Flood Insurance Requirements in Florida. Do you need it?

A common misconception among homeowners is that a homeowner’s insurance policy contains coverage for flood induced damages. Table 5-IV at the end of this section lists the perils that typically are covered by the usual type of homeowner’s policy (Form HO-3), and floods are not among them. Thus, one must look elsewhere.

The National Flood Insurance Program (NFIP) has been set up by the federal government to provide flood insurance to protect homes, condominiums, apartments, and non residential buildings including commercial structures. This insurance is sold through local agents, although it is underwritten by the federal government. There is a 30 day waiting period before a policy takes effect, and coverage tops out at $250,000 for a residence and $100,000 for its contents. Maximum flood insurance coverage for the contents of a commercial building is $500,000. Here is how “flood” is defined by the National Flood Insurance Program.

• A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is the policyholder’s property) from:
• Overflow of inland or tidal waters; or
• Unusual and rapid accumulation or runoff of surface waters from any source; or
• Mudflow; or
• Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.

So in plainer English, a flood is an excess of water (or mud) on land that is normally dry!

The Web site (www.floodsmart.gov) of the National Flood Insurance Program allows you to enter an address (street and town) to find the flood risk level of that property. Once on the web site home page, click the “residential coverage” button, then the “homeowner” button. This opens a window that lets you enter an address for your property that will define the level of risk (a zone designation) for that the property. It will also provide you with a list of agents in the area of the property from which you can purchase insurance. The site also allows you to estimate the cost of a policy by clicking the “Estimate your cost” button on the home page.

The accompanying table presents some sample costs. This data is for inland areas not coastal zones, but data for the latter is available. At least for the zones listed, the costs shown are quite moderate. A detailed analysis for your specific property must to be done with an agent. The average flood insurance policy in 2014 costs about $650 per year.

Table 5-IV

Sample Flood Insurance Coverage
Risk Level	Building Only	Premium ($)	Contents Only	Premium ($)	Building and Contents	Premium ($)
Preferred	250,000	NA	100,000	177	250,000/100,000	352
Zone A1*	250,000	499	100,000	226	250,000/100,000	695
Zone A2*	125,000	401	50,000	166	125,000/50,000	569**

*Zone A1- Area with a 1% annual chance of flooding and a 26% chance of flooding over the life of a 30 year mortgage. **May be somewhat less than indicated number.

Now back to the question in the title. Does your property need to be insured for floods?

“There’s hardly any place in Florida that you’re not at some risk of flooding,” according to a spokesperson at NFIP. Different areas of the country have been mapped by the NFIP for their risk of flooding. These maps are subject to revision because of changing weather conditions and/or changes in the flow patterns of natural bodies of water. This may also apply to mobile homes as they have their own individual requirements (perform your own due diligence). Need to get back up to speed after a flood? Learn more about the correct heat pump size for a 14×70 mobile home.

Floods can happen when bodies of water overflow due to heavy rainfall (or thawing snow in northern Florida!). A flash flood, which can strike anywhere without warning, occurs when a large volume of rain falls within a short time. When more and more buildings, roads and parking lots are built on raw land, the land’s natural ability to absorb water is destroyed. This factor when coupled with changing weather patterns, has made recent floods more severe and increased everyone’s chance of being flooded. In fact, as much as one-quarter and maybe as much as one-third of flood claims are from out of high risk areas.

Although the NFIP expected to pay out more than $23 billion in claims for Katrina, Rita and other storms in 2005, it estimates that more than 50% of residents affected by the storms didn’t have flood protection. This startling statistic itself should motivate you as a Florida (potential) property owner to investigate your vulnerability to flooding losses and the cost to insure against them.

Table 5-V

Perils that are typically covered by a Homeowner’s Insurance Policy
Fire or Lightning	Windstorm or Hail
Explosion	Riot or Civil Commotion
Aircraft	Vehicles
Smoke	Vandalism or Malicious Mischief
Theft	Volcanic Eruption
Falling Objects	Weight of Ice, Snow, or Sleet
Accidental Discharge or Overflow of Water or Stream	Tearing, Cracking or Bulging
Freezing	Sudden and Accidental Damage from Artificially Generated Electrical Current
Open Peril on Buildings	Sinkholes

Learn about important topics for Florida homeowners and Florida retirees in the Florida Retirement Book here: Florida Retirement Book