If you own a home or business in New York or the tri-state area, it is more important than ever to be protected against flood damage. And if there is any doubt about owning flood insurance, you need look no further than the serious storms this area endured last year, including Super Storm Sandy, which devastated the tri-state area and caused billions of dollars in property damage. Many homes and businesses were destroyed beyond salvage or repair. But were they properly covered?
Flood damage is not covered by homeowners and business insurance policies and many home and business owners without flood insurance were wiped out with little or no financial recourse. A home or business that is not insured could lose everything.
So are you properly protected? A disaster can strike at any time and you need to be ready. Berkley Brokerage can help ensure that you are covered in the event of another Super Storm or serious weather event. We can make sure that you have the flood insurance coverage you need to rebuild and get on with your life and business.
Flood Insurance covers the structure and contents of your home or business in the event of a flood caused by a natural disaster. It does not cover water main ruptures, pool leaks, or burst pipes. Those events are typically covered under traditional home and business policies. Flood Insurance is designed to protect you from the catastrophic flooding caused by natural disasters and hurricanes like Super Storm Sandy.
The Long Island Sound and Atlantic Ocean caused catastrophic damage to homes and businesses on Long Island, Connecticut, and New Jersey. This damage was not covered under traditional home and business insurance policies. Buildings and their contents were literally pulled out to sea by the violent overflow of the Long Island Sound and Atlantic Ocean during the last storm.
Standard flood insurance policies cover up to $250,000 for your home and $100,000 for the contents. A business can be covered for up to $500,000 of building coverage and $500,000 of contents coverage. Please note that basements in either homes or buildings are not covered under flood insurance. In fact, businesses that are located above the ground floor in the building are afforded a lower rate on the premium.
Who should buy Flood Insurance? Some homeowners are required to buy Flood Insurance as a condition of their mortgage. Even if this is not a requirement, we recommend that any home or business that could be at risk of exposure to flood buy flood insurance at the maximum limit.
You may ask, why can’t I rely on federal disaster assistance? Federal disaster aid such as FEMA can be helpful in the event of major disasters. There is however, no guarantee that they will pay anything out and if someone qualifies it can take a very long time before those funds become available. As evidenced recently with Hurricane Sandy, some businesses and homeowners are only just receiving distributions from FEMA and others are still waiting. Federal disaster assistance is usually a loan that must be paid back with interest. For a $50,000 loan at 4% interest, your monthly payment would be around $240 a month ($2,880 a year) for 30 years. Compare that to a $100,000 flood insurance policy, which can range between $150 and $2500 per year depending on your location and needs.
Considering Flood Risk
- In most cases, it takes 30 days after purchase for a policy to take effect, so it’s important to buy insurance before the storm approaches and the floodwaters start to rise.
- If you are a Condo or Co-op Owner or Renter, consider where your unit is. If you are close enough to a body of water and on the ground or first floor you should consider Flood Insurance. In some cases, even second floor residents should consider taking on a flood insurance policy depending on the flood plain and proximity to a body of water. Second floor residents living in Long Beach, Staten Island and other coastal areas were not immune to the flooding caused by Hurricane Sandy.
- Being pro-active during a potential flood is the best defense. Know when weather is coming, move your items from your garage, basement, or storage space; anything at ground level. For items that are more difficult to move, such as furniture or equipment, place them up on blocks.
There are several types of Flood Insurance coverage that you may want to consider.
- Contents Coverage requires an additional premium but will cover items such as clothing, furniture, electronics, swimming pools, plants and fences. These items are not automatically covered under a standard flood policy and are often the most expensive items to replace.
- Excess Flood Insurance-A standard National Flood Insurance Policy only covers $250,000 worth of building damage (as explained in more depth above) and $100,000 in contents coverage. If a person has a home that is worth $1,000,000 including property and contents, then $650,000 is completely unprotected by the policy. In cases such as this, Berkely Brokerage highly recommends excess flood coverage.
- Preferred Risk Flood Insurance-If you live in a moderate-to-low risk area and are eligible for the Preferred Risk Policy, your flood insurance premium may be significantly lower than a standard risk policy.
- Floods and flash floods happen in all 50 states.
- Everyone lives in a flood zone.
- If you live in a Special Flood Hazard Area (SFHA) or high-risk area and have a federally backed mortgage, your mortgage lender may require you to have flood insurance.
- Just a few inches of water from a flood can cause tens of thousands of dollars in damage.
- A car can easily be carried away by just two feet of floodwater. Any damages would be covered by your automobile insurance policy.
- Hurricanes, winter storms and snowmelt are common (but often overlooked) causes of flooding.
- New land development can increase flood risk, especially if the construction changes natural runoff paths.
- In a high-risk area, your home is more likely to be damaged by flood than by fire.
- When your community participates in the Community Rating System (CRS), you can qualify for an insurance premium discount of up to 45% if you live in a high-risk area and up to 10% in moderate- to low-risk areas.
Contact Berkely Brokerage today to determine the right coverage for your property and a full review of your existing policy.