It’s crucial for homeowners in Illinois to understand the limitations of their standard home insurance policies when it comes to flood damage. Investing in a separate flood insurance policy can provide much-needed protection against the financial devastation floods can bring. With various coverage options tailored to different needs, homeowners can find a policy that suits their specific circumstances. From covering the structure of the home to its contents and even offering replacement cost coverage, flood insurance ensures comprehensive protection. Additionally, considering optional excess flood coverage can provide an extra layer of security, especially in high-risk areas. While flood damage can be unpredictable and overwhelming, having the right insurance in place can offer peace of mind and financial security during challenging times.
Illinois boasts an extensive network of rivers, lakes, and streams, making it one of the largest inland systems in the United States. A significant portion of our land, approximately 7,400 square miles or 15% of the total area, is susceptible to flooding. The sheer volume of water flowing through our streams is staggering, averaging over 25 BILLION gallons per day. Consequently, our state is highly prone to floods, which are the most prevalent natural disasters here, accounting for more than 90% of the declared incidents. It is estimated that there are over 250,000 buildings situated in floodplains across Illinois.
Flooding stands as the most recurrent and expensive catastrophe in the United States, entailing average payments for flood insurance claims that may exceed $100,000, contingent upon the severity of the disaster. Floods have the potential to occur in any location, at any given moment, and numerous homeowners and tenants undergo the devastating consequences of flooding, despite residing far from rivers, coastlines, or significant water bodies. It is advisable to contemplate the purchase of flood insurance as a means to safeguard both property and personal possessions in the event of a flood.
Flood insurance or Supplemental insurance is necessary to cover the damage or destruction caused by a flood, as it is often regarded as an act of nature. Without this additional coverage, losses sustained due to flooding are not covered by standard property insurance. Flooding can occur as a result of various factors such as heavy rainfall, snow melting, coastal storm surges, blocked storm drainage systems, or failure of levee dams. Flood insurance provides coverage for specific types of water damage to your property and personal belongings. The National Flood Insurance Program (NFIP), the largest flood insurance provider in the country, defines flooding as “an excess of water on land that is normally dry.”
Flood insurance covers various scenarios, including:
- Overflowing rivers, lakes, or bays.
- Storm surges from hurricanes.
- Rapid accumulation of water from heavy downpours.
- Mudflows.
- Snowmelt seeping into your home.
Typically, standard homeowners, condo, renters, and mobile home insurance policies do not include coverage for flood damage. Therefore, if your property is susceptible to flooding, it is advisable to purchase flood insurance separately.
The National Flood Insurance Program
The National Flood Insurance Program (NFIP) is an optional program that operates through a mutual agreement between the federal government and local communities. It is administered by the Federal Insurance Administration (FIA) within the Federal Emergency Management Agency. In Illinois, the state coordinating agency for the NFIP is the Illinois Department of Natural Resources/Office of Water Resources (IDNR/OWR).
Floods are the most prevalent natural disaster in Illinois, accounting for over 90% of declared disasters. There are approximately 250,000 buildings located in floodplains throughout the state. Poor development in flood-prone areas further exacerbates property damage and the potential loss of life due to flooding. The annual damages in Illinois average around 700 million dollars.
The NFIP was established by Congress in 1968 with the aim of reducing the escalating costs of disaster relief and minimizing the loss of life and property caused by flooding.
To participate in the NFIP, a community must adopt and enforce local floodplain management regulations. In return, the Federal Emergency Management Agency (FEMA) provides access to flood insurance, disaster assistance, and grants for mitigation efforts to that community.
The IDNR/OWR serves as the state coordinating agency for the NFIP in Illinois. The program operates on a voluntary basis, with a mutual agreement between the federal government and local communities. Currently, 82 counties and 770 communities in Illinois have adopted local floodplain ordinances and actively participate in the NFIP.
What Are My Flood Insurance Options?
The majority of flood insurance is provided by the National Flood Insurance Program (NFIP). If your community is part of the NFIP, you have the option to purchase an NFIP plan. Typically, these plans can be obtained through a major insurance company or directly from the NFIP.
NFIP plans must adhere to federally established standards. They offer two types of coverage: structure insurance, which protects your home, and contents coverage, which insures your belongings. Additionally, there may be coverage available for debris removal costs, loss prevention, and the expenses associated with meeting compliance requirements.
