Category: Flood

Protecting Your Condo Against Floods

Flood insurance is a horse of a different color when it comes to the types of coverage available because it must be obtained through the Federal Emergency Management Agency (FEMA). Under the National Flood Insurance Program (NFIP), there are flood insurance guidelines and policies for both the condo association and the individual unit owner.

The condominium association is responsible for maintaining all forms of property insurance necessary to protect the common property against hazards to which that property is exposed. If the condominium is located in a Special Flood Hazard Area as designated by the federal government, it is the responsibility of the condo association to provide adequate flood insurance protection for all common property.

The Residential Condominium Building Association Policy (RCBAP) Form is designed for buildings owned by condominium associations that have at least 75% residential occupancy and are located in communities covered under the flood insurance program. High-rise and low-rise residential condominium buildings can be insured under the RCBAP. The program enables the association to manage flood insurance needs according to their insurance requirements. Under the RCBAP, the entire building is covered, including the common areas, individually owned building elements within the units, and commonly owned personal property if the policy is written with contents coverage.

The RCBAP is a replacement cost policy. This means that no depreciation deduction is taken at a loss settlement. The maximum available limit is $250,000 per unit times the number of units. Buildings that are not insured for at least 80% of their replacement cost or the maximum amount of insurance available for that building under the NFIP would be subject to a co-insurance penalty at settlement.

Since the association’s coverage of building elements within their unit would be primary, and the unit owner’s personal coverage considered excess coverage, unit owners should obtain information about the by-laws and building coverages provided by the association.

In addition to building elements, unit owners should cover their personal property as well as structural improvements they have made. The policy that addresses the insurable needs of residential unit owners is the Dwelling Policy Form. This form can cover building elements within units, improvements made by unit owners, flood loss assessments and personal property owned by the unit owner or it can simply cover the unit owner’s personal property depending upon how the policy is written. It may not, however, be used to cover the cost of co-insurance or deductibles. An individual unit’s coverage cannot exceed the $250,000 building policy limit for single-family dwellings in program communities, or the $35,000 building coverage limit in emergency program communities.

There are options for covering improvements within units made by the unit owners. If the unit owner purchases contents coverage under the Dwelling Policy Form, coverage is also available for the interior walls, floor and ceiling, if not otherwise covered under the condo association’s flood insurance policy. The coverage limit is 10% of the amount of the contents coverage. If a unit owner uses the contents coverage to insure improvements, it reduces the personal property limit.

If you need assistance in finding flood insurance coverage for your condo, please give us a call.

Uncovering Common Misconceptions About Flood Insurance Coverage

According to the National Flood Insurance Program (NFIP), flooding is this country’s most prevalent natural disaster. In the years between 1995 and 2004, flood losses in the U.S. averaged $867 million annually. There are about 4.7 million citizens who have taken advantage of the government’s flood insurance protection, however large numbers of at-risk Americans still refuse to find coverage.  After hurricane Katrina last summer, when nearly 80% of New Orleans was underwater, it is surprising that people would not seek such coverage, since their homeowner’s policies do not insure them against floods.

Part of the problem stems from the innate sense that if it’s offered by the federal government, applying for it must be: a) tied up in red tape, and b) too complicated due to all the exclusions. Both of these statements, however, are not true. Let’s examine some of the commonly held beliefs about flood insurance:


  • You can’t buy flood insurance if you are in a high-risk area.  Flood insurance is available to all homeowners and businesses in any community that participates in the NFIP. You can check to see if your community participates by visiting The only issue which would prevent you from obtaining flood insurance is if you reside in a Coastal Barrier Resource System location, or a location that is designated as an Otherwise Protected Area. Land that falls under these two categories are undeveloped areas along coastlines. The flood insurance program doesn’t provide coverage in these areas to discourage settlement where there is an extreme risk not only for flooding, but potential loss of life.
  • You can only get flood insurance if you are a homeowner.  Condominium/co-op owners, apartment dwellers, and commercial/non-residential building owners can purchase NFIP coverage. There is a maximum of $250,000 worth of coverage on a one-family residential building. The maximum per-unit coverage limit on a residential condominium/co-op association building is also $250,000. Contents coverage for any residential building is limited to $100,000. Commercial/non-residential structures can be insured for a maximum of $500,000. You can also insure the contents of commercial buildings up to $500,000.
  • You have to wait 30 days for flood insurance protection to take effect. Usually there is a 30-day waiting period from the time a policy is purchased until you are covered. However, there are some exceptions. There is no waiting period if you already have a flood insurance policy, but need more coverage to increase, extend or renew a loan, such as a second mortgage, home equity loan, or refinance. Coverage is effective immediately, as long as you pay the premium at or prior to loan closing. There is a one-day waiting period when additional coverage is requested because of a map revision. This applies when the NFIP revises the map so that a non-Special Flood Hazard Area becomes a Special Flood Hazard Area. Coverage must be purchased within 13 months following the map revision to be applicable for the reduced waiting period.
  • You can get Federal Disaster Assistance even if you don’t have your own flood insurance policy.  The Federal Disaster Program will only provide coverage to uninsured individuals or businesses if the affected area is declared a federal disaster area, which occurs less than 50% of the time.  Statistics show the awards average about $4000 dollars and most are made in the form of a Small Business Administration Loan, which must be paid back with interest.  Furthermore, the award recipient must carry flood insurance for the duration of the loan.


