Tuesday, July 31, 2012

How to Purchase a Flood Insurance Policy?

Flood insurance was not available up until 1968 in the USA, when Congress created the National Flood Insurance Program (NFIP) to make this coverage available to the eligible communities through federal subsidization. The program is managed by the Federal Emergency Management Agency (FEMA). Any building on a permanent site, above the ground, walled and roofed, is eligible for the coverage.

If your property is located in a flood zone, it is subject to standard flood policy premium rates, which are higher than preferred rate premiums.

To purchase flood insurance, you don't have to be in the flood zone. If you are not in the flood zone, and you want to insure your property just in case of a flood, you will be charged a preferred rate. This type of coverage is very affordable; the premium is a couple of hundred dollars a year.

NFIP policies may be sold by private insurance companies through the FIA's "Write Your Own" program. Under this system, the FIA sets rates, eligibility requirements, and coverage limitations. The participating company collects the premiums and pays for the losses out of these premiums. If the insurance company collects more in premiums than it pays out in losses, the excess must be returned to the government. Most of the time, the insurance companies that sell flood insurance also sell homeowner's, dwelling, and other policies.

For the flood coverage to go into effect, an application for the NFIP must be completed and accompanied by the gross policy premium payment in full. Payment cannot be divided into partial payments, and no payment plan is available.

After the payment is received, there is a thirty-day waiting period for the policy to go into effect. The waiting period is waved only if you are buying a house and need to submit all insurance supporting proof at the time of a closing. If your new home is not in a flood zone and your mortgage does not require flood insurance, don't expect them to pay for it from your escrow account. If flood insurance is required, you can request a payment to be released from your escrow account, same as your hazard insurance.

Let's say you have a house, and you have a homeowner's policy and a flood insurance policy. If you decide to sell the house, you can do it in two different ways with the flood coverage.

You can cancel the policy, providing HUD statements and receiving a refund, or you can assign flood coverage to the new owner of the house. The flood insurance can be assigned to the other insured with the title of the property. Some insurance companies request written consent from the previous insured, and some don't.

Friday, July 13, 2012

The Increase Of Flooding In The UK

There are a lot of rivers in the United Kingdom and as an island state, there is also an extensive coastline. During the summer of 2007, there was an unusual amount of extreme weather which led to a lot of flooding and this resulted in over £3 billion worth of damage. As yet, the flood damage from the extensive flooding in 2012 has not been determined but you can be sure it will be a good deal more than £3 billion. The climate is changing and there appears to be a good deal more rain during the summer months. It is possible that long term, sea level will also rise and this too could lead to further flooding on coasts and up rivers. Obviously this is bad news for anyone already living in a flood zone but also bad news for those who may think that they are safe from flooding. It might be a good idea for you to perform a flood risk assessment for your property.

If you have seen the television footage and newspaper photographs over the past few months, you will be aware that there are many areas that have been hit by flooding which had previously never experienced it. Damage has occurred to roads, bridges and railways leading to disruption to transport links. In some places, the only way to get around was by boat or canoe. Homes and businesses have suffered horrendous damage with families being displaced and temporary accommodation having to be arranged. The flooding is not only devastating for those affected but it means that properties are out of commission until they have been dried out and repaired and this can take several months or even a year to complete. If you have home insurance, there is a good chance that the insurance company will pay out for the damage but if you do not have insurance, the cost could be quite horrendous.

Many properties have now found to have been built on flood plains, so it is always a good idea to check before you move in. Take a good look at where your property is, if it is near a river, the sea, a reservoir, at the foot of a hill or bank and what the local topography is. Find out if there are any flood defences in place so that in the event of heavy or prolonged rain there is a bit of protection. You can investigate flood defences and flood protection for your property yourself and this can have a big impact on preserving your property. This is particularly important if your property falls within the official flood risk area and you have difficulty in obtaining insurance cover. Most insurers will not cover properties that fall within a flood risk area or that have flooded in the past.

Unfortunately, more people will suffer from the effects of flooding even if they do not live in a known flood risk area. As we have observed this summer, even for those who live nowhere near a river, flooding can devastate their properties, so be sure to check about yours.