Will Your Flood Damage be Covered by your Insurance?

Photo courtesy of Nathan Fowler/Nathan Fowler Photography

September 21, 2009 is a day that will resonate with Atlanta residents for many years.  Parts of our city experienced as much as 20 inches of rainfall in a 48 hour period, causing devastating flooding throughout the area.  Thousands of homes have been lost, and families will spend months (and in some cases, years) trying to rebuild their lives.  The truly unfortunate side of this story is that many of these families did not have flood insurance.

Flooding from rainfall is not covered under a standard homeowner’s insurance policy.  A flood insurance policy is something that must be purchased separately through FEMA.  Out of 2.2 million homeowners in Georgia, it is estimated that only 91,000 households have a flood insurance policy.

There are three types of flood insurance policies available.  First is a policy that covers both your dwelling and your contents.  This type of policy is available in both standard risk and preferred risk areas.  Next is a policy that covers only your dwelling.  This type of policy is available in standard risk areas only. Finally, you can get a policy that covers only your contents.  This policy can be purchased in either preferred or standard risk areas.  Maximum coverage on a flood policy is $250,000 for your dwelling, and $100,000 for your contents.

The Atlanta Journal Constitution recently reported that this was a 500 year flood.  It is important to note that the way this term was referenced in the article was inaccurate.  The terms 100-year flood, and 500-year flood are not references to water levels or the frequency of flooding.  These terms refer to flood plains and the likelihood of a flood each year.  As defined by FEMA a “100-year flood” is an area where the flood elevation has a 1% chance of being equaled or exceeded each year.  Thus, the 100-year flood could occur more than once in a relatively short period of time.  A structure located within a special flood hazard area shown on a flood zone map has a 26 percent chance of suffering flood damage during the term of a 30 year mortgage.  The term 500-year flood works the same way, except the 1% chance turns into .02% chance.  So in fact, a 500-year flood plain is actually less likely to experience flooding.  It is important that residents understand that what happened last week is just as likely to happen again next year, not in another 100 or 500 years.

So that massive financial loss can be avoided in the future, it is time for Georgia residents to evaluate their flood insurance coverage.  It is also time for insurance agents to implement a flood insurance review with both current and new policyholders.

If you would like to become involved in the recovery effort, please visit www.hopeatl.com.