The Insurance Federation of Minnesota is calling attention to a dramatic lack of Minnesota homeowners taking up much needed Flood Insurance.
“With the recent heavy snows and the most recent flood forecast showing many areas of the state at a high risk of flooding, it is very important for Minnesotans to take the steps necessary to make sure they are adequately protected,” said Insurance Federation of Minnesota President Bob Johnson.
Fewer than one percent of all Minnesota homeowners buy flood insurance, according to statistics available on the website of the National Flood Insurance Program (NFIP).
With the spring melt and rains right around the corner, the time to act is now, according to Johnson, because of the NFIP’s requirement that flood insurance be in place for at least 30 days before it becomes effective.
“Since the standard homeowner’s insurance policy does not cover flood damage, it is important for all Minnesotans to carefully consider all their options to protect their home, which in many cases should include flood insurance,” said Johnson.
Flood insurance is available to Minnesotans in most parts of the state and is sold either through the NFIP directly or through many homeowners’ insurers who package the federal flood coverage with homeowner’s or renter’s insurance.
According to Johnson, one of the reasons for the low ‘take-up’ rate of flood insurance in Minnesota may be the misconception made by many about who qualifies for flood insurance.
“The biggest misconception about flood insurance is when you hear that you can’t get flood insurance because you don’t live in the flood plain, which is just not true,” said Johnson. “The only requirement to be eligible for flood insurance is that your city, county or township must participate in the National Flood Insurance Program and most do, so this important coverage is available almost everywhere in the state.”
Federally regulated mortgage lenders require flood insurance for mortgagees who live in the areas most prone to flooding. But even if such coverage is not required by your lender, getting flood insurance may be prudent, even if you don’t live in a flood plain. FEMA says about a third of all flood claims come from homes located outside designated flood plains.
“Unfortunately, many homeowners don’t buy such coverage because they think it is too expensive,” said Johnson. “Anybody buying property insurance for their home or business should ask their agent or broker about the cost of flood coverage. It many cases it is surprisingly affordable, considering what’s at stake.”
Many homeowners’ insurance policies do cover water damage from the backup of sewers or drains if the homeowner carries an additional ‘rider’ on their policy. This optional coverage also pays if a sump pump fails or is not working due to a power outage. The ‘backup of sewer and drain endorsement’ is surprisingly inexpensive, typically costing $35-$50 per year for $10,000 in coverage with more available if an additional premium is paid.
Auto owners also have coverage for flood damage to their vehicles under their comprehensive auto insurance coverage, if they’ve purchased it. While comprehensive coverage is not required under the state’s mandatory auto insurance coverage, many lenders require borrowers to carry comprehensive coverage.
Some commercial insurance policies also have provisions that pay for flood damage if the business owner buys such coverage. A commercial insurance agent or broker can help determine the right amount of coverage needed. The NFIP also has flood coverage available for business owners.
The best way to find out more information about flood insurance and its costs is to visit the program’s website at: www.floodsmart.gov or contact your insurance agent or company.
The Insurance Federation of Minnesota is a non-profit state trade association representing insurers doing business in Minnesota. The IFM also supports the Insurance Help Line, offering free, unbiased answers to questions about insurance. Questions are taken 24 hours a day by visiting our website at www.insurance
federation.org and clicking on the Insurance HelpLine link.