The ins and outs of flood insurance

March 07-- Mar. 7--MANKATO -- Kato Insurance has been doing a brisk business selling flood insurance policies recently.

"You just have to look outside and see the potential for flooding," said President Scott Michaletz.

They've sold about 40 policies to homeowner and commercial properties in the past week or so.

The National Flood Insurance Program makes federally backed flood insurance available in communities that agree to adopt and enforce floodplain management ordinances to reduce future flood damage. Most Minnesota cities participate.

Michaletz said premiums are based on the specific flood zone where the property is located, usually based on elevation.

People can call their insurance agent and they can plug their address in and find out what flood risk zone their property is in.

He said the mortgage holders on many commercial properties require flood insurance to protect their mortgage. Commercial property owners can buy up to $500,000 in coverage through the federal program and get additional coverage on the secondary market.

Flood insurance must be in place 30 days before a flood. And unlike other insurance types that you can cancel at any time, flood policies have to be kept for one year with a few exceptions, such as if you sell your home.

Michaletz said many people who live on lake shores buy policies in case the lake levels rise too high.

While normal homeowner policies won't cover damage from seepage of surface water into homes, flood insurance will cover "unusual, rapid accumulation or runoff of surface waters from any source."

But flood insurance has limited coverage when it comes to basement flooding. It covers the furnace, water heater and appliances like chest freezers.

It also covers from the unpainted drywall out, including structural elements and essential equipment of the home.

People with flood insurance worried they will get flood damage can move their personal belongings from the basement to their main floor where they will be covered.

Flood insurance facts

-- A standard homeowner's insurance policy does not provide flood coverage.

-- You cannot depend on disaster assistance. You only get assistance when the president declares a disaster. Because less than 50 percent of floods are declared disasters, most flood victims are on their own.

-- Contact your local insurance agent to find out what types of offers they have for purchasing flood insurance.

-- Flood insurance policies must be in force for 30 days prior to a flood.

-- The average cost for a flood insurance policy is $500 per year for those in higher risk areas.

-- Between 20 and 25 percent of flood claims come from outside high risk areas. A "preferred risk" policy for those in low- to moderate-risk areas costs less than the higher risk areas.

-- The NFIP provides coverage for up to $250,000 for the structure of the home and up to $100,000 for personal possessions. Private excess coverage flood insurance is also available.

-- Water and seepage that comes from sewer or drain backups, or a sump pump that overflows is NOT considered a flood.

What Qualifies as a Flood

-- Water has to cover at least 2 acres of land that's normally dry or has to have damaged two or more properties (one being your home).

-- Also, the water has to come from:

Overflowing inland or tidal waters

Unusual, rapid accumulation or runoff of surface waters from any source

Mudflow (that's mud carried by a flow of water, creating a river of mud)

You're also covered when shorefront land collapses or sinks due to waters above "anticipated cyclical levels."

Follow Tim Krohn on Twitter @TimKrohn

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