By filing a claim on your flood insurance plan, you may be eligible for compensation to cover your losses and reduce your flood recovery expenses. Generally, flood insurance takes effect 30 days after purchase. However, if your lender requires you to have flood insurance in order to obtain, increase, extend, or renew your loan, there is no waiting period.
How does Flood Insurance Work?
Flood insurance policies provide coverage for damages caused by floodwaters, which is not included in standard homeowners insurance. Property owners residing in flood-prone areas are advised to obtain this specialized insurance to protect their homes and commercial properties.
In the event of flooding due to external factors such as rain, snow, or storms, the insured property owner is compensated for the repair or rebuilding costs up to the policy limit. The annual premium is determined based on the property’s flood risk and the chosen deductible.
Unlike basic hazard insurance, flood insurance requires separate policies for the dwelling and its contents. Additionally, a separate coverage rider is necessary to protect against sewer backup not caused by the floodwaters. It is mandatory for property owners with federally backed mortgages in federally designated flood zones to have flood insurance coverage.
What Does Flood Insurance Cover in Illinois?
Flood insurance provides coverage for both structural and personal property damage caused by flooding. It’s important to keep in mind that even just one inch of water in your home could result in up to $25,000 worth of damages.
Standard flood insurance solely provides coverage for personal possessions and structural damage to your property. However, it does not include protection for vehicle flooding, decks, documents, swimming pools, or landscaping.
Flood Insurance Building Coverage
Building coverage is a crucial component of any flood insurance policy, as it provides financial protection for the physical structure of your home. This coverage extends to various aspects of your property, including:
– Foundation walls: Essential for supporting the entire structure of your home.
– Electrical systems: Including wiring, outlets, and circuit breakers.
– Plumbing systems: Covering pipes, drains, and fixtures.
– Furnaces, central heating, and air conditioning units: Vital for maintaining a comfortable living environment.
– Built-in appliances: Such as refrigerators, stoves, and dishwashers.
– Permanent carpets: Including those installed wall-to-wall.
– Built-in furniture: Such as cabinets and countertops.
Having building coverage ensures that in the event of flood damage, you can repair or rebuild these essential components of your home without facing significant financial strain. With policies from the National Flood Insurance Program (NFIP), homeowners can purchase up to $250,000 in building coverage, providing substantial protection against flood-related losses.
Flood Insurance Contents Coverage
Contents coverage is another critical aspect of flood insurance, designed to protect your personal belongings from damage caused by floods. This coverage extends to a wide range of items within your home, including:
– Apparel: Clothing, shoes, and accessories.
– Furnishings: Such as sofas, tables, chairs, and beds.
– Electronic devices: Including televisions, computers, and audio equipment.
– Laundry appliances: Such as washing machines and dryers.
– Other personal belongings: Such as kitchenware, decorations, and personal electronics.
Having contents coverage ensures that if your possessions are damaged or destroyed due to flooding, you can receive financial compensation to replace them. With policies from the National Flood Insurance Program (NFIP), homeowners have the option to obtain contents coverage of up to $100,000, offering significant protection for their personal belongings. This coverage provides peace of mind and helps homeowners recover from the financial impact of flood-related losses.
Flood insurance coverage beyond the NFIP
You might have the opportunity to obtain more extensive coverage and increased limits by purchasing flood insurance from insurers that are not affiliated with the NFIP. For instance, Neptune provides building coverage of up to $4 million and contents coverage of up to $500,000. On the other hand, Chubb offers limits of up to $15 million in total for your residence and personal property. Both companies offer replacement cost coverage for your belongings, allowing you to replace items like your flood-damaged recliner with a new one.
What doesn’t flood insurance cover?
The standard NFIP policy does not provide coverage for certain expenses, such as:
– Some water damage: NFIP only covers damage caused by naturally occurring flooding that affects at least 2 acres and two properties. It does not cover incidents like an overflowing bathtub flooding your bathroom.
– Damage to specific items and areas of your home: NFIP does not pay for flood damage to swimming pools, hot tubs, decks, patios, landscaping, fences, wells, valuable papers, or currency. Additionally, most basement items are not covered, including furniture, electronics, finished floors, bathroom fixtures, or generators.
If you have a finished basement, you may want to consider private flood insurance as an alternative to NFIP.
