Eagle Eye Contents — Summer 2006

The recent flooding that has been experienced here in northern New England has received a lot of media attention and discussion about what people have for insurance coverage. The standard homeowners or business property policy does not have any coverage for flooding. A general quick definition of flooding is surface water that either seeps in through cracks in a foundation from the pressure of the water, or water that flows in from outside that runs on top of the ground. Any loss to the building, walls, driveways, and the items in the building are not covered.

In plain English, a flood is excess water (or mud) on land that is normally dry.

Floods often happen when bodies of water overflow or tides rise due to heavy rainfall or thawing of snow. But you don’t have to live near water to be at risk of flooding. A flash flood which can strike anywhere without warning, occurs when a large volume of rain falls within a short time.

Option 1: Hope that you’ll receive Federal disaster relief if a flood hits.

Many people wrongly believe the the US government will take care of all their financial needs. The truth is that the assistance is only available if the President formally declares a disaster and then the assistance is in the form of a loan you have to repay.

Option 2: Buy Flood Insurance

Homeowners can insure their homes up to $250,000 and contents to $100,000. Renters can insure up to $100,000. Commercial properties can be insured up to $500,000 for both building and contents. The cost of the insurance is based on the area the property is in and it’s relative risk to flooding. There are 3 basic zones with subcatagories. The highest risk areas would pay about $400 per year for $100,000 in coverage, while the low to moderate risk areas could pay as little as $112 a year for the same coverage.

You are eligible for flood insurance as long as your community participates in the National Flood Insurance Program.

Policies generally take effect 30 days after you purchase the coverage, so when the weather forecasters are predicting a storm, it’s already too late.

• Floods and flash floods happen in all 50 states
• Just an inch of water can cause costly damage
• Hurricanes, winter storms and snow melt are common causes of flooding
• In a high risk area, there is a 26% chance of having damage from flooding compared to 9% chance of fire over the life of a 30 year mortgage.
• 25% of claims paid out have been in low to moderate risk areas
• Average 10 year losses have been $867 million dollars per year (’94-04)
• Only 4.7 million people have a flood insurance policy.

The federal government has an informative web site, www.floodsmart.gov that has a lot of good information and a place where you can type in your address and it will give you a preliminary assessment of the risk you have to flooding in your area.

Give us a call and we can work up a quote for you, if you decide to buy this important coverage.