To learn more about the terms of flood insurance coverage, log on to

Source: FEMA Publication F-216 (08/04) and

Flood Damage to Cars Isn’t Always Easy to Spot

Wherever you find disaster, you almost always find someone attempting to profit. Following hurricanes Katrina and Rita in the summer of 2005, thousands of water-damaged vehicles showed up in car lots all across the southern United States, many with no visible problems.  They were sold outside of the hurricane’s heavy-hit areas, to avoid suspicion of flood damage.  Though in excellent physical condition, these refurbished cars could still be prone to problems, which is why concealing their disastrous history is against the law.

A “flooded” vehicle is one that has been submerged or partially submerged in water to the extent that damage to the body, engine, transmission or differential occurs.  However, even though physical damage is visible within hours of the flood, it could take weeks or even months for the car to exhibit symptoms of damage with the transmission, on-board computer or electrical systems within the dashboard, anti-lock brakes, airbags, and other safety functions.

Even though most state laws require that the buyer be informed in writing of previous flood damage to a vehicle, there are still several cases each year where the buyer believed they were getting a great deal on a great car.  Despite a flawless exterior, there are other ways to spot a flood-damaged vehicle.

To prevent yourself from being taken advantage of in this situation, here are some basic guidelines in spotting a flood-damaged car:


  • Check the engine, trunk, glove compartment, and the floor beneath the carpeting for signs of sand, silt or moisture.
  • Examine all of the computerized and electrical components of the vehicle, including lights, gauges, air conditioning, wipers, turn signals, radio, etc.
  • If you suspect the car may be flood-damaged, ask the seller directly. 
  • If you are still unsure, have the car examined by an independent mechanic.


Vulnerable Homeowners Negligent About Flood Insurance

Quite a bit of attention is being paid lately to floods and the devastation they leave behind. In the wake of Katrina, more and more questions have been raised about what kind of preventative measures would have lessened the catastrophic effects of such an event.  How well equipped are individual homeowners to handle financial consequences on their own, as opposed to relying solely on agencies like FEMA to provide them with economic assistance? Are Americans taking advantage of the nation’s flood insurance program?

That’s what FEMA wanted to know. The agency worked through the American Institutes for Research (AIR) to commission a study. AIR is a not-for-profit organization that conducts research on social issues and provides technical assistance in the fields of health, education, and workforce productivity. AIR coordinated the study, which was conducted by the Institute for Civil Justice and the Infrastructure, Safety and Environment division of the RAND Corporation. It was intended to be part of an overall evaluation of the flood insurance program.

In the course of their work, the researchers discovered that most homeowners buy flood insurance only because it is required. Only 20% of homeowners living in the areas most vulnerable to floods buy federal flood insurance when they are not required to do so. The study went on to reveal that just 1% of Americans living outside designated flood zones buy federal flood insurance even though the possibility of being victimized by flood is a real threat.

Only 50% to 60% of the 3.6 million single-family homes in the most highly affected areas are legally required to buy federal flood insurance. The remaining homeowners in these areas and the nearly 76 million single-family homes outside these areas are not required to buy flood insurance.

The study put the greatest emphasis on exploring the demographics of flood insurance purchasers. About 63% of homeowners living in areas subject to coastal flooding purchase flood insurance. Approximately 35% of homeowners living in areas that are only affected by river flooding buy flood insurance. The researchers surmised that the disparity might be the result of a perception of having less risk or that coverage available for basements is limited, and basements are prevalent in inland areas subject to river flooding. The report recommended that this aversion to flood insurance by those living in inland areas be studied, to search for an explanation or possible causes.

The study also looked at purchasing habits along geographic breakdowns. In the South, 75% of homeowners who carry flood insurance also have contents coverage. Only 16% of homeowners with flood insurance in the Midwest and 49% in the Northeast have contents coverage.

Clearly homeowners everywhere need to reassess their exposure to flooding.  If you have questions about obtaining flood insurance for your property, please give us a call.

Stay Dry with Sump Pump Coverage

Outside a violent storm slams rain against your house, the streets fill with water, the rain rushes down the down spouts, but through it all you hear the comforting sound of the sump pump hard at work. Before going to bed, you check on the condition of the basement and find it remains dry. The sump pump is purring and easily removing the water rising in the pit. You sleep soundly.

The next morning, the storm has passed but you feel something is not quite right. You rush to the basement and find it completely flooded. The pump has broken down sometime during the night. You make a frantic call to your insurance agent to report the damage and what a relief when you learn you are covered — you elected sump pump protection with your homeowner’s policy.

Basements are areas that homeowners should never overlook when insuring their homes. Often valuable personal property is stored in basements, in addition to heating, cooling and refrigeration systems.

