Flood Insurance Policies to Change Oct. 1

Columbia, SC – According to the South Carolina Insurance News Service, the national flood insurance program will make policy revisions effective Oct. 1.

The organization released the following information on Tuesday:

Premiums will increase an average of 8 percent and homeowners will see their deductibles increase.

Homeowners with a $500 deductible will see an increase to $1,000, while those with a $1,000 deductible will see an increase to $2,000. Customers with a $2,000 deductible can reduce their deductible to $1,000 by paying an additional premium. The basic coverage limits are increasing for all categories of building and contents coverages. The NFIP is making additional revisions to building types and eligibility requirements.
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The South Carolina Insurance News Service advises home and business owners to talk to their insurance agent or company to learn more about the changes. “Homeowners can set up a catastrophe savings account to pay for their insurance deductibles in the time of a disaster,” said Allison Dean Love, executive director of the South Carolina Insurance News Service. “This is a great way to be prepared for a disaster by having the money set aside, state income-tax free,” she said.
In 2007, the South Carolina General Assembly passed the Omnibus Coastal Property Insurance Reform Act, allowing homeowners to set up catastrophe savings accounts to pay for qualified catastrophe expenses such as an insurance deductible or other uninsured costs associated with a hurricane, flood or windstorm event. The account must be labeled as a “catastrophe savings account” and can be established at any state or federally chartered bank in an interest-bearing account. Depending on the amount of the insurance deductible, homeowners can contribute up to $15,000. If your home is self-insured, you can contribute up to $250,000 or no more than the value of the home. You can save up to 7 percent times the amount in the account (less $448) on your taxes. For more information on setting up a catastrophe savings account, visit www.scinsurance.net.

There are more than 201,000 National Flood Insurance Program policies in South Carolina–approximately 12% of the state’s households–with more than $46 billion in property insured. The National Flood Insurance Program is administered by the Federal Emergency Management Agency.

The South Carolina Insurance News Service offers the following facts about flood insurance:

No matter where in South Carolina you live, you may need flood insurance to help protect your home, business, family and financial security. If any portion of your structure is in a high-risk flood zone and you have a mortgage through a federally regulated or insured lender, you will be required to purchase flood insurance by your bank or mortgage lender. For example, if you build a deck and the deck extends into the zone and is connected to your home, then you will need to have flood insurance.
There is a 30-day waiting period required for flood insurance to take effect.
Flooding is the nation’s number one natural disaster. Most home and business owners’ insurance policies do not cover flood damage.
South Carolina has seen a nearly 25 percent increase in the number of National Flood Insurance Program policies issued during the last three years. Potential driving factors include increased flood awareness since Hurricane Katrina, increased development in coastal high-risk flood areas and changes to flood maps that broaden the high-risk areas.
If you live in a moderate- to low-risk area for flooding and are eligible for a “Preferred Risk Policy,” your flood insurance premium might be as low as $119 per year, including coverage for your property’s contents. The national average premium for a flood policy is $544 a year. The average premium in South Carolina is $550. To determine your home’s risk and for pricing information, visit www.floodsmart.gov.
There are 212 communities in the flood program in South Carolina and 34 of those communities are a part of the Community Rating System (CRS). CRS is a voluntary incentive program that recognizes and encourages community floodplain management activities that exceed the minimum NFIP requirements. As a result, flood insurance premium rates are discounted up to 45 percent to reflect the reduced flood risk resulting from the community’s actions to reduce flood losses, facilitate accurate insurance rating and promote the awareness of flood insurance.
Homeowners can buy up to $250,000 of coverage for the structure and up to $100,000 for personal contents. Businesses can buy up to $500,000 in coverage for the structure and $500,000 in contents coverage. Some private insurance companies offer excess flood protection, which provides higher limits of coverage than the NFIP. Separate contents coverage is also available. Renters can buy coverage of up to $100,000.

In order to determine how much insurance you need, download free home inventory software from the South Carolina Insurance News Service web site at www.scinsurance.net.

Number of NFIP policies in SC Property amount covered
2006 163,573 $33 billion+
2007 189,712 $40 billion+
2008 198,155 $43 billion+
2009 201,235 $46.1 billion

South Carolina has experienced flooding from many hurricanes and tropical storms during the last 20 years, including Hugo, Fran, Bonnie, Floyd, Charley, Gaston and Frances. According to the National Flood Insurance Program, South Carolinians filed 12,843 flood insurance claims after Hurricane Hugo in 1989.

Many private insurance companies issue flood insurance under an arrangement with the Federal Emergency Management Agency (FEMA (web | news) ). Insurance companies issue the policy under the company’s name and handle claims using the rules, coverages and procedures specified by the NFIP.

Many flood maps in South Carolina have been updated, but some date back many years. Maps are available at www.floodsmart.gov. To find out if your community participates in the program visit www.fema.gov/cis/SC.pdf.