Living along the coast means beautiful views of the ocean and the wonderful smell of salt in the air. However, the closer you live to the water, the higher your risk of flooding becomes. In the wake of recent natural disasters like Hurricanes Harvey, Irma, Jose and Maria, HIG wants homeowners to understand the importance of having flood insurance in Massachusetts and Rhode Island, especially considering that 80% of homeowners affected by Hurricane Harvey, unfortunately, did not have flood insurance. We sat down with insurance agent and HIG partner, Paul Burke, to answer homeowners’ most common questions about flood insurance.
Q: Who needs flood insurance?
Paul Burke: If you live near a body of water, whether it be along the coast or near a river or lake — you need flood insurance. Unfortunately, we have seen a lot of situations where homeowners didn’t believe they were in a flood zone or didn’t think they would be affected by a flood, and because the cost of damages can be significant, the effects were devastating. Experts are all talking about sea levels rising, and over the last few years we have seen unpredictable weather, so being prepared can save you an enormous amount of stress and money.
While we believe everyone should consider a flood insurance policy, for some, it is a must. For example, if you buy a home located in a flood zone, you’ll need to have a flood insurance policy in place in order to obtain a mortgage. If you already own a home located in a flood zone, you should have flood insurance. Period. Even if you are outside of a zone, but close to one, you should consider purchasing a flood insurance policy.
Q: How do I buy flood insurance?
PB: Flood insurance can be purchased through the National Flood Insurance Program (NFIP), or you can shop the private markets, insurance provided by a private market insurance carrier. However, in either scenario, flood insurance cannot be purchased directly. You can only obtain flood insurance through a participating insurance agency, like HIG. Flood insurance is complicated because it’s always changing, so having an experienced agent walk you through the process of determining your risks and the coverage you need, is a must.
At HIG, we have a tremendous amount of experience working with coastal homeowners on the southcoast of Massachusetts and in Rhode Island, and that’s something that has paid off big for our clients time and time again. For example, we had a client who owned a home along the coast who came to us after working with a different insurance agency. The agent they had been working with actually had the elevation of their home wrong, and was helping them get way more coverage than they actually needed. We know the area and we know what to look for, so when we noticed the error, we re-evaluated their policy and saved them a huge amount of money on their premium.This is the kind of expertise you need to look for in a flood insurance agent, someone who is knowledgeable and willing to go the extra mile for you, and that’s what we do here.
Q: How do you make sure you have adequate flood coverage?
PB: Well, you buy as much coverage as you need. The NFIP offers two types of limits — you can purchase one or both. One policy covers your actual home, meaning the building itself, and the other covers your personal property within the home. You can purchase up to $250,000 for the cost of your home. For personal property coverage, NFIP will cover up to $100,000 for your belongings. To know how much personal coverage you should purchase, we recommend doing a home inventory to come up with an actual cash dollar amount for your belongings. A home inventory is especially important when it comes to renters, since you are likely only purchasing coverage for your belongings. Electronics, furniture, your clothing, all of those things add up quickly.
Certainly, if the cost to rebuild your home is less than the policy limit of $250,000, you can buy less coverage. Otherwise, you should purchase up to the limit. If the cost to rebuild your home exceeds $250,000 or the cost of your personal belongings exceed $100,000, sometimes the same coverage options can be found in the private market with higher policy limits, but understand that these options are limited. The private market is relatively small and is selective in who qualifies for coverage. Here’s where I’ll say it again: flood insurance is complicated. Especially now, the flood insurance market is undergoing a lot of changes. Luckily, when you work with an agency like HIG, it’s our job to keep up with these changes along with changes to flood maps, which can impact your home’s insurance needs. Just because you’re not in a flood zone now, doesn’t mean you won’t be in 5 years. But that’s a big part of our job, making sure you always have the right amount of coverage to protect your home and belongings.
Q: How can you save on flood insurance?
PB: If you believe your house is above the flood level, you can get an elevation certificate to help save on the cost of insurance. Like I said before, we’ve seen clients who have the wrong elevation recorded for their home. If your elevation is recorded as being lower than it really is, you could be purchasing more insurance than you need. Conversely, if you are in a high-risk flood zone and your home is below flood zone level, you can choose to elevate your home. Again, this is something you should discuss with your insurance agent. At HIG, we’re very familiar with the area, and can help determine if this is a good strategy for your specific property.
For homebuyers, you should ask if the existing residents have a flood insurance policy in place. NFIP allows you to take over the already existing flood policy when purchasing a home in a flood zone and because this policy is already in effect, it is likely that the premium will be lower.
Q: Is there flood insurance for renters and condo owners?
PB: Yes. Most flood laws require a building owner, whether it be a condo owner, a condominium association, or a landlord, to have flood insurance coverage for the building. So since the property owner usually covers the property itself, renters and condo owners may only need to purchase a policy for their personal belongings. However, as a condo owner, it’s very important that you read the condo association bylaws to understand specifically what is covered and what is not. An HIG agent can help you understand the terms of your condominium bylaws to find the policy that best suits your needs.
Don’t forget — renters and condo insurance policies are similar to a homeowner’s insurance policy in that none of them offer flood coverage.That’s why it’s just as important for renters and condo owners to add flood insurance coverage to their current insurance policies.
Here at HIG, we know that flood insurance can be confusing and you likely have more questions. Let Paul help you navigate the unpredictability of Mother Nature and the flood insurance market — give him a call at (508) 676 5949 or visit our website to speak to an HIG flood insurance professional today.