Flood is a term used in the insurance industry to refer to rising water which covers two or more adjacent properties. Most standard commercial and homeowner policies do not cover flood damage. If your building is located in an area where flood is a possibility, it is prudent to purchase flood insurance.
The majority of flood insurance is written through The National Flood Insurance Program (NFIP) administered by the Federal Emergency Management Agency (FEMA) and the Department of Homeland Security of the United States government.
Under the Federal flood insurance program, insurance is available to any homeowner who lives in an NFIP-participating community. The maximum coverage available is $250,000 replacement cost coverage for property and $100,000 replacement cost coverage for contents. Homeowners may purchase additional flood insurance from private flood insurers.
Residential Condominium Building Association Policy (RCBAP) is a replacement cost policy obtained through NFIP with maximum limits of coverage of up to $250,000 per unit.
The Federal NFIP program also provides flood insurance for businesses. The building and its contents are insured separately and are not insured on a replacement cost basis. All commercial flood claims are settled using Actual Cash Value or depreciated value.
Special regulations and requirements apply under all federal flood insurance programs. Claims under flood policies are handled differently than claims under standard private insurance policies. It is imperative that the insured understands and complies with all duties under the policy so as not to waive their right to recovery.
When a hurricane strikes, causing damage from both flood and wind, it becomes critical to separate the damages caused by flood from those caused by wind. This is a complex and highly detailed process that requires a thorough understanding of both the governing wind and flood policies. To allow for the best outcome, a licensed, accredited claims professional should be employed to assist in this process.