A Flooded House on Long Island

Most insurance companies have restrictions based on the homes’ proximity to the ocean and other tidal waters, therefore, it becomes important know the obstacles you are up against BEFORE you purchase that dream house. The cut-off for most companies is 2500 feet of the ocean or tidal bay, although this may vary.

In recent years, the increased hurricane activity and the over-development along waterfront property has put more homes in harms way of wind and water damage. To limit exposure to these catastrophic storms and hurricanes, many insurance carriers have introduced wind or hurricane deductibles into their policies. This deductible typically can be 2%, 5% or 7% of your dwelling coverage, which can be a hefty amount.  For example, if your dwelling coverage is $250,000, your 5% deductible will be $12,500. You should therefore review your home insurance policy and understand this important deductible language. You must understand:

1. What % deductible your policy carries (2%, 5%, 7%) 

2. What triggers the deductible to apply (a windstorm, a category one or category two hurricane).

Another important consideration when insuring your home near any body of water should be flood insurance, as your home policy will not normally cover damages arising out of a flood. In New York, companies selling the National Flood Insurance policy can help you with this coverage. The Federal Emergency Management Agency (FEMA) has established flood zones for your home’s location and the insurance premium will be based upon that flood zone.  For example, premiums for $250,000 of dwelling coverage will range from $338 annually in the most desirable “X” zone and could be as much as $1,000-2,000 in the more vulnerable “A” zone.   

As insurance companies re-evaluate their risk management in the New York coastal areas it is more important than ever to continually review your home insurance policy and set up a meeting with your agent to make sure you are properly covered. The cost for this “insurance check-up” should be free, and could give you some much needed peace of mind knowing that you are properly covered before disaster strikes.

A Flooded Street in NYC

If you are one of the unfortunate policyholders that have received a non-renewal notice due to your home’s location you should not panic, as you will have a couple of months to secure new coverage. First, try and get a referral from the company that is cancelling you, as they may have a relationship with a local broker that is able to write your insurance. And secondly, make sure you try and stay with a financially secure and reputable company.

1. Floods are the #1 natural disaster in the United States.

2. Most home insurance policies don’t cover flood damage.

3. Hurricanes, winter storms and snowmelt are common (but often overlooked) causes of flooding.

4. If you live in a low-to-moderate risk area and are eligible for the Preferred Risk Policy, your flood insurance premium may be as low as $119 a year, including coverage for your property’s contents.

5. Last year, one-third of all claims paid by the National Flood Insurance Program were for policies in low-risk communities. (Source: www.floodsmart.gov)

6. Your home has a 26% chance of being damaged by a flood during the course of a 30-year mortgage, compared to a 9% chance of fire. (floodsmart.gov)

7. Everyone lives in some type of flood zone. These are geographic areas that FEMA defines, based on studies of flood risk. The zone boundaries are shown on flood hazard maps, also called Flood Insurance Rate Maps.

Where Can You Buy Flood Insurance?
You can purchase flood insurance from your insurance agent through the National Flood Insurance Program. The National Flood Insurance Program is backed by the U. S. government.

Does Home Insurance Cover Flooding?
Most do not cover flooding. Homeowners can include personal property coverage in their NFIP policy, and residential and commercial renters can purchase flood coverage for their contents. Business owners can also buy flood insurance coverage for their buildings, inventory and contents.

Does a flood insurance policy offer any type of basement coverage?
Yes, it does. A basement, as defined by NFIP, is any building area with a floor below ground level on all sides. Basement improvements – finished walls, floors or ceilings – are not covered by flood insurance,  nor are personal belongings, such as furniture and other contents. But flood insurance does cover structural elements and essential equipment, provided it is connected to a power source (if required) and installed in its functioning location. Examples of items covered may include the following: sump pumps, well-water tanks and pumps, oil tanks and the oil inside, natural gas tanks and the gas inside, pumps or tanks used with solar energy, furnaces, water heaters, air conditioners, heat pumps, electrical junction and circuit breaker boxes (and their utility connections).