Flood insurance is mandatory if you live in a high-risk area and have a mortgage from a federally regulated or insured lender.
Reassessing Risk
How New Flood Maps Effect Insurance
Flood insurance is an important first step in protecting your financial investment. Over the life of a 30-year loan, a home in a high-risk area (Special Flood Hazard Area) has about a three-times greater chance of having a flood than having a fire. In accordance with the Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994, flood insurance is required for all structures located in a high-risk area, that carry a home mortgage loan back by a federally-regulated or insured lender. The risk can vary dramatically from neighborhood to neighborhood and within a neighborhood. Remember, flood insurance is available for all properties, regardless of risk designation, and is the only insurance that protects your home or business from flood damage.
Changing Costs
Zone Changes May Effect Flood Insurance Costs
Insurance costs may rise for some to reflect heightened risk. However, property owners may be able to save money by purchasing flood insurance prior to the new maps becoming effective. This process is called grandfathering. For more information on grandfathering, go to the Resources page.
Likewise, some property owners may find their risk is now reduced and that they are eligible for an optional, low-cost flood insurance policy known as a Preferred Risk Policy. To learn more about a Preferred Risk Policy, go to the Resources page.
Policy Statistics
Shawnee County Flood Insurance Statistics*
| Community |
Policies
in Force |
Cum. Coverage |
Cum. Claims Pd
Oct 31, ‘04—Oct 31, ‘09 |
| City of Auburn |
3 |
$595,000 |
— |
| City of Rossville |
189 |
$22,514,000 |
$588,857 |
| Shawnee County |
247 |
$49,742,000 |
$499,113 |
| City of Silver Lake |
11 |
$1,905,000 |
($939) |
| City of Topeka |
504 |
$76,442,000 |
$839,985 |
| City of Willard |
2 |
$200,000 |
— |
| TOTAL |
956 |
$151,398,000 |
$1,927,016 |
* Data as of October 31, 2009
Purchasing Considerations
Why Buy Flood Insurance?
Since standard homeowners insurance does not cover flooding, it is important to have protection from the floods associated with heavy rains, snow melt, etc. In 1968, Congress created the National Flood Insurance Program (NFIP) to help provide a means for property owners to financially protect themselves. The NFIP offers flood insurance to homeowners, renters, and business owners if their community participates in the NFIP. Participating communities agree to adopt and enforce ordinances that meet or exceed FEMA requirements to reduce the flood risk.
Flood insurance protects two types of insurable property: buildings and contents. The first covers your building, the latter covers your possessions; neither covers the land they occupy.
Building coverage includes:
- The insured building and its foundation.
- The electrical and plumbing system.
- Central air conditioning equipment, furnaces and water heaters.
- Refrigerator, cooking stoves, and built-in appliances such as dishwashers.
- Permanently installed carpeting over unfinished flooring.
Contents coverage includes:
- Clothing, furniture and electronic equipment.
- Curtains.
- Portable and window air conditioners.
- Portable microwaves and dishwashers.
- Carpeting that is not already included in property coverage.
- Clothing washers and dryers.
The two most common reimbursement methods for flood claims are: Replacement Cost Value (RCV) and Actual Cash Value (ACV). The RCV is the cost to replace damaged property. It is reimbursable to owners of single-family, primary residences insured to within 80% of the building’s replacement cost.
All other buildings and personal property (i.e. contents) are valued at ACV. The ACV is the RCV at the time of loss minus physical depreciation. Personal property is always valued using the ACV.