If you are a homeowner in Louisiana, the possibility that your property may be affected by a flood is an unfortunate reality. There are physical measures a homeowner can take to protect his property against the threat of a flood, but the prospect that structural mitigation may not be enough should compel a homeowner to seek flood insurance. In this situation, National Flood Insurance Program (NFIP) policies most often come into play.
According to the NFIP, a flood exists “where two or more acres of normally dry land or two or more properties are inundated by water or mudflow.” GOHSEP (Governor’s Office of Homeland Security and Emergency Preparedness) expands upon this definition to describe how a flood is typically an external event. If the dam or levee behind your property breaks and your home is inundated with water, it is considered a flood. On the other hand, if your pipes burst and your home sustains water damage, it is not a technical flood. Insurance policies for property owners reflect this distinction. When a home is damaged by a legitimate flood, it is a matter for the NFIP to handle. If a home is affected by water, mud or other runoff material not resulting from an actual flood, then it would relate to homeowner’s insurance, not the NFIP.
When a homeowner in a “moderate-to-low risk area” applies for flood insurance with the NFIP, he has more than one coverage option. Building and contents can be offered in one premium package, and the NFIP offers additional choices to alleviate the financial burden that flood insurance places on a homeowner. Many Louisiana homeowners do not fit this “moderate-to-low risk” standard. The Preliminary Digital Flood Insurance Rate Maps (DFIRMs) currently used by FEMA and the NFIP illustrate that much of the state is categorized as “high risk.” Louisiana homeowners might balk at the price tag for flood insurance, but they may have no power to reject it. The NFIP stipulates that if you are in a high risk area, and your mortgage was acquired through a “federally regulated or insured lender,” you must insure your property.
What happens once insurance has been obtained? When flood damage occurs, and the insured approaches the NFIP with a flood claim, he may find that his comprehensive insurance policy does not account for everything. Precious metals, septic systems, and temporary living expenses are among the items not covered by the NFIP. Louisiana homeowners should take care to scrutinize their coverage, or lack thereof, with their agent..
Cost is another factor that must be taken into consideration. NFIP policy rates vary, and a homeowner does have a number of coverage options to choose from, but flood claims are capped at $250,000 for building and $100,000 for contents. Moreover, the annual premiums, and the homeowner’s deductible, are costlier in the A and V flood zones (high risk and coastal areas) which comprise much of Louisiana’s geography. In a low-risk flood zone, for instance, a homeowner who purchases maximum coverage for building and contents on his property pays an annual premium of $348 or $388, depending upon whether or not he has a basement. The same policy in an A zone costs $2,647, and $5,714 in a V zone. If a homeowner feels that he is still left too vulnerable by the NFIP’s coverage limits, he can also purchase “excess” flood insurance, which is offered through a number of general insurance providers in Louisiana. These supplemental policies offer coverage beyond the $250,000 and $100,000 maximums, but they are frequently more expensive. The Louisiana homeowner may find it necessary to purchase an NFIP policy, and perhaps supplemental insurance as a safeguard against flooding, but such precaution certainly does not come cheap.