What Waterfront Property Owners Need To Know About Floods And Insurance

Insurance Blog

Waterfront properties offer views and water access that no other parcels of land can afford, but the same proximity that makes these properties so nice to own also makes them more difficult to insure. If you own waterfront property, here's what you need to know about floods and insurance.

Standard Property Insurance Doesn't Cover Flooding

First, standard property insurance policies don't include flooding within their protections. Even if they cover water damage that's caused by plumbing issues, floods are treated differently and excluded. The only way to purchase insurance against flooding is to get a flood insurance policy. Should your property flood, this insurance will help pay to remove water, address mold growth, and rebuild.

Importantly, many flood policies have a waiting period so that property owners don't purchase a policy immediately before a major flood event is imminent. Don't delay getting coverage if your waterfront property might flood.

Flood Insurance Covers Unusual Water Patters

Most flood insurance policies don't just cover flooding but also extend coverage to other unusual water patterns. For example, policies typically also cover unusual waves — which is a risk if your waterfront property is on a major body of water. Some policies also cover mudflows and mudslides, which might be a consideration for waterfront properties in mountainous areas.

Many Property Owners Are Required to Purchase Flood Insurance

If you own waterfront property in an area that's deemed to be at high risk of flooding and have a mortgage, you're required to carry flood insurance. Some laws mandate that all lenders who offer loans on properties that are in high-risk flood zones require the property owner to carry flood insurance. Your mortgage undoubtedly has such a stipulation.

Not all properties that are in high-risk flood zones are waterfront properties, and not all waterfront properties are in high-risk zones. Plenty of waterfront properties are at high risk of flooding, though, and this act applies to them.

Subsidized Flood Insurance May Be Available

If you're required to purchase flood insurance, subsidized policies are available through the National Flood Insurance Program. The program is only available to property owners in high-risk areas, and it's specifically designed to make the mandatory flood insurance affordable. Importantly, all policies offered through the National Flood Insurance Program provide the same mandatory coverages and at the same price. You don't need to compare them too closely if you need to purchase one of these policies. Any of them will be sufficient and offer comparable protection. 

For more information about flood insurance, reach out to an agent near you. 

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8 July 2020