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Just Because You Are Not In A Flood Zone Doesn’t Mean You Don’t Need Flood Insurance

With the weather in the Pensacola area this week, I thought flood insurance would be an appropriate topic to discuss.

 On Oct 18, Pensacola airport reported over 6 inches of rain, and over 9 inches was reported in Gulf Breeze.

And there is still more rain to come.

Owning real estate in the Pensacola area, or on the gulf coast in general, means living with ridiculously high homeowners insurance rates. The typical homeowner would assume that their insurance policy would cover anything that caused damage to their home, including flooding. Given the cost of insurance in Pensacola, that would seem to be a valid assumption.

Unfortunately, many gulf coast home owners found to their dismay that this was not the case after hurricane Ivan hammered Pensacola in 2004. Owners of flooded homes were given the cold shoulder by their insurance carriers, and the courts stood by the insurance companies.

Here are some important points regarding flood insurance.

1)  Flooding is not typically covered under a homeowners insurance policy

Other losses caused by wind, fire, lightning, vandalism and burglary are covered. If you want to buy flood insurance, it must be obtained through the National Flood Insurance Program administered by FEMA. Your insurance carrier should be able to help you obtain flood insurance, although some insurance carriers have stopped providing this service.

2) Do Not Depend on Federal Disaster Assistance

To be eligible for federal disaster assistance, a community must be declared a federal disaster area. In most cases, flooding tends to be a localized event and a federal disaster declaration is not issued.

And IF disaster assistance is available, it is usually a loan you must repay, with interest.

After hurricane Ivan, the Pensacola area was declared a disaster area, and thus many homeowners without flood insurance were provided varying degrees of financial assistance. As an example, I knew a resident of a home in the Bayou Grove subdivision that was flooded with 3 feet of water when Bayou Chico rose from the Ivan storm surge. All of the owner’s possessions were destroyed, and the home had to be gutted. FEMA paid $10,000 to cover damage to the home and the contents. FEMA_Staging_Sign_Resize300Contractor estimates to repair the home were over $50,000.

3) Flooding can extend beyond flood zones

Approximately one third of all flood claims come from moderate to low risk areas outside of delineated flood zones. FEMA estimates that 1 in 4 homes in high risk areas will experience a flood over the course of a 30-year mortgage.

4) Flood insurance premiums are based on property location

In other words, if your home is in a flood zone, your premiums will be higher. To find out how much flood insurance will cost you, you need to know if you are in a low to moderate, or high risk flood area.  Refer to this article on How To Determine The Cost Of Flood Insurance in Pensacola.

It is extremely important to know whether a home you are living in, or one you are considering purchasing is in a flood zone. I have seen several instances where a contract was finalized for the sale of a home only to fall apart weeks later when it was found that the home was in a flood zone.

5)  Flood Insurance coverage

Comprehensive flood insurance coverage includes two policies.

The first covers the structure
The second covers the contents of the home.

When researching the cost of flood insurance, the policies will be broken down into these 2 categories.

The Pensacola News Journal wrote an article regarding Flooding in the Pensacola area after hurricane Ivan. This article provides useful information about flood insurance and some sad situations that could have been avoided by obtaining flood insurance coverage.  Fema_Trailers_Resize300

And if you do lose your home to a flood in Pensacola, there is a bright side. FEMA still has lots of trailers sitting out at the Saufley Field Naval Base just waiting for, well, waiting for something. They have been there since early 2005, so I’m not sure what they are waiting for.   (Update: As of April 2008, the FEMA trailers are gone).

Those trailers out there are empty. There were too many to count. If anyone can help me understand why they are sitting out there, I’d love to know.

Here are some useful flood insurance links:

FEMA Information For Homeowners and Renters  

Flood Smart

Click on Pensacola Real Estate News for a list of articles indexed by category.

  1. Pensacola Real Estate News » How To Determine The Cost Of Flood Insurance Coverage In Pensacola

    […] article is a follow-up post to a previous article on why many people should get flood insurance in the Pensacola […]