What to know about flood insurance

The recent nor'easter that slammed the Outer Banks was a not-so-subtle reminder that hurricane season is still upon us and will continue until November 1. That is why it is important to be up to speed on flood insurance and to understand your options if you don't happen to have any coverage.

As pointed out by the North Carolina Department of Insurance, the first thing that homeowners need to keep in mind is that their standard homeowners policies do not cover flood damage. With that said, if you live in a flood plain, near a river, or if you live near the coast, you should consider purchasing flood insurance for your home.

Other important information

1. Your lender may require that you purchase flood insurance if your home is located in a flood plain

2. Just because your home may not be in a designated flood plain, DO NOT assume you will never incur flood damage

3. The federal government offers insurance for direct flood and flood-related damage, including mudslide and erosion, under the National Flood Insurance Program (NFIP)

4. This coverage includes a 30-day waiting period before the policy becomes effective, although there are some exceptions. They key is to plan ahead.

"Under the National Flood Insurance Program," said Allan Williams, director of training with NC Farm Bureau Insurance, "a flood is defined as a general and temporary condition where 2 or more acres of normally dry land or two or more properties (at least one of which is the policyholder's) are inundated by Overflow of inland or tidal waters, Unusual and rapid accumulation or runoff of surface waters, Mudflows (mudslides), and the collapse or subsidence of land. Even if there are exclusions, an NFIP policy does provide a greater opportunity for coverage resulting from flooding that seems to be occurring more frequently."

How much does North Carolina flood insurance cost?

The average cost of flood insurance in North Carolina is $916 per year for an NFIP policy. Annual flood insurance rates in North Carolina range from about $200 to over $5,000, depending on where you live.

Is flood insurance required in North Carolina?

North Carolina homeowners aren't required by the state to buy flood insurance. However, your mortgage company may require it if your home is in an area with a high risk of flooding. There are also federal requirements. Homes that are in a Federal Emergency Management Agency (FEMA) flood zone beginning with "A" or "V" need flood insurance to get a mortgage. You can check FEMA's Flood Insurance Rate Map (FIRM) to look up your property's flood zone.

These homes are typically located at a low elevation above sea level, like the Outer Banks, or near a river, like the Catawba. Their proximity to water means they have a greater chance of flooding than a home that is inland.

What does an NFIP cover?

A flood insurance policy can cover both your home and its contents.

1. The NFIP's building coverage includes foundations, electrical and plumbing systems, and water heaters.

2. An NFIP contents coverage policy would cover clothing, furniture, personal electronics, and portable and window air conditioners.

3. For residential properties, you can secure coverage up to $250,000 for the building and $100,000 for the building contents.

4. For commercial properties, you can secure coverage up to $500,000 for the building and $500,000 for the building contents.

5. Contents and building coverage are purchased separately, and there are always separate deductibles.

What does private flood insurance cover?

1. Private flood insurance covers the structure of your home and its contents from water damage caused by a flood. What separates this option from other flood insurance policies is that it is not backed by the federal government.

2. Policies under the federal program are able to pay out flood damage claims for as long as the program receives funds.

3. A private flood insurance company, on the other hand, is a for-profit company that relies on either an insurance policy of its own or money collected from premiums to pay out damages to claimants.

"Living in Eastern North Carolina, I think it's something every homeowner should at least consider," said Lauren Atkins, The Rich Company, and president-elect of the Washington-Beaufort County Board of REALTORS®. "Flooding isn't limited to properties that are in a high-risk flood zone. If it's not required for your mortgage, I recommend speaking with your insurance agent about your risks and coverage options."

Information for this story was provided by the North Carolina Department of Insurance, North Carolina Farm Bureau Insurance, FEMA, and licensed insurance agent and professional writer and strategist, Cate Deventer.

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