The Basics of Flood Insurance

Many homeowners don’t realize that a standard homeowner policy does not cover flood damage. That is why it is so important to purchase additional insurance for floods. Federally subsidized flood insurance is available, providing limited coverage under the National Flood Insurance Program: up to $250,000 for single family dwellings plus $100,000 for personal property, including furniture, and up to $500,000 for business and church properties, plus $500,000 for the contents.1

The federal “Write Your Own” (WYO) policy allows private insurers to offer and administer standard form flood insurance policies with the federal government serving as the underwriter.2 This means the U.S. Treasury pays the claims and administrative expenses.3

When dealing with a flood claim, it is important to understand that a standard form flood insurance policy is governed by the National Flood Insurance Act, Federal Emergency Management Agency (“FEMA”) regulations, and federal common law. The policy covers damage from a “flood,” which is defined in part as inundation of normally dry land area from overflow of inland tidal waters, “unusual and rapid accumulation or runoff” of surface waters from any source, and mudslides or mudflows4 proximately caused by such accumulation or runoff and “akin to a river of liquid and flowing mud on the surface of normally dry land areas…as when earth is carried by a current of water and deposited along the path of the current.”5 However, the policy excludes losses caused by a flood confined to the premises on which the insured property is located—unless the flood is displaced over two acres of property—and losses caused by landslides or movement of land.

In 1968, Congress created the National Flood Insurance Program (NFIP) to help provide a means for property owners to financially protect themselves. The NFIP offers flood insurance to homeowners, renters, and business owners if their community participates in the NFIP.

Insurance is a Wise Investment

You don’t have to live in a high-risk flood zone to be at risk for flooding. According to the Federal Emergency Management Agency, 20 percent of all flood damage insurance claims come from low- to moderate-risk flood zones. Just a few inches of water can cause thousands of dollars in damage.

In some parts of Yuba County, property owners have a 25 percent chance of flooding during the life of a 30-year mortgage. However, most homeowner insurance policies do not cover flood damage. That’s why Yuba County strongly recommends flood insurance.

Flood insurance can be purchased by property owners and renters. Lowest-cost flood insurance is available through the National Flood Insurance Program (NFIP) and can be purchased through most insurance agents.

Rates are determined based on your property’s flood risk, amount of coverage, and the elevation of your property.

A policy for a property with low- to moderate-risk flood risk is typically eligible for a preferred rate of about $365 per year for $250,000/$100,000 of coverage on the building and contents, respectively.

Properties located in high-risk flood zones are required under federal law to carry flood insurance, if they have a federally-backed mortgage or loan. Rates for high-risk policies vary, but can cost up to $2,400 per year under the NFIP. Private insurance is usually much more expensive. Check FEMA's Flood Insurance Rate Maps for Yuba Countyto determine your flood hazard zone.