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Flood Insurance Primer: Is Coverage Right for You?

In the past three months I’ve gotten more questions than ever before on one topic: flood insurance. The rain showers that started the first Saturday in May and continued unabated until Sunday night forced everyone to think about their coverage.

Until recently, many Middle Tennesseans though they’d never need protection from floods. Now they have many questions about how to get insurance and what it covers. Here are the most common questions I’ve heard since the flooding in May.

Do I need flood insurance?

Nearly all businesses and homeowners should consider flood insurance, even if they do not fall within high-risk zones on flood maps. Why? Because 25 percent of flood damage occurs in areas that are considered low to moderate risk.

About half of the buildings that were damaged in the recent flood were outside the flood plain. In addition, only 12 percent of the more than 2,700 businesses Metro government estimates sustained damage had flood insurance.

Do I qualify for flood insurance?

Flood insurance is available to homeowners, renters, condo owners/renters and commercial owners/renters. Most flood insurance comes from the National Flood Insurance Program (NFIP), overseen and underwritten by the Federal Emergency Management Agency (FEMA).

The insurance is available to people and businesses within any of the 349 communities in Tennessee that participate in the program, which requires a focus on flood damage mitigation. If a community doesn’t participate in program, nobody in that area is eligible to purchase the government insurance.

There is no major alternative to the NFIP. Floods pose too great a risk for the private sector to offer affordable insurance.

What is the flood risk for my home or business?

FEMA designates certain areas as having different levels of flood risk. To get a rough idea of the risk at your property, you can enter your address in the “one-step flood risk profile” at www.floodsmart.gov.

The federal government creates maps that designate areas of risk. FEMA is in the middle of redrawing the maps across the country. A first draft of Davidson County’s revised map is due in December and will take effect in 2012. You can see an interactive map of the recently flooded areas and FEMA’s floodplain/floodway here.

How much does flood insurance cost?

Cost can vary widely depending upon what flood zone you are in and how far above the base flood elevation you are.

Private lenders generally require borrowers to carry flood insurance to cover the cost of a mortgage. Federally backed mortgage brokers must require their borrowers to carry flood insurance if the property is in a high-risk area. Those who have suffered flood damage and are seeking an SBA disaster loan must obtain flood insurance.

Are the items inside my home covered?

All NFIP policy forms can provide coverage for buildings and contents. However, you might want to discuss insuring personal property with your agent, because contents coverage is optional.

Coverage is limited in basements regardless of zone or date of construction. It's also limited in areas below the lowest elevated floor, depending on the flood zone and date of construction.

Property and belongings outside your home are not covered. Examples include trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs and swimming pools.

You can reach Ken at 615-494-9610 ext. 2610 or by e-mail at ken.halliburton@mlbins.com.

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