage can be very affordable and extremely valuable to protect your most important asset, your home.
About MacCorkle Insurance Service
MacCorkle is a forward-thinking, highly experienced and full-service insurance brokerage firm. Driven by commitments to service excellence and leveraging technology to provide the most time and cost-effective coverage, the MacCorkle plans you choose will safeguard you, your business, your employees and your family, and ensure you are well-positioned for the future. MacCorkle's integrated insurance programs include Employee Benefits and Retirement Plans, Commercial Business Insurance, Individual and Executive Insurance, and Personal Insurance.