Flood Insurance

About ten million dollars of flood damage occurred during each of the 1983 and 1986 floods, both 50-year flood events. You may have been spared in 1998, or you might have done some flood proofing, but remember, the next flood could be worse. In 1890 and 1909, Clear Lake levels were more than two feet higher than in 1983, 1986 and 1998.

Standard homeowners insurance does not cover damage caused by flooding!

One of the best protection measures for a owner of a building with a flood problem is National Flood Insurance, which is purchased through most property insurance agents. If the building is located in a floodplain, flood insurance will be required by most mortgage lenders.

Lake County participates in the National Flood Insurance Program (NFIP). The NFIP makes federally backed flood insurance available for all buildings, whether they are in a floodplain or not. Flood insurance covers direct loss caused by surface flooding, including a river flowing over its banks, a lake or storm, and local drainage problems.

Over 100 properties in unincorporated Lake County have collected on flood insurance more than once!

If you do not have flood insurance, we recommend that you talk to your insurance agent. If you do have flood insurance, you should check your policy to ensure that the coverage is adequate and the contents are insured.

The NFIP insures buildings, including mobile homes, with two types of coverage: structural and contents. Structural coverage is for the walls, floors, insulation, furnace, and other items permanently attached to the structure. Contents coverage may be purchased separately provided the contents are in an insurable building.

Since July 1, 1997 all NFIP policies include Increased Cost of Compliance coverage. The first claim under this coverage came from Lake County. This coverage will assist in bringing structures into compliance with current building standards, such as elevating the structure to reduce the risk of future flood damage. The maximum limit of this coverage is $30,000.

There are approximately 7,800 flood-prone properties within unincorporated Lake County, with approximately 1,700 flood insurance policies in effect that provide over $341 million in coverage.

Lake County participates in the Community Rating System (CRS). CRS gives a community credit for efforts to reduce flood losses that are above the minimum requirements of the NFIP. Due to Lake County’s efforts, all NFIP policies in the unincorporated County receive a 15 percent discount from the standard rates. With the average NFIP policy in Lake County of $789 per year, the savings are $139 per year per policy, or over $236,000 per year in Lake County.

There is a thirty-day waiting period before a flood insurance policy takes effect. This means you need to buy insurance before the rains start in order to be covered during a flood.  The waiting period does not apply to insurance purchased in conjunction with new loans, loan modