We get this question quite often – from homeowners and insurance agents! This short article should help answer these questions, and more.

First things first, what exactly is a “flood?”  According to the terms of our current EZ Flood® policy, as well as a policy offered by the National Flood Insurance Program (NFIP), a flood is defined as:

1. A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from:
   • Overflow of inland or tidal waters;
   • Unusual and rapid accumulation or runoff of surface waters from any source;
   • Mudflow.
2. Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined in 1.a. above.

 
In layman’s terms, flooding means surface water.  Surface water can occur from many sources including rain, tidal water, rivers, lakes, streams, even an overflowing sewer. In most cases “surface water” is excluded from a homeowner’s policy.  Most homes in the US are in a flood zone, albeit some at a higher risk than others, so it makes sense for every homeowner to explore flood insurance options to make sure they’re adequately protected.  After all, your home, or your client’s home, is probably the biggest investment you’ll ever make, so it’s well worth protecting.

As far as coverage goes, there are many different types of flood insurance policies on the market today, which can make a confusing situation even more confusing.  With the addition of “private flood policies”, you have several choices for your situation. 

The most popular flood insurance policy is purchased through the National Flood Insurance Program (NFIP), which is administered by the federal government. The NFIP policy is very specific in terms of coverage.  For example, you can get replacement cost for the dwelling on a single family, owner-occupied home.  Anything else (such as for contents) only gets Actual Cash Value (ACV), less depreciation, which will be decided at time of claim.  No matter the type of residence, owner- occupied, rented, or vacant, the NFIP only offers ACV loss settlement for contents coverage.  This could mean you or your client will not get full reimbursement for aging items in the home including electronics, clothing, and even furniture. 

How does private flood insurance such as EZ Flood from Aon Edge compare to the NFIP offering?  Check out this chart to see the differences:
 

	EZ Flood	NFIP
Maximum Building Limit	$750,000	$250,000
Maximum Personal Property Limit	$200,000	$100,000
Coverage Amount Option	No coverage combination restrictions	Limited to 9 coverage amount combinations
Claims Settlement	Replacement Cost Value for principal residences and Actual Cost Value for secondary residences	Replacement Cost Value for principal residences and Actual Cost Value for secondary residences
Deductibles Options	$1,000 / $1,250 / $2,000 / $5,000 and $10,000	SFHA: $1,000 - $10,000 PRP:   $1,000 / $1,250
Ground Collapse Coverage	Yes	No
Additional Living Expenses	$5,000 in Living Expenses $500 Food Spoilage	No
Swimming Pool Cleanout	$1,000 to clean and restore a swimming pool	No
Excess Flood	Additional $5M above EZ Flood	Additional $5M above NFIP (including personal and commercial)
Commercial Flood	Up to $40M Dwelling/Contents	Excess $15M above the NFIP

As you can see, the NFIP limits the dwelling amount that can be purchased to $250,000.  In most places in the US, that amount may not adequately cover your home.  Never fear, because homeowners have options to purchase more dwelling and contents coverage with an excess flood insurance policy through companies offering private flood solutions such as Aon Edge.  In addition, the NFIP doesn’t offer any coverage beyond dwelling and contents.  Many private flood insurance solutions offer coverage for items such as additional living expenses and swimming pool cleanout.  These types of coverages can help save the day after a flooding event, giving homeowners a place to live while the damage is being fixed, as well as assistance with the expense of cleaning out an inground pool.

Our advice to homeowners is to talk with an agent who specializes in flood insurance to make sure you know the available options for your personal situation.  Remember to ask about loss settlement and make sure you get the most comprehensive coverage for your money.  After all, you don’t want to find out at claim time, when it’s too late, that you could have made a better choice for your flood insurance policy.    

All descriptions, summaries or highlights of coverage are for general informational purposes only and do not amend, alter or modify the actual terms or conditions of any insurance policy.  Coverage is governed only by the terms and conditions of the relevant policy.