Ohio Residents Reminded of Flood Insurance

November 18, 2004

It happens every year. All over America, flooding repeats itself and thousands suffer major damage to their homes. And then many of the victims find out they aren’t insured. In Ohio, flooding is reportedly the most likely disaster residents will face time and time again, and 2004 is no exception.

“Buying flood insurance is the best thing you can do to protect your home, family, financial security or your business,” said Lee Champagne, federal coordinating officer with the U.S. Department of Homeland Security’s Federal Emergency Management Agency (FEMA).

Insurance is the first line of defense, and those residents with flood insurance policies do not have to wait for a presidential declaration to file a claim. A policy is the best way to reduce future disaster costs. The average policy reportedly costs about $400 a year for $100,000 of coverage.

“Standard homeowners insurance does not cover flood damage, even though flooding is one of the most frequent and devastating causes of property damage,” said Dale Shipley, executive director of Ohio EMA and state coordinating officer in the disaster recovery efforts. “Unlike a standard homeowners and renters policy, a National Flood Insurance policy covers losses to your property caused by flooding.”

Some disaster assistance includes flood insurance for those living in the Special Flood Hazard Area. Assistance grants can automatically cover the first three years’ premiums, but it is up to the applicant to ensure that the policy is maintained or it could severely limit future disaster assistance.

A primary example of the importance of maintaining flood insurance occurred during this year’s series of flooding events in Ohio. Homeowners who were flooded in the late 90’s and received certain forms of disaster assistance were insured under a three-year group policy. At the end of the three-year term the property owners chose to let their flood insurance policies lapse.

Those who failed to maintain their policies and experienced new damages were only eligible for temporary rental assistance rather than the full-range of disaster programs. Federal and state assistance can include grants for home repairs and serious other needs assistance not covered by insurance or low-interest disaster loans for homeowners, renters and businesses from the U.S. Small Business Administration.

Another important benefit available to flood insurance policyholders is Increased Cost of Compliance. Flood insurance policyholders in special flood hazard areas can get up to $30,000 to help pay the cost to bring their home or business into compliance with their community’s floodplain ordinance. This benefit is available to elevate, relocate or demolish a home or flood proof a non-residential building.

To be eligible for ICC coverage homeowners who structures are determined to be substantially damaged (experienced damage by a flood to the point that repairs will cost 50 percent or more of the building’s pre-damaged market value) by their community official or classified as a repetitively flood-damaged building can apply for this benefit. Some 2004 Ohio disaster victims now reportedly realize that by not keeping their flood insurance policies valid they loss out on possibly tens of thousands of dollars in Increased Cost of Compliance funds.

It’s important to know that if one has a federally backed, secured mortgage on a home in a high-risk zone or a home where the disaster damage was caused by flooding, federal law requires them to buy flood insurance. Also, if they received previous federal disaster assistance as a result of a flood, and that assistance included a three-year flood insurance policy, at the end of the three-year term a homeowner must maintain the flood insurance policy to qualify for future aid.

A standard flood policy will cover structural damage, furnace, water heater and air conditioner, flood debris cleanup, and floor surfaces such as carpeting and tile. Individuals can also buy a flood insurance policy to cover the contents of their home, such as furniture, clothing, collectibles, jewelry and art. Policies are available in three forms: Dwelling (most homes), General Property (apartments and businesses) and Residential Condominium Building Association (condominiums).

When one is a flood insurance policyholder:

* Flood insurance compensates them for covered losses.
* Coverage can be relatively inexpensive. In a preferred risk zone, it may be as low as $100 a year.
* Individuals can be reimbursed for flood damages even if the President does not declare a federal disaster.
* Individuals don’t have to repay a loan, as they might with many federal disaster relief packages.
* The federal government backs the NFIP and the program is self-supporting. Policyholder premiums support claims payments. Taxpayer dollars are not being used to pay for disaster damages under NFIP.
* One’s agent can help them handle their claim quickly, so that they won’t have to put their life on hold if a flood damages their property.
* One can even request a partial payment immediately after the flood, which can help them recover even faster.
* Contrary to what many believe, flood insurance does provide basement coverage. While flood insurance does not cover basement improvements such as finished walls, floors or ceilings, or personal belongings that may be kept in a basement (such as furniture and other contents), it does cover structural elements, essential equipment and other basic items normally located in basements. Many of these items are covered under building coverage, and some under contents coverage. The NFIP encourages people to buy coverage for both buildings and contents for the broadest protection (80 percent of the value is recommended).

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