Subject to an additional premium and underwriting, homeowners’ policies may be endorsed to cover losses, either structural or personal property, caused by water that either backs up from a sewer or drain or overflows from a sump pump or similar system, even if the loss occurs from a mechanical breakdown of the sump pump (Damage caused by loss of electricity to the sump pump is not covered.). Such damage is normally excluded from basic homeowners’ policies. A deductible often applies to any occurrence covered by the endorsement and there is usually a maximum limit of liability for any loss.

Even with the sump pump or backup endorsement, water damage from flooding or from water below the ground’s surface continues to be excluded from homeowners’ policies. Most insurance policies are clear that if a flood is the cause directly or indirectly of the sewer back up or sump pump failure, the damage is not covered by either the homeowner’s policy or the sump pump endorsement.

But you can cover some of the losses from flooding by purchasing protection from the federal government’s National Flood Insurance program. This program will cover direct physical loss caused directly or indirectly by backups through sewers or drains; discharges or overflows from a sump pump or related equipment; or seepage or leaks on or through the insured property but only IF there is a general condition of flooding in the area and the flood is the proximate cause of the sewer or drain backup, sump pump discharge or overflow, or seepage of water.

Checking with your professional insurance agent and broker can forestall problems from water damage by making certain that you understand why you may need the optional coverages – sump pump and/or flood – to protect your home.

Sump Pump Tips

-A yearly check up of your sump pump can prevent problems in an emergency. A well functioning sump pump drains water from a pit and prevents water from overflowing into your basement.

-Check to see if any debris, garbage, or build up may have worked its way into the sump since the last time it was used.

-Connect a garden hose and fill the sump with water. If the pump does not start, you may need to replace the switch or even a fuse.

-While pumps do not have filters, they do have screens or small openings through which water flows. Check this area to make sure it is not plugged or clogged.

-While sump pumps are usually a good line of defense against flooding, under isolated conditions like a power outage, you may find yourself standing in knee-deep water surrounded by thousands of dollars worth of damage. If you live in an area where power outages are common, especially during severe thunderstorms, it may be worthwhile to invest in a generator to keep your sump pump operating.

Congress Turns on the Floodlights

Recently, Congress passed legislation designed to solidify the National Flood Insurance Program (NFIP) managed by the Federal Emergency Management Agency (FEMA).  This legislation comes after the program, founded in 1968, was extended for a year in January of 2003.  The new legislation will extend the program for five more years while making some important changes to staunch the flow of red ink caused by repeat claimants in flood-prone areas.  

Some of the changes Congress hopes to encourage are remedial in nature.  For example, $40 million a year has been authorized to pay for elevation, relocation, demolition and flood proofing of homes in flood zones that have been the subject of repeat claims.  Under the new legislation, the government would pay 90% of flood proofing costs, and the property owner would pay 10%.  The remediation would be optional for the homeowner, but the alternative would be bleak.  According to the Associated Press Online, one study reported that the subsidized NFIP plan costs insureds only about 38% of actuarial risk rates, costing the government about $200 million a year. Under the new plan, refusal to accept the government’s “mitigation” offer would end the subsidy for the property owner, resulting in a significant increase in flood insurance premiums.

Dissenters in Congress include Rep. Billy Tauzin, a Lousiana Congressman, who complained that the bill unfairly targets his constituency, noting that those who live in earthquake or tornado prone areas are not similarly penalized.  

The bill targets the most prolific claimants in the NFIP program. There are 48,000 properties that, within a 10-year period, have experienced multiple flood claims exceeding the deductible by at least $1,000, accounting for 25 – 30% of all claims.  Of those, the program targets the 10,000 properties that top the list for frequency and severity of claims.  Also targeted are homes whose multiple claims over time have totaled more than the value of the insured property.

With the spotlight (or floodlight?) on flood insurance, now may be a good time to review your strategy for managing your business or home’s exposure to floods, the most common disaster scenario in the US according to FEMA.  But do not make the assumption that disaster-relief will be available, obviating the need for flood insurance.  Less than half of flooding events are declared disasters, says FEMA, often leaving insurance the sole source of compensation for victims.

Flood insurance is available to protect homes, condominiums and nonresidential buildings including farm and commercial structures in participating communities.   It’s important to find out whether or not your community participates in the NFIP program, thereby making you eligible for flood insurance under the plan.   

Another important consideration is to buy insurance before an imminent flood.  Although you can buy coverage just prior to a flood, there is a 30-day waiting period before the policy becomes effective unless the flood map for your community was revised in the last year or the insurance is required to close a loan.

It is a commonly held belief that homeowner’s insurance covers floods.  While certain water damage may be covered under a homeowner’s policy, by and large most flood exposures are uncovered by any other policy (with the possible exception of an excess or umbrella policy specifically stated as excess above an NFIP backed policy).

The NFIP defines flooding as a general and temporary condition during which the surface of normally dry land is partially or completely inundated. The cause of flooding can be:


  • Overflow of tidal waters or inland waters;
  • Runoff, such as from rainfall;
  • Mudslides or mudflows caused by flooding; or
  • Collapse of land along a body of water from erosion exceeding normal levels.


To find out more about flood hazards, steps to take to mitigate flood damage or to deal with the after-effects of a flood in your community, check out the FEMA website at  Naturally, if you have any questions about flood insurance available for your home or business, call us for details.