The National Flood Insurance Program (NFIP) is a Federal program enabling property owners in participating communities to purchase insurance as a protection against flood losses. Participating in the NFIP is based on an agreement between communities and the Federal Government. The program is administered by the Federal Emergency Management Agency (FEMA) and provides flood insurance protection to property owners, renters, and business owners in communities that participate in the program. Under commercial flood policies, business interruption coverage is usually available to cover lost income in addition to the property damage coverage.
Consider the following facts:
- Flood losses are not covered under homeowners’ insurance policies.
- FEMA manages the National Flood Insurance Program, which makes federally-backed flood insurance available in communities that agree to adopt and enforce floodplain management ordinances to reduce future flood damage.
- Flood insurance is available in most communities through insurance agents.
- There is a 30-day waiting period before flood insurance goes into effect, so don’t delay.
- Flood insurance is available whether the building is in or out of the identified flood-prone area.
Property insurance exclude repairs due to earthquake or earthquake sprinkler leakage damage.
Currently earthquake insurance policies feature a high deductible, which makes it useful if the entire property is damaged, but not so if the structure has minor damaged. Rates depend on location, construction type and a probability of an earthquake.
Previously premiums were calculated by using a collection of mass inventory data and some expert opinions. Today’s premiums are estimated using a Damage Ratio (DR), a ratio of the earthquake damage dollar amount to the total value of a building. Another method is the use of HAZUS, a computerized procedure for loss estimation.