Flood insurance is coverage for property damage caused by flooding of tidal or inland waterways. Normally, Commercial Property and Homeowners policies exclude flood damage. The most common and cost effective way to purchase flood insurance is from the National Flood Insurance Program (NFIP), which can be bought through an independent agency like Gorilla.
There are several types of flood insurance policies, but each is based on your property’s qualifications and whether your property is located in Special Flood Hazard Areas SFHAs (“high risk”) or Non-Special Flood Hazard Areas NSFHAs (“low risk”).
Preferred Risk Flood – Homeowners and Commercial buildings located in NSFHAs
Residential (Standard Flood) – Homeowners located in SFHAs or with claims history
Non-Residential (Standard Flood) – Commercial buildings located in SFHAs or with claims history
RCBAP (Standard Flood) – Designed for condo associations allowing unit owners to participate purchase low cost flood coverage
What is a Flood?
According to NFIP, “a flood is a general and temporary condition where two or more acres of normally dry land or two or more properties are inundated by water or mudflow. Your flood risk isn’t just based on history: it’s based on many factors that include current weather patterns, natural changes in the environment, and recent development in your community.”
Preferred Risk and Standard Flood Policies
Your agent can run a flood determination and reveal your flood zone. If your property is in a low risk flood area (Non-Special Flood Hazard Areas NSFHAs), like Zones B, C or X, then you may qualify for a Preferred Risk Flood policy which is the least expensive coverage. On the other hand, if your property is located in a high risk flood area (Special Flood Hazard Areas SFHAs), like Zones A, V, AE, VE, AH, AO, A99, AR, V1-V30, or A1-A30, then your rates will vary based on Base Flood Elevation (BFE) and/or Base Flood Depth (BFD) as provided be an Elevation Certificate.
A certified land surveyor or engineer can be hired to complete an Elevation Certificate. If you are in an NSFHA zone, but have experience past flood claims, then you may still require an Elevation Certificate and have to be rated on a Standard Flood Policy.
[Side Note: SFHAs have a 25% chance of flooding every 30 years.]
Pre-FIRM and Post-FIRM
Zones and rates are also affected by Pre-FIRM and Post-FIRM maps. Pre-FIRM properties are those built on or before 12/31/74 or before initial FIRM date. Post-FIRM properties are those built after 12/31/74 or after initial FIRM date, whichever is later.
The initial FIRM date is when the community (where your property is located) entered the regular flood program mapping). Whether your property is Pre-FIRM or Post-FIRM impacts your rates and whether an Elevation Certificate is required.