Flood insurance covers houses and properties for losses that result from water damage, specifically related to flooding. This particular property insurance is a lot different than having basic hazard insurance or a homeowner's insurance policy because flood insurance solely covers damage caused by rising floodwaters. To be more specific, flood insurance would not cover water damage caused by sewer backups unless it was somewhat related to rising floodwaters.
Understanding the Flood Insurance Policy
Flood insurance policies are built to cover both residential and commercial property areas. Flood insurance can be important when properties hold mortgages from federally backed lenders. This is because these types of properties will require adequate flood insurance coverage, if located in a flood zone, in order to receive financing. Pricing for flood insurance policies are regulated by the National Flood Insurance Program (NFIP) which means that the cost of flood insurance will be priced out the same across all agents. Factors that may affect premium pricing include the number of floors, zone designation, as well as the age of the property being insured.
Flood Zones and Risk Rating
The Federal Emergency Management Agency (FEMA) contains up-to-date maps of flood zones in the United States. Both FEMA and the NFIP use these maps to keep up to date with changing weather patterns. Flood zones can be broken up into sub-zones, which are then used for risk rating. Risk ratings are used to help determine the risk of flooding and/or water damage in each zone. For instance, properties in 'V' risk zones are considered to be at high risk because these particular zones are positioned along the coast. Properties in 'B', 'C', and 'X' risk zones have less than 1% chance of flooding in any given year, which means they have a lower risk of flooding. Additionally, properties located in the D designated zone have not been given a risk rating yet, as they are still being reviewed.
To learn more about flood zones, please visit the FEMA Flood Map Service Center website: https://msc.fema.gov/portal/home