Flood Insurance – Is There an Alternative to the Government Backed Plan?

After Hurricane Harvey, perhaps we should all review our options for flood insurance. The threat of flood continues to increase and at the same time the existing flood insurance option is failing to deliver the comprehensive and effective protection that homes and businesses need.

Less than 20% of the homeowners who sustained damage in Texas during Hurricane Harvey will have insurance protection and that will leave many people responsible for their flood related losses.

Fair Insurance, located in Centerville, has been serving Cape Cod for the past 30 years. From renters insurance and homeowners insurance to specialty policies they’ve been helping to keep Cape Cod safe from all sorts of unexpected events. We spoke with Kathy from Fair Insurance about the best way to ensure you’re covered against flooding on Cape Cod.

If your home is located in a special flood hazard area, and you have a mortgage, the bank will require that you purchase flood insurance. If your home is not in a special flood hazard area, flood insurance is not required by the lender, but is available. The government backed plans offer coverage on homes up to 250,000 for the dwelling and 100,000 for contents. If it is a business, coverage is available up to 500,000 on the building and 500,000 for business property.

These policies contain limitations for property that is below a certain level; they exclude certain types of property and have a certain definition of what a “flood” is. In order to be deemed a “flood”, two or more acres of normally dry land, or two or more properties (one of which is yours) must be inundated with water. Although excess coverage may be available (over and above the 250,000 offered through the government backed plan), in the event of a flooding scenario similar to Harvey, the coverage may simply be insufficient.

In addition, there is no coverage provided if the homeowner must relocate while the home is being rebuilt. Loss settlement to secondary or seasonal homes is handled on a depreciated value basis.

In the past few years there have been some new carriers that have entered the marketplace. Particularly for homeowners, some of these policy forms are attractive both in the coverage area, limits available and additional options not available through the government backed plans. Some policies offer coverage up to 1 million on the home; losses are settled on a replacement cost basis, not a depreciated value basis, they have an expanded definition of “flood”, and some provide expenses if the homeowner is forced to relocate while the home is being built. For homes that are rented out, loss of rents can be included as well. In addition property in lower levels of the building is not limited.

In many cases the cost for these policies is LESS than what is available through the government backed plans. With the recent increase in the intensity of the storms, this coverage is worth checking out.

Fair Insurance provides both government backed and private market insurance. Contact Kathy Silva today to discuss which would be the best plan for you. Visit the Fair Insurance website or call 508-775-3131.

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