What Does Flood Insurance Cover ?

Sioux Falls Flood Insurance Information

People in Sioux Falls who shop around for home insurance quotes also frequently ask for quotes on flood insurance. The price for flood insurance varies greatly from $200 to $4500 and up depending on which flood zone your house is located in. I won’t go into the details of all the different flood zones, but people are usually surprised when they discover that every house in Sioux Falls is in a flood zone. Every house is in a flood zone because the entire Sioux Falls area is “mapped” by NFIP (National Flood Insurance Program), but most homes will be located in a flood zone “X”. A house located in flood zone “X” has a very low probability of flooding and flood insurance will cost in the $200 to $500 range per year. A home in flood zone “X” has a .2% of flooding and banks do not require borrowers to obtain flood insurance if your house is “mapped” in zone “X”. If your house happens to be located in flood zone “AE”, then the bank will require the homeowner to purchase flood insurance at the homeowner’s expense. Flood zone “AE” has a 1% or greater potential to flood, and can push the cost for flood insurance to $3000 and up per year. It is interesting to note that $250,000 is the highest amount of flood insurance a person can purchase for their home, so a house that would cost $450,000 to rebuild will only be covered for $250,000. Someone can purchase additional coverage for personal property, but $250,000 is the most you can get for structures on your property.

People in Sioux Falls, SD usually start thinking about flood insurance as our snow melts and our wet spring begins. Then our basements begin to fill with water during heavy rains. A home insurance policy through an insurance company like State Farm or American Family does NOT cover flood or water entering your basement. You can buy a “back up of sewer/sump pump failure” endorsement which will have some limited coverage for your basement if your sump pump stops working or is overwhelmed and floods your basement. This endorsement DOES NOT cover surface water that enters your basement through windows or the foundation, so people naturally turn to a flood insurance policy offered by NFIP, which is branch of FEMA (Federal Emergency Management Agency). This flood insurance policy is purchased through the same insurance companies that provide you home insurance, but these companies are merely a transaction point. The federal government is not efficient at most things including offering insurance policies, so they use established insurance providers to offer and explain their flood insurance policy. NFIP is the ONLY flood insurance policy a person can get, so even though you can purchase the policy through many different companies (State Farm, American Family, All State, etc), you will be buying the exact same policy at the exact same price.

Sioux Falls residents are primarily concerned about surface water entering their basements through their foundation walls, or ground water tables rising and water entering their basement through their basement floor. The home owner would like to turn to their flood insurance policy and have their carpet, baseboard trim and drywall all replaced, but NFIP did not write their policy to cover all those elements. If your loss first qualifies for a “flood”, which means your yard and an adjacent yard must be inundated with surface water, then NFIP will only cover new insulation and drywall. Your carpet, trim, doors are not covered, and the taping, texturing and painting of the drywall will NOT be covered. NFIP does not want people to have finished basements in flood zones, so the government will only pay for the utilitarian part of the repair relating to your basement. They will cover furnaces, water heaters and pump as well as other things necessary for the operation of the home, but not the finished basement we all desire in our area.

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