Friday, March 19, 2010

Spring brings flowers, birds, greenery and oh yeah Flood!

Last Friday evening was a beautiful spring (almost) evening here in Central New York, and flooding was the furthest thing from my mind with the sunny blue skies over head. That was until I ventured up to the new shed I built last year to rescue one of my daughter's bikes from it's winter slumber. You see the ground was literally seeping water around my shoes with each step and that reminded me that its Flood Season.

It is that time of year when the winter melt combined with the spring rains often creates the perfect recipe for flooding and tragically this peril is not covered by any personal property insurance policies (e.g. Homeowner Insurance) nor by 99% of commercial property policies in effect today. Sadly, despite millions of dollars in awareness advertising by the National Flood Insurance Program(NFIP) and written notice in every property policy letting the policyholders know, many insureds do not understand this gap in coverage exists until it is too late.

Let me be perfectly clear now so there is no misunderstanding:


There I said it, now you know. Of course you should understand what is meant when someone calls something a flood. The NFIP defines Flood as follows:

  • 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.

The sad fact is it is not so clearly defined in most property policies out there. In fact the ISO Homeowners policy does not define it at all, but they do exclude it. You may wonder why there is no coverage for the exposure in your traditional property insurance policies, and it lies in the root of the catastrophic nature of this type of loss. For the most part floods are widespread and cause large amounts of damage. Do to this massive exposure it was deemed un-insurable by the traditional insurance companies. In response the federal government created the NFIP, a department of the Federal Emergency Management Agency (FEMA) in an effort to reduce the financial losses of consumers and public entities from the devastating effects of flooding. It was designed to provide a federally backed insurance market to handle the exposure of Flood as defined by NFIP.

The good news is you can buy flood insurance through your local Independent Insurance Agent via the NFIP or one of its approved Write Your Own (WYO) insurance carriers. This access is for both Consumers and Businesses, each in there own unique programs.

There are 2 critical things to remember when making the decision to purchase Flood Insurance. The first is that the only people that can purchase flood coverage through NFIP programs and have it be effective immediately is for a mortgage closing which requires the coverage. Otherwise you have to wait for 30 days from the date of application for your policy to become active. This stipulation was put in to prevent people from only securing coverage when there was an eminent threat of a flood, thus forcing participants to be proactive. The 2nd thing to remember is that contents of the structure are not automatically included in the base flood policy. So you will want to add that coverage in when you purchase the policy.

There are many other considerations when purchasing flood insurance. It is important you talk to an Independent Insurance Agent to discuss the coverages you need and the unique characteristics of your exposures. You will also find more information at the following website -

Its Flood Season....are you ready?

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