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The Bank Didn’t Make Me Buy It, So I Don’t Need It!
Let me start off by highlighting that the bank wants to protect (cover) their loan to you! They want the collateral protected until the loan is repaid. That being done, they’re done. They have certain guidelines they must meet. That being done – they’re done. The bank isn’t your Guardian Angel - If your interests get protected at the same time, all is well and good. That, however, isn’t their goal. If your building – business or personal – is in a flood zone (according to those FEMA maps), they will require flood insurance. Because that’s one of the guidelines. Conversely, if it isn’t in a flood zone, they won’t.
But are you protecting what you have spent soo much money on? It’s easy to look at the cost of insurance – instead of the cost of replacing what you are insuring in the first place. You are
at risk for flood if you are anywhere it rains. Anywhere – mountain top included.
Remember a little storm called Hurricane Harvey back about 5 years ago? If you live in Texas, you do! That storm did - are you sitting? - $125 billion (with a “B”) in damages, 204,000 homes affected. Yes, there was most definitely wind damage BUT – Houston itself got over 50” of rain over 4 days! And Houston is over 50 miles away from any storm surge on the coast. Nederland, east of Houston, got 60”. Nederland is 84 miles from Houston as the crow flies (or as the wind blows!) How many buildings between Houston and Nederland got flood damage? I bet most of them, wouldn’t you? Did any of them have Flood Insurance – hmmm, where is Nederland on the FEMA flood maps – the Neches River is there, some probably had required flood coverage. And maybe a few in Houston. FEMA paid out a “mere” $4 billion – that’s about 3%. What does that mean? It means waay too many people had to come out of pocket, or got low-interest Federally-backed loans – just to get back to where they were – and now
have to pay it back.
Heavy rains can seep under the doors and damage floors and sheetrock walls. It doesn’t take a Named storm to do it, either. If it stays there long enough, that rain that crept in under the doors can do significant damage that ONLY Flood insurance will cover. Nothing
in either a Homeowners’ or Property policy will cover what’s known as “rising water”. It is excluded, actually. So, there is NO coverage. Period – end of discussion. That wet sheetrock halfway up the walls? Sorry. And that warped floor? Nope, sorry.
You see it on TV every time there are flash flood rainstorms. “...and we’ve been told insurance doesn’t cover
this,” says the shocked news reporter. Unfortunately, they are right – ONLY Flood insurance covers the damage from that water cascading down the embankment into their yards and houses or businesses. Doesn’t matter that they are 15 miles or more from the shoreline or lakeside – any place that gets rain can get flooded.
Here’s another exciting little fact: unless it is written at the time of a bank loan closing, Flood Insurance doesn’t take effect for 30 days after it is first written!
Do you live near a river that might overflow? OR, is there a hurricane in the Gulf? If you buy Flood insurance today – it’s simply not taking effect for 30 days, overflowing river notwithstanding. I should also clarify that, once a Named Storm is actually in the Gulf, you can’t buy property insurance anyway– or even increase
By Virginia Reames The Policy Center Jackson, Mississippi
property coverage. You waited too long.
Flood Insurance comes from the Federal Government, and it has maximum limits: $250,000 for dwellings, $100,000 for contents; $500,000 commercial buildings, $500,000 for business contents.
“What? That’s not nearly enough! Now what?”
You can get additional private flood coverage which steps in once the underlying (National Flood) is used up. That’s called “excess”. Your agent can explain all of the ins and outs of this
– you don’t have to get it through the government. But please be completely aware that you need to have Flood Insurance no matter where you live or do business. I wouldn’t say you don’t need it even in Death Valley – even Death Valley just got some heavy rain
in August 2023 – 2.24 inches – one year’s worth fell in 1 day.
It happens – and can happen anywhere. The only thing those flood zones maps do is affect the cost of Flood coverage
– the more likely a loss, the more it costs. But if it wasn’t for that National Flood Program, where else could you get protection for your property against floods? Nowhere else!
So – if you don’t currently carry it --
Based on those 30 days before going into effect, get covered now – long before you need it. It really isn’t about the price of the insurance – it’s about rebuilding the flood damage to your property!
2023, Issue 4
Alabama 811
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