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Insurance Glossary

Flood Insurance

Property

Definition

Insurance coverage that protects against losses from flooding, which is specifically excluded from standard homeowners and renters insurance policies. Flood insurance covers direct physical losses caused by flooding, including overflow of inland or tidal waters, unusual accumulation of surface water, mudflow, and collapse of land along a body of water. Available primarily through the National Flood Insurance Program (NFIP) or private insurers, with a typical 30-day waiting period before coverage takes effect. Essential for properties in flood zones but recommended for all properties since 25% of flood claims come from low-risk areas.

Definición en Español

ES

Seguro contra Inundaciones

Cobertura de seguro que protege contra pérdidas por inundación, que está específicamente excluida de las pólizas estándar de propietarios de vivienda.

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Related Terms

NFIP
The National Flood Insurance Program is a federal program created by Congress in 1968 to provide flood insurance to property owners, renters, and businesses. Managed by FEMA, the NFIP makes flood insurance available in communities that adopt and enforce floodplain management regulations to reduce future flood damage. Standard homeowners insurance does not cover flood damage, making NFIP policies essential for properties in flood-prone areas. The program offers up to $250,000 in building coverage and $100,000 in contents coverage.
Flood Zone
Geographic areas that FEMA defines according to varying levels of flood risk. These zones are depicted on Flood Insurance Rate Maps (FIRMs) and determine flood insurance requirements and premiums. High-risk zones (Special Flood Hazard Areas) include Zone A (1% annual chance of flooding) and Zone V (coastal high-hazard areas with wave action). Moderate-to-low risk zones include Zone B, C, and X. Properties in high-risk zones with federally backed mortgages must carry flood insurance. Zone designations directly impact insurance costs and building requirements.
Base Flood Elevation
The computed elevation to which floodwater is anticipated to rise during a base flood (a flood with a 1% chance of occurring in any given year, also called a 100-year flood). Shown on FEMA Flood Insurance Rate Maps (FIRMs), the BFE is used to determine flood insurance premiums and building requirements. Structures built below the BFE face higher insurance costs and greater flood risk. Local building codes typically require new construction in flood zones to have the lowest floor elevated at or above the BFE. Knowing your property's BFE is crucial for flood risk assessment and insurance decisions.
Accident Insurance
Insurance coverage for unforeseen bodily injury resulting from an accident.
Actual Cash Value
The repayment value for indemnification due to loss or damage of property; in most cases it is replacement cost minus depreciation.
Depreciation
The decrease in value of property over time due to wear, tear, age, or obsolescence.
Replacement Cost
The cost to replace damaged or destroyed property with new property of similar kind and quality, without deduction for depreciation.