Protecting Your Property: Flood Insurance

Posted by on Tuesday, April 8th, 2014 at 3:57pm.


With September's disaster still fresh in mind, Boulder County residents worry about residual flooding this spring. ROB Radio puts John Farrington of Foothills Insurance and Jessica Shanahan of Premier Lending in the hot seat in this interview to reveal the ins and outs of flood insurance.

All flood insurance is run through FIMA--FIMA sets the price, the rate, and regulations and are underwritten by insurance companies that, according to Farrington, can interoperate the quirks involved. For example, a crawl space counts as a floor and flood insurance is required if a home or business is financed by a federally backed mortgage. Basement contents are not covered by flood insurance; however, permanent fixtures such as a furnace or water heater are covered as well as minimal repair to walls and floor. If an owner has more than one building on a single property, Farrington says, both buildings must be covered separately. Additionally, the policies max out at $250,000 for a private residents and $500,000 for a business. 

Because of the fall floods, Farrington points out that exactly where the flood plain lies is no longer a guessing game. 

"Risk is greater now with the heavier-than-normal snowmelt coming from the west and blockage and debris still in the rivers," Farrington says. Larimer County has even started distributing sandbags to home owners near water. "Historically, most floods happen in the lower risk, 500 year flood plains, than in the 100 year flood plains," he points out. That's what was witnessed in Boulder. 

Farrington explains the 500 year flood plain as "Zone X" and the 100 year flood plain as "Zone A". "You can interpret the latter as having a 1% chance of flooding each year," he says.

As a result of September's flood, many properties in Boulder have been rezoned. Those properties that have been rezoned from Zone X to Zone A will be grandfathered into the old system of flood insurance that offers a lower risk premium structure as a result of the Preferred Risk Extension Program. For homes that do not require insurance (Zone X)  there is a 30-day waiting period for flood insurance. Homes in Zone A are required to have flood insurance.

"As soon as we accept a loan application, we pull flood zone information and refer the applicant to an insurer if applicable," says Shanahan. She admits this is a rarity, necessary for just one or two Premier Lending loans each year. The 30-day wait period required by FIMA is lifted if flood insurance is required for loan closure. 

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