Homeowners and commercial property insurance policies offer protection from many different perils, but they also exclude some potential risks. One of the risks these policies frequently exclude is flooding, which typically leaves Massachusetts residents and business owners without protection against rising waters unless they purchase flood insurance.
Flood policies are specialized insurance policies designed to protect against a specific peril -- unusual water patterns. Insurers offer flood policies for homeowners, condo owners, condominium associations, renters, and owners of commercial property.
Many people who own property in Massachusetts can benefit from having flood coverage.
USNews reports there are 32 square miles in the state that are prone to flooding. Property owners in these parts of the state ought to strongly consider obtaining coverage, and they may even be required to (either by law or the terms of a loan).
Property owners outside of these areas aren’t immune to flooding, though. Their risk may be lower, but they could still experience a flood or other unusual water pattern that causes significant damage. Therefore, property owners may still want to get a flood policy even if they’re in a lower-risk region.
Flood policies may provide protection against several different kinds of unusual water patterns.
The most well known unusual water pattern that policies typically protect against is, of course, rising water levels. The coverage is called “flood coverage,” after all. Other water patterns that a policy might offer protection from include the following:
(The particular water patterns that a specific policy covers can vary, so policyholders should review their policies’ terms and conditions carefully.)
Property owners are only able to purchase flood insurance through the National Flood Insurance Program (NFIP) if their community participates in the program. In Massachusetts, the vast majority of communities participate. At the time of writing, the Federal Emergency Management Agency (FEMA) listed 341 communities in the state that participated and only 9 that did not. Property owners can find out whether their community participates by checking FEMA’s current list of communities or contacting their insurance agent, who can check for them.
For residents whose community participates in the NFIP, the program typically offers the most affordable rates on flood policies. In some cases, the only available or affordable policies are through this subsidized program.
If it’s made available, property owners can use disaster assistance funds to repair or rebuild buildings that are damaged in a flood. These funds, however, aren’t a substitute for flood coverage. There are two reasons why property owners shouldn’t rely on these funds as a replacement for a flood policy.
First, many floods never qualify for disaster assistance. These funds are only made available when the President declares an incident a national disaster, and many floods are never given this status. Unless a flood is immense and causes a lot of damage that affects many people, property owners are unlikely to receive disaster relief funds to help any rebuilding efforts.
Second, disaster relief funds aren’t free money. They’re interest-free loans which must eventually be repaid. Therefore, any property owners that rely on these funds to recover from a flood end up paying all rebuilding costs themselves – they just get a number of years to spread the expense over.
Depending on where they’re located, Massachusetts property owners might be able to get flood insurance through the NFIP or on the private insurance market. An independent insurance agent can help property owners who need help shopping either or both of these markets compare policies.