SilverLink - Winter 2008 - (Page 30)

Private client services Personal Insurance Flood Insurance Truth or Myth? by Pam McCawley 1. 2. 3. 4. 5. Truth / Myth Truth / Myth Truth / Myth Truth / Myth Truth / Myth Think you know everything you need to know about flood insurance? Take this quick quiz and see how you fare: You have homeowners’ insurance and don’t live in a flood zone, so you don’t need flood insurance. The average homeowner probably cannot afford to purchase flood coverage. Federal disaster assistance will cover any flood damage. Your lender did not require flood insurance so you probably don’t need it. Flood insurance will cover the entire house, including the basement. 1. You have homeowners’ insurance and don’t live in a flood zone, so you don’t need flood insurance. The answer is Myth. Flooding can happen anywhere. David Maurstead of the Federal Emergency Management Agency’s National Flood Insurance Program (NFIP) reports that flooding has occurred in every part of the U.S. throughout the past 12 months. Homeowners’ insurance policies do not cover flooding. In fact, many homeowners’ policies specifically exclude flood damage from their coverage. A separate flood policy is needed and can be purchased directly through NFIP, which administers the program. Coverage can also be purchased through private companies such as Firemen’s Fund, Chubb and AIG. These companies generally offer policies which provide broader coverage than those available through the NFIP. One-third of flood insurance claims in a given year occur in low-to moderate-risk areas. And even in low-risk areas, ice jams, melting snow and inadequate drainage systems can also cause damage. 2. The average homeowner probably cannot afford to purchase flood coverage. Myth. For fairly low-risk areas, lower cost (preferred risk) premiums—which cover building and personal belongings—may start as low as $112/year. Full coverage, including $250,000 for a building and $100,000 for contents, costs an average of $371/year. The nationwide average for a flood insurance premium is less than $500 annually. 5. Flood insurance will cover the entire house, including the basement. Myth. Comprehensive flood coverage should include two policies: one for the structure and one for the contents of the home. Covered basement contents include washers and dryers, but not finished walls, carpeting, flooring, furniture or personal belongings. Sadly, most people do not have adequate coverage for their basement contents. The fact is, you can live on high ground and still incur water damage. Additionally, if you live in an area experiencing new development, construction work may affect the topography, which could mean that you are more vulnerable to flood damage. Local flood-control boards or a municipal buildings department may be able to supply up-to-date information on the likelihood of flooding in your area of the country. Water is one of nature’s most powerful forces. It pays to protect your home, business and belongings. Don’t get washed away—contact your insurance agent for more information on flood insurance for your area. 30 3. Federal disaster assistance will cover any flood damage. Myth (but with conditions). The Federal government does provide compensation for flood damage. The caveat is that your community must be declared a Federal Disaster Area before it is eligible for any Federal disaster assistance— and Federal disaster assistance declarations are awarded in fewer than 50% of flooding incidences. 4. Your lender did not require flood insurance so you probably don’t need it. Myth. Lenders should notify borrowers in special flood hazard areas that they are eligible for flood insurance. contact PaM MccaWley at 402.96 4.5570 or PMccaWley@ ssgi.coM

Table of Contents Feed for the Digital Edition of SilverLink - Winter 2008

SilverLink - Winter 2008 Contents Risk Management: Where in the World is Human Resource Consulting? Workers’ Compensation Rate Declines Insurance Certificates Haute Retirement It All Began with a Cup of Coffee Playing Fair in the Housing Market Captives 101 Proceed with Caution Fore! (Or is it Pull? or Giddyup?) Don’t Be Fuelish Employee Benefits: Medical Trend Countdown to Compliance Private Client Services: Buy & Sell Agreements Flood Insurance Pushing Wealth to the Next Generation Client Spotlight: Travel and Transport Internal Happenings: SilverStone Group Giving Back Since 1945

SilverLink - Winter 2008

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