Are You Paying Too Much for Flood Insurance?

Are You Paying Too Much for Flood Insurance?

You might not think of Arizona as being a place where homeowners or home buyers need to consider flood insurance. We are after all, largely desert. In fact, according to the government website FloodSmart.gov, in the past 5 years, property owners in all 50 states have experienced floods. Monsoon has been very unkind to several areas in Arizona, including the North Phoenix Valley. Floods were widespread and common this year. If you’re buying a home in Arizona, don’t forget to check flood maps and purchase flood insurance if necessary. Your homeowners insurance will not cover floods.

Property owners of both residential and commercial units purchased more than $3.5 billion in flood policies last year through the National Flood Insurance Program (NFIP). The reason? More lenders may be requiring flood insurance—and yours could ask for it, too.

Insuring your home against flood risk is important, but it is also important to understand its cost. One way to ensure cost-control is with an error-free elevation certificate, says Michael Allison, president of AmeriFlood Solutions, Inc.

The elevation certificate is a document that indicates the elevation of the property, which determines insurance premium rates. The certificate must be free of errors and omissions—either could potentially cost thousands in needless expense, Allison says.

“A signed and sealed elevation certificated does not ensure accuracy,” Allison said in a statement. “More than 50 percent of the elevation certificates reviewed by our staff have errors. Further, outdated elevation certificates may not reflect building improvements or uncover documentation errors or omissions that can cause insurance agents, brokers and carriers to rate flood policies inaccurately. That can add up to a considerable difference in the amount paid for coverage or measures implemented to mitigate flood damage.”

Allison recommends reviewing the elevation certificate with an insurance broker or agent or flood risk expert—they can help you determine if you are paying too much (or too little) for flood insurance.