By Steven M. Ladd
The Horan Companies
After watching and reading about the effects of hurricanes Harvey and Irma these past few weeks, I’ve begun to think a lot about flooding. The sheer devastation that flood water can have on a home, a business and a town’s infrastructure is hard to imagine. FEMA (the Federal Emergency Management Agency) defines a flood as 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 from: overflow of inland or tidal waters; or unusual and rapid accumulation or runoff of surface waters from any source; or mudflow.
As residents of Central New York, most of us have lived with little to no concern about flooding. Only a small percentage of our geography lies in a special flood hazard area. However, 30 percent of paid losses have occurred outside of high hazard areas on a national scale. In fact, in high-risk areas (otherwise known as flood zone A), properties have a 26 percent chance of flooding over the lifetime of a 30-year mortgage. Compare that to just a 9 percent risk of fire during that same period.
The fire, we are insured for. Flood waters, we are not.
A flood policy has a few quirks to it though. In order to get a policy, you’d first have to wait for 30 days before it would kick in. This prevents people from buying policies at the last second when a flood is imminent. If you are in the process of purchasing a home, then the 30-day waiting period is waived. If you are purchasing in a moderate/high flood zone, the lender will require a flood policy before funding the loan. Thankfully replacement cost coverage for the home and for its contents is available.
Occasionally, the flood maps are redrawn. Some properties come out of high-risk zones while others are added. This can lead to surprises when some people go to sell a home. If during the initial purchase the property was not in a flood zone, but later was added to one, that property is considered grandfathered in, leaving the bank unable to require coverage. However, when the property is later marketed for sale, a buyer wishing to obtain a loan would be required to purchase a policy. With the increase in national flooding, we are beginning to see banks ask for it on some lower risk properties too.
While for most of us, flood insurance is not mandatory, it can have significant benefits. Even if you are in a low-risk zone, give it some thought. It could mean the difference between rebuilding as soon as possible or waiting in line for a FEMA trailer.
Steven M. Ladd is an insurance agent with Horan Companies, Inc. He can be reached at (315) 635-2095 or [email protected].
