Why private flood insurance is the best way to 'C.Y.A.'
Flood insurance is an important — yet often overlooked — way to 'Cover Your Assets.'
Now more than ever, we have become accumulators of physical assets. Think about you or your clients’ collection of electronics, or antique memorabilia, or perhaps your home office equipment that many of us are using on a daily basis right now.
How would all these high-value products be protected in the event of a flood?
Cover all your assets
In the midst of dealing with the COVID-19 outbreak and juggling health and family challenges, many of us have been learning the ropes of working from home for the past few weeks. If you’re like me, it’s been an opportunity to get a lot of work done. It has also been a chance to catch up on many “I’ll do it someday” items. One important item on most of our “someday” lists is to review our insurance policies and make sure that if a flood catastrophe happens, we have full and proper coverage.
However, as we see by the statistics below, flood insurance rarely makes it to the top of people’s lists.
- Sad fact: More than half of the homes in the U.S. that have flood insurance are potentially under-insured. This is based on a National Association of Home Builders 2017 report that shows the average cost of home construction in the U.S. is greater than the National Flood Insurance Program (NFIP) coverage cap of $250,000 for a home. Unless a homeowner buys above the NFIP or buys a private flood insurance product, that individual is not covered for a total loss.
- Sadder fact: More than 90% of the homes in the U.S. that are at risk of flooding have no — yes, zero — flood insurance. Data analytics firm Verisk estimates that 62 million homes are at risk for flooding, yet there are only 5.5 million policies in force across the U.S.
Going the government route for coverage isn’t always sufficient. The NFIP does not cover basement contents, unattached external structures, such as sheds, pools, pool houses or detached garages beyond 10% of the house coverage. The NFIP also lacks other essential coverages.
People that have purchased an NFIP policy assume they are all set for any contingency, but they are missing out in many ways. There is a much better way to cover your assets than to rely on a federal government program that has lost more than $45 billion in the last 20 years.
Private flood insurance is an alternative to the NFIP and offers a range of options to protect all of your assets, including:
- Building coverages up to $2 million or even $5 million in some cases;
- Contents coverages far exceeding the NFIP’s $100,000, with some as high as $500,000;
- Temporary living expense in case of evacuation, which is a hidden surprise to those who have gone through it (hotel rates are not usually at bargain level during an emergency);
- Replacement cost on all your contents;
- Basement contents, pool repair and refill, unattached structures, and more.
There is no reason to buy partial insurance and still get caught short in a catastrophe. Private flood insurance is an important way to CYA.
Jim Albert (jim@neptuneflood.com) is founder and chairman of Neptune Flood in St. Petersburg, Fla. These opinions are his own.
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