– Living expenses if you cannot stay at home: If you need to stay in a hotel or rent an apartment while your home is being repaired after a flood, you will be responsible for covering those costs.
– Vehicles: NFIP insurance does not cover cars or other self-propelled vehicles. However, if you have comprehensive insurance on your auto policy, it should cover flood damage.
Private insurers typically offer more coverage options and fewer exclusions. For example, Neptune and Aon Edge may cover some expenses if you need to relocate during repairs and also cover swimming pool repairs or cleanup.
Do You Need Flood Insurance in Illinois?
Flood insurance is not included in standard homeowners and renters insurance policies. It is important to recognize that every property is susceptible to flooding, which is why purchasing flood insurance is a prudent investment, even for those residing in areas with low or moderate flood risks. On the other hand, individuals who live in high-risk flood zones and have mortgages are required to obtain flood insurance.
Opting for private flood insurance has its own advantages. In the event of a flood, insurance providers are obligated to cover the damages to your home, even if there is no declaration of a presidential disaster. In contrast, federal disaster assistance grants are limited to a maximum of $5,000 per household, which is often insufficient to cover the extensive costs associated with flood damage.
In essence, flood insurance provides policyholders with an additional layer of protection and peace of mind, ensuring that they are adequately covered in the event of a flood.
What is the appropriate amount of flood insurance coverage that I should obtain?
The amount of coverage required is determined by the size and layout of your residence, as well as the value of your possessions. For instance, a larger one-story ranch may necessitate more coverage compared to a two-story home where a significant portion of your belongings are out of reach of most floods.
Consulting with an insurance agent can assist you in determining the appropriate amount of building coverage to purchase. Additionally, conducting a home inventory is an effective method to evaluate the worth of your possessions.
If the coverage provided by the NFIP is insufficient, consider inquiring with your insurance agent about excess flood insurance to bridge the gap. Excess insurance typically provides the same coverage as your NFIP policy, but with higher limits that become effective once your NFIP coverage is depleted. This type of insurance can be obtained from private companies like Wright and SWBC.
Alternatively, you may choose to forgo the NFIP and explore private flood insurance options that offer higher coverage limits.
Flood Insurance Rates in Illinois
The cost of flood insurance in Illinois is determined by various factors, including the county you reside in and individual risk factors. These risk factors encompass elements such as the construction of your home, its elevation, the expenses associated with replacement and repairs, the frequency of flooding, and more.
It is important to note that standard renters or homeowners insurance policies typically do not provide coverage for damages caused by natural flooding. According to the Federal Emergency Management Agency (FEMA), even just an inch of water can result in expenses of up to $25,000.
Illinois comprises multiple flood-prone areas with high-risk flood zones. By referring to a local flood map, you can determine if your household falls within one of these zones. Regardless of whether you reside in a low-risk flood zone, it is advisable to consider purchasing flood insurance. This will help safeguard you against the substantial costs associated with flood-related damages.
Average Cost of Flood Insurance in Illinois
The annual cost of flood insurance in Illinois is typically $1,105. Nevertheless, the rates can significantly differ based on your distance from a flood zone and the specific risks associated with your property. It is common for individuals residing in flood-prone regions to pay higher premiums.
Average Cost of Flood Insurance by County in Illinois
Illinois flood insurance rates tend to be approximately $337 higher than the national average, potentially due to the state’s increased number of high-risk flood zones. A study by MoneyGeek reveals that Ford County boasts the lowest premiums at $356 annually, while Menard County has the highest rates, averaging $4,179 per year. The cost of flood insurance varies significantly across Illinois counties, with premiums ranging from $356 to $4,179 per year.
Factors That Affect Flood Insurance Costs in Illinois
In the past, flood insurance providers primarily used location as the sole determinant for calculating insurance costs. FEMA offers interactive maps displaying flood risk for U.S. counties, helping individuals assess their flood risk.
FEMA’s data on flooding events in Illinois since 1996 reveals significant disparities among counties. Alexander County has experienced the highest number of flooding events (187), while Stark County has had the least (20). Despite these differences, the average annual cost of flood insurance in Alexander County is $1,043, compared to $914 in Stark County.
