RealManage Insight

Why Your Community Association Needs Flood Insurance

by Katie Vaughan on Sep 12, 2018 8:04:00 AM

Do you know what the most common and costly natural disaster is? According to the federal government, it is floods. The unfortunate lesson from the 2017 hurricanes is that even elevated areas can flood. In fact, 20% of flood claims filed under the National Flood Insurance Program are made by homeowners living in areas considered at low risk for a flood.

Most insurance policies exclude coverage for damage caused by a flood. Currently, the most common provider of flood insurance is the National Flood Insurance Program (NFIP) which is administered by FEMA.

For single family communities, coverage is available for commonly owned buildings including clubhouses and pool houses.

Condominium and townhome communities can also insure their residential buildings and commonly owned property under the NFIP. Coverage is available under a Residential Condominium Building Association Policy. Building coverage is provided on a Replacement Cost basis with some restrictions.

Non-residential (commercial) condominium buildings may be insured under the NFIP General Property Form. ‘Non-residential’ limits will apply.

Flood insurance is also important for individual homeowners and renters. Most homeowner’s policies do not cover flood damage. Did you know that if you live in an area with low or moderate flood risk, you are 5 times more likely to experience flood than a fire in your home over the next 30 years?

Some folks may mistakenly believe they don’t need flood insurance because federal disaster assistance will be offered. First, federal disaster assistance is only available if the president declares a disaster. A FEMA disaster grant is only about $5,000 on average, per household. And, there are strict eligibility requirements based on individual needs. By comparison, the average flood insurance claim is nearly $30,000.

You can purchase flood insurance at any time. There is usually a 30-day waiting period before the policy will go into effect. There are a couple of exceptions to this. One is purchasing the flood insurance in conjunction with a loan secured by the covered property. Also, the 30-day waiting period may not apply if your property experiences a flood loss caused by post-wildfire conditions.

Whether for your community or your personal residence, please ask your insurance agent today for a flood insurance quote.

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