FLOOD INSURANCE

Many homeowners aren’t aware that standard home insurance does not cover flooding. With the increase in severe weather conditions in the United States over the last few years, this can present a crisis for those whose homes are not covered when intense rain, hurricanes, or tropical storms strike.

To help protect homeowners, renters, and business owners with flood insurance, Congress created the National Flood Insurance Program (NFIP) in 1968. Communities in high-risk areas for flooding work with NFIP to bring help to reduce the danger of flooding. If standards set by FEMA (the Federal Emergency Management Agency) are met or exceeded, participating communities are included in flood insurance programs that make this insurance affordable and accessible.

If you take out a flood insurance policy, you can select from one or both of two kinds of insurance. The first, building insurance, is exactly what it sounds like: insurance that covers a building, like a home or an office, if it’s damaged in a flood.

Building insurance covers the structure of the building and its foundation, as well as the electrical and plumbing system. It also covers heating, ventilation, and air conditioning elements, like central air conditioners and furnaces, and water heaters. Major appliances can be covered by building insurance: stoves, dishwashers, and refrigerators. Building insurance also covers flood-damaged permanent carpeting that is installed over unfinished flooring.

The second type of flood insurance available covers the contents of a building. This can be purchased by building owners and by renters. This type of insurance covers personal belongings, such as clothing, electronics, window treatments, portable air conditioners, small appliances, clothing washers and dryers, and carpeting that is not already covered by building insurance.

Replacement Cost Value (RCV) is what you would need to spend to replace your damaged property. This applies to owners of single-family, primary residences for up to 80 percent of the building replacement cost, depending on the policy.

Actual Cash Value (ACV) is calculated by subtracting physical depreciation from the Replacement Cost Value at the time the property is lost, and is always used to reimburse the loss of personal property because of wear and tear.