Many Look for Insurance to Avoid Deep Trouble

Flooding in Seal Beach on Thursday and the threat of an extremely wet winter have pushed many homeowners to consider getting flood insurance--and to check on existing policies.

The federal government has classified areas that are most likely to flood during heavy storms. Mortgage lenders typically require borrowers in those areas to obtain flood insurance.

Here are the answers to some common questions:

Where and how fast can I get flood insurance?

Policies from the federal National Flood Insurance Program, or NFIP, are available from licensed property insurance brokers. They take effect 30 days after purchase, except those for new mortgages, which have no waiting period.

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Who needs flood insurance?

Since standard homeowner and business policies don’t cover floods and mudslides, any property owner at risk should buy flood insurance. The Federal Emergency Management Agency advises that all homeowners, even those outside of high-flood-risk zones, get insurance because more than 25% of NFIP claims are from outside high-risk areas. You can find out if you’re in a danger zone from your local public works department or your insurer.

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Is flood insurance available everywhere?

Except for some extremely high-risk coastal areas, you can buy federal flood insurance no matter where you live as long as your community belongs to the NFIP. Your insurer or your planning department can tell you if your community is an NFIP member. The only Southern California cities that have known flood risks and aren’t participating are Chino Hills and Grand Terrace, both in San Bernardino County, and Lemon Grove in San Diego County. Some areas, like Laguna Niguel in Orange County and Huntington Park in Los Angeles County, have little flood risk and don’t participate.

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How much does it cost?

That depends on the risk classification, along with the building’s construction type, number of stories and age. The average annual premium for an NFIP policy is about $300. Preferred-risk policies can run about $100 a year for homes facing low to moderate flood danger. In high-risk areas, such as the Seal Beach coastal neighborhood that flooded Thursday, it could cost about $1,300 a year to get coverage on $225,000 worth of property.

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What property can be covered and how much coverage can I buy?

All buildings, from single-family homes to commercial structures, are eligible for flood insurance. You can get coverage for up to $250,000 for homes and apartment units and up to $100,000 for contents. Commercial building coverage is available up to $500,000 for structures and $500,000 for their contents. Supplemental coverage can be obtained through Lloyd’s of London.

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Why buy flood insurance when there is government disaster aid?

Only half of flood disasters become presidentially declared disasters. And even when they are declared, outright disaster aid averages just $2,500. Most victims seek loans, such as those provided by the Small Business Administration, and the average cost to repay them is $320 a month.

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What constitutes a flood?

The NFIP definition is two adjacent properties under water. In rural areas, the standard is two acres.

Sources: Insurance News Network, FEMA, Western Insurance Information Services, State Farm Insurance Cos.