by Ed S. Flood Insurance Expert in Chicago Illinois

Homeowners insurance covers a particular policyholder against many potentially disastrous perils. But as anyone who has made a claim for losses after a hurricane knows very well, regular homeowners insurance does cover flood damage.  To be properly covered against the consequences of a flood loss, a special coverage offered by the NFIP or the National Flood Insurance Program is necessary.

The Federal Emergency Management Administration, FEMA, is the organization that administers that NFIP. FEMA determines the terms and conditions of the flood policies as well as the premiums. While insurance agents may sell insurance policies directly sold by the NFIP, private insurance carriers may be able to write and issue flood policies. These insurers are known as 'Write Your Own' flood insurers.Illinois flood insurance rates

The Federal Government through its FEMA hopes to accomplish some goals by involving the private insurers in the flood insurance programs. First, offering the flood coverage through private insurers will facilitate the process of providing the coverage to the public. Second, allowing the 'Write Your Own' flood insurers to participate will reduce the administrative costs of the federal government in policy underwriting and claim processing.

Home buyers who decide to purchase homes in flood zones or 'special  flood hazard area' with a loan from a federally regulated financial institution are required to carry flood insurance to cover their new home. 'Special flood hazard area' refers to zones where there is at least 1% chance of flood occurring each year. By the end of 2010 there were over 20,000 communities in the United States that participate in the NFIP. Communities that choose not to participate in this non mandatory program are making their residents ineligible for such program, and may put their residents' rights to obtain federal disaster relief in jeopardy.

Members of the NFIP community must practice the enforcement of certain building codes. Despite the fact that most new buildings in flood zones, buildings that are below ground level may not be covered. Also, certain areas of the United States known as the 'Coast Barrier Resources System' may be subject to limited coverage. The NFIP has manuals explaining all of that.

Flood insurance can be used to cover both residential and commercial buildings. Personal and business properties can also be covered under the same flood coverage policies. Residential properties can be covered to limits of $250,000 for building coverage, and $100,000 for personal properties. Non residential properties may be covered at maximum limits of $500,000 for each building coverage and business property coverage. Properties stored in basements are not covered.
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