Hurricane Storm Surge Danger Drives Need for Flood Insurance
One-Third of Floridians Have Flood Insurance;  40 Percent of all Policies are in Florida 

Developed by the Florida Insurance Council staff, July 3, 2007

Excellent information on flood insurance is available from the NFIP home page through this link:
National Flood Insurance Program

Consumers can calculate their flood insurance premium from this NFIP site:
FloodSmart

Conventional Homeowners Insurance Does Not Cover Flooding Losses

Florida homeowners with a comprehensive, basic residential insurance policy may not be fully covered. There is an important gap in their insurance if they live along the Gulf of Mexico and Atlantic Ocean coastlines, near a river or golf course pond or in a low lying area which is normally dry, but floods following unusually heavy rains.

Damage from flooding is not covered by conventional homeowners policies, although there is coverage in certain mobile homeowners policies. Flood insurance generally is available only through the National Flood Insurance Program (NFIP), part of the Federal Emergency Management Administration (FEMA). It is issued for the NFIP by most regular insurance agents and companies and usually can be purchased in conjunction with the base policy.

When is flood insurance necessary? Rising water from an overflowing river or lake clearly is flooding, but so are storm surges which may accompany a hurricane. Most of the homes directly on the Florida west coast damaged or destroyed by Hurricane Opal in 1995 and Hurricane Ivan in 2004 were victims of a storm surge.

OIR Commissioner McCarty: Flood Insurance is Critical in Florida

NEWS FROM THE FLORIDA OFFICE OF INSURANCE REGULATION-

Tallahassee - (04/26/2007) Florida Insurance Commissioner Kevin McCarty urged Floridians to purchase flood insurance to protect their homes. McCarty's warning comes on the eve of the 2006 hurricane season which officially begins June 1. The Commissioner is also warns Floridians there is a standard 30-day waiting period before coverage takes effect.

"If Floridians want flood insurance by the beginning of hurricane season --- they need to purchase it by May 1," Commissioner McCarty warned. "We learned several lessons from the 2004-2005 hurricane seasons. One of those lessons was that many people were unaware that flood damage is not covered by homeowners' policies. Buying flood insurance is easy, affordable, and provides an extra layer of security in the event of a catastrophic event."

During the aftermath of Hurricane Katrina, one research report cited up to 80% of properties damaged in Mississippi, and 60% of properties in low-lying New Orleans did not have flood coverage. This also spawned litigation, whether specific damage was caused by hurricane force-winds or the accompanying storm surge. Some litigation in the gulf coast states is still pending.

"In Florida nearly one-third of Florida's homes do have flood insurance, but that still leaves two-thirds of families without this coverage. Even people outside of the flood zones should consider obtaining coverage,"McCarty adds. A Rand Corporation study showed one-third of all floods occurred outside standard flood hazard areas; however, only one percent of people outside the flood plains buy insurance.

Florida consumers can purchase flood insurance for up to $250,000 in property damage, and $100,000 for personal contents. Most flood insurance policies may cost less than $1,000 a year in the flood zone and less than $200 a year outside the flood zone depending on the coverage selected.

Forty Percent of NFIP Policies Issued in Florida

Florida has 1,300 miles of beaches and 54 percent of the country's hurricane exposure, according to one estimate. Its vulnerability to hurricanes and their storm surges makes it a prime area for flood insurance. Florida has 2,183,515 flood insurance policies in force representing premium of $845.2 million. The NFIP nationally has 5,425,384 policies in force, representing $2.6 billion in premium. (June 2007 figures.) Florida has about 40 percent of all flood policies in force in the United States and it accounts for about 33 percent of premium. 

It is difficult to gauge how many people in Florida facing serious threats from flooding have the appropriate coverage, although it is clear many people are unprotected. The NFIP Public Affairs Office in Washington estimated in 1995 that of 9.5 million households nationwide in so-called Special Flood Hazard Areas (SFHAs) - like the beachfront, where the risk of flooding is especially great - only 21 percent were covered by flood insurance.

The NFIP did release Florida specific figures following Hurricane Opal. Out of about 107,000 total business and residential structures in Escambia County, only about 9,000 were covered by flood insurance. Other counties: Santa Rosa, 31,874 structures and 3,422 NFIP policies; Okaloosa, 57,671 structures and 8,361 policies; Walton, 12,163 structures and 4,861 policies; Bay, 53,418 structures and 11,833 policies; and Gulf, 4,657 structures and 829 policies.

Flood Insurance Eligibility Requirements

For homeowners or renters to buy flood insurance, their community must meet certain conditions established by the NFIP, including adopting and enforcing local ordinances that establish enhanced construction standards in Special Flood Hazard Areas. All 67 Florida counties have qualified in their unincorporated areas. Most incorporated communities have qualified as well - some 403 statewide. There is a mandatory purchase of flood insurance as a condition of receipt of federal or federally related assistance for the acquisition or construction of buildings in the SFHAs. The SFHAs are the A and V Zones on the Flood Insurance Rate Maps. Flood insurance can also be purchased if one resides in a B, C or X Zone. About 33 percent of all flood claims come from minimum risk areas, the B, C and X Zones.

Flood Insurance Policy Limits

A maximum of $250,000 of building coverage is available for single-family residential buildings and $250,000 per unit for multi-family residential. Contents coverage of up to $100,000 is available for residential owners and renters. Commercial structure ceilings are $500,000 for buildings and $500,000 for contents. A 30-day waiting period is required for flood insurance, so it cannot be purchased before an approaching storm. There are exceptions, including closings in the purchase of a home.

Inexpensive Inland; More Costly in Coastal Areas

The average flood insurance policy is about $438 per year. This is based on 4,558,696 policies with total premium throughout the country of $1,997,567,722, as of December 31,2004. Rates along the Florida coast are generally much higher, with rates based on three factors – location of structure, date of construction of structure and the elevation of lowest floor of structure as compared to the base flood elevation in the area.

For additional information, contact:
NFIP Consumer Information Hotline: 1-800-638-6620.