When most people think about their homeowners or commercial property insurance, they assume “flood” is automatically covered. Unfortunately, that’s not the case and learning this after water is rising in your living room or business can be a devastating (and costly) surprise.

Flood coverage is almost never included in standard homeowners or property insurance policies. Instead, it must be purchased separately, either through the National Flood Insurance Program (NFIP) or from a private flood insurer.

Whether you own a home, a business, or both, here’s what you need to know to protect yourself before the next heavy storm rolls in.

What Exactly Counts as a “Flood”?

In insurance terms, a flood isn’t just any water damage. It has a very specific definition:

A general and temporary condition where two or more acres of normally dry land—or two or more properties — are inundated by water or mudflow.

That means water damage from a burst pipe or a leaky roof is not considered a flood. But storm surge, heavy rain overflow, river swelling, or flash flooding from sudden downpours often meet the definition.

What is a Flood Zone?

Flood zones are geographic areas defined by FEMA (Federal Emergency Management Agency) to indicate different levels of flood risk:

· High-Risk Zones (A or V): These have at least a 1% annual chance of flooding (also called the “100-year flood”). Lenders usually require flood insurance here.

· Moderate-to-Low-Risk Zones (B, C, X): Flooding is less likely, but still possible. About 25% of flood claims come from these areas.

· Undetermined Risk Zones (D): Flood hazards are possible, but not mapped.

You can check your property’s flood zone using FEMA’s Flood Map Service Center.

Why You Still Need Flood Insurance in a Low-Risk Zone

Many homeowners skip flood insurance because their lender doesn’t require it. But here’s the truth:

· Flooding can happen anywhere — it’s the most common and costly natural disaster in the U.S.

· Just one inch of water can cause $25,000 or more in damage.

· Federal disaster assistance is not guaranteed and often comes in the form of loans you must repay.

Questions to Ask When Considering Flood Insurance

1. Is my property in a FEMA-designated flood zone?

2. What’s the cost difference between NFIP coverage and private flood insurance?

3. Does my policy cover the replacement cost or actual cash value?

4. What are the coverage limits for my building and personal/business property?

5. Is there a waiting period before coverage starts? (NFIP policies typically have a 30-day wait.)

6. Are there exclusions I should be aware of? (For example, basements often have coverage limitations.)

7. Can renter’s purchase flood insurance? Renter’s can purchase flood insurance, but only in the NFIP. The NFIP offers a Contents-Only policy covering personal belongings (furniture, clothing, electronics) up to $100,000.

Key Details to Look for in a Flood Policy

· Coverage Limits: NFIP policies max out at $250,000 for residential structures and $500,000 for commercial buildings, plus limited contents coverage. Private insurers may offer higher limits.

· Contents Coverage: Check if it’s included or requires a separate policy.

· Deductibles: Understand how much you’ll be responsible for if you file a claim.

· Waiting Period: Factor in the time before the policy takes effect—don’t wait until a storm is approaching.

The Bottom Line

Flood insurance isn’t just for people living on the coast or near rivers. It’s for anyone who wants peace of mind that their home or business is protected from one of nature’s most damaging (and unpredictable) forces.

Don’t wait for the next big storm to start asking questions. Review your coverage now, understand your flood risk, and explore your options for protection.

Need help figuring out your flood risk or finding the right policy?

Ellis Insurance Agency can walk you through your options, compare NFIP and private flood coverage, and ensure you’re protected before the water rises.

What is a payment schedule in roof insurance claims?

A Payment Schedule is a specific method used by most insurance companies to determine the settlement amount for a damaged roof. Unlike Actual Cash Value (ACV) or Replacement Cost (RC) settlements, this approach does not rely on the current market value or full replacement cost of the roof. Instead, it applies a predetermined percentage reduction based on the roof’s age at the time of the loss. The older the roof, the greater the reduction in the payout. This method is designed to offer a consistent and transparent settlement process for both the homeowner and the insurer.

How does the payment schedule work?

The Payment Schedule follows a sliding scale, meaning the amount you’re eligible to receive for roof damage decreases as your roof gets older. Here’s a simplified example to illustrate how this might work—note that this is just a general example and not an official payment schedule from any specific insurance company:
    •    Roof Age 0–5 years: 100% of the replacement cost
    •    Roof Age 6–10 years: 80% of the replacement cost
    •    Roof Age 11–15 years: 60% of the replacement cost
    •    Roof Age 16–20 years: 40% of the replacement cost
    •    Roof Age 21+ years: 20% of the replacement cost

Keep in mind that the exact percentages and age brackets can vary widely depending on your insurance provider and policy. The key takeaway is that the older your roof is, the lower the payout you can expect under a Payment Schedule approach.

The Process of a Payment Schedule Claim

Damage Assessment: Once you report roof damage, an insurance adjuster will inspect the roof to evaluate the extent of the damage and estimate the replacement cost.

Age Verification: The adjuster or insurance company will verify the age of your roof, typically requiring documentation such as installation records or receipts.

Payment Calculation: Using the Payment Schedule, the insurance company applies a percentage based on your roof’s age to the estimated replacement cost. For example, if your roof has a replacement value of $20,000 and is determined to be 6 years old, you may receive 80% of that value, or $16,000.

Settlement: The final payout is issued after subtracting your home insurance deductible. This amount is intended to help cover the cost of repairing or replacing your roof.

Advantages and Considerations

Advantages:
    •    Predictability: Homeowners have a clear understanding of what percentage of the roof replacement cost they might receive, based on the roof’s age.
    •    Perceived Fairness: The approach seeks to strike a balance between providing coverage for homeowners and managing risk for the insurance company.

Considerations:
    •    Reduced Payouts for Older Roofs: Homeowners with aging roofs may receive significantly lower settlements compared to Replacement Cost (RC) policies, especially if the roof was already near the end of its useful life.
    •    Policy Differences: Not all insurers offer a Payment Schedule option, and those that do may use widely varying age brackets and payout percentages. It’s important to review your specific policy details carefully.

In conclusion…

A Payment Schedule in roof insurance claims provides a structured, age-based method for determining settlement amounts after roof damage. Unlike Actual Cash Value or Replacement Cost policies, this approach reduces the payout according to the age of the roof, offering homeowners a predictable and transparent understanding of what they can expect. While it can be seen as a fair way to balance the insurer’s risk and the homeowner’s coverage, it often results in lower payouts for older roofs. Because Payment Schedules and their specific terms can vary greatly between insurance providers, it’s essential for homeowners to review their policies closely and understand how their roof’s age could impact a future claim.