Understanding flood insurance
In 1968, Congress created the National Flood Insurance Program (NFIP). This program offered homeowners affordable flood insurance because private companies were unwilling to take on the risk of damage caused by floods. The program is administered by the Federal Emergency Management Agency (FEMA).
While private companies sell flood insurance, all rates are standardized by FEMA. Property owners in Boston qualify to buy and maintain federally subsidized flood insurance through the program.
What does flood insurance cover?
The two kinds of flood insurance coverage are building coverage and contents coverage. You have the option to pick separate coverage amounts and deductibles for each.Building coverage
This type of coverage insures your belongings. But it excludes most items in your basement or below the lowest occupied floor.
There are some counter intuitive exceptions, for instance:
- Building flood insurance covers refrigerators, stoves, and dishwashers.
- Contents flood insurance covers washers and dryers.
Make sure to check your policy to see what is being covered.
How are rates determined?
- the flood zone your property is located in
- its height above sea level, and
- your building’s characteristics.
In Boston, there are three different flood zones that determine these rates. To learn more about flood insurance rates, visit FEMA's website. You can also talk with your insurance agent.
When you review FEMA's flood map, you'll see some common symbols:
- Moderate to low-risk areas are represented on the maps by the letter X.
- High-risk areas are labeled with such designations as A, AE, AO, or AH.
- High-risk areas that have more risk from storm surge and wave action are labeled V or VE.
Policies by zone
In low-to-moderate-risk areas (Zone X), there are two types of policies available.
- The Standard Rated Policy is the standard rate for homeowners.
- The Preferred Risk Policy is a special policy. It offers low-cost protection for homes and apartments outside of the existing floodplain.
If you bought flood insurance before being required to, the grandfathering rule may apply.
In the high risk flood zones (Zone A or V) homeowners will need to buy flood insurance. It is required by law if you carry a mortgage from a federally regulated or insured lender. Homeowners who have received federal disaster assistance for flood damage also need to buy flood insurance to be eligible for future aid.