The introduction of FEMA’s Risk Rating 2.0 system in October 2021 marked a shift toward evaluating individual property risks. This includes factors such as foundation type, building structure, elevation, repair costs, and flood frequency, in addition to flood zone mapping. Risk Rating 2.0 offers a more tailored approach to premium computation, although location still plays a significant role in determining flood insurance rates.
Various factors influence flood insurance premiums in Illinois, including flood risk, coverage type, deductible amount, age of structure, and structural design. Comprehensive coverage and lower deductibles typically result in higher premiums, while opting for a higher deductible can reduce premiums but requires a higher out-of-pocket expense in the event of a claim. Additionally, insurance rates may vary based on the age and design of the insured structure.
Companies that offer Flood Insurance in Illinois
Residents of Illinois have the option to obtain flood insurance either through the National Flood Insurance Program (NFIP) or from private insurance companies. Private insurers offer both base policies, similar to NFIP coverage, and excess policies, which provide additional coverage beyond the base policy.
Private flood insurance may be preferable for households that require more extensive coverage than what the NFIP offers or for those residing outside NFIP-designated communities.
Several private flood insurance providers operate in Illinois, each with its own contact information for inquiries and policy purchase:
– Neptune Flood: 727-202-4815
– Aon Private Flood: 888-281-0684
– Hiscox – FloodPlus: 866-283-7545
– FloodSimple Insurance Services: 844-803-8788
– Chubb: 866-324-8222
Additionally, the NFIP collaborates with various insurance companies in Illinois to offer flood coverage. MoneyGeek has compiled a list of NFIP-participating insurers and their respective contact details for convenience:
– Allstate Insurance Company: (800) 527-2634
– American Family Mutual Ins. Co: (800) 692-6326
– American Nat. Prop. & Casualty: (417) 887-4990
– American Strategic Ins. Corp.: (866) 274-8765
– Assurant: (800) 423-4403
– Auto Owners Insurance Co.: Refer to the Agent locator
– Farmers Insurance Group: (866) 865-2965
– Hartford Fire Insurance Co.: (860) 547-7440
How to get flood insurance
There are multiple options available for purchasing flood insurance. The NFIP collaborates with approximately 50 insurers to distribute its policies, so you might be able to obtain flood insurance from the same provider that offers your auto or homeowners coverage.
To purchase an NFIP policy, you must reside in one of the 22,000-plus communities that are part of the program. If NFIP insurance is not accessible in your region, consider looking into private flood insurance companies. Even if NFIP insurance is available, you could potentially secure lower rates from a private insurer. A local independent agent can assist you in exploring your options.
It is advisable not to delay obtaining coverage until a hurricane is approaching your residence. Typically, there is a waiting period between purchasing flood insurance and when the coverage becomes effective. For NFIP policies, the waiting period is usually 30 days, while other policies may have shorter waiting periods of 10 to 15 days.
Providing your insurer with an elevation certificate could potentially reduce your premium. An elevation certificate indicates the lowest floor elevation of your home, which the insurer will utilize to assess your home’s flood risk. Although FEMA used to mandate elevation certificates for certain property owners to obtain coverage, this is no longer a requirement.
You can obtain an elevation certificate from your local flood plain manager or hire a land surveyor or engineer to prepare one for you.
Flood Mitigation
Since 1993, the state has actively focused on addressing the most flood-prone structures by utilizing a combination of FEMA and state mitigation funds. More than 4000 of these structures have undergone mitigation efforts, either through state or federal buyouts followed by demolition or elevation by the property owner. These mitigation measures have effectively prevented millions of dollars in potential future flood losses.
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The Illinois Emergency Management Agency (IEMA) oversees the distribution of various FEMA Hazard Mitigation Grants. For more details on IEMA’s mitigation programs, please visit the Mitigation – Recovery section. Public notices are issued when applications are open for submission.
The Illinois Department of Natural Resources/Office of Water Resources manages state mitigation funds whenever they are available. Public notices are released for counties and municipalities to submit their applications. For further information, please reach out to Ron Davis, the Mitigation Program Coordinator.
Conclusion
The decision of whether flood insurance is suitable for you hinges on various factors, particularly the location of your property in a high-risk flood zone. Nevertheless, floods can happen anywhere. Living near water is not a prerequisite for potential flooding, as it can result from storms, snowmelt, or clogged drainage systems. Remember, if you wish to safeguard against flood-related expenses, purchasing a separate policy alongside your homeowners insurance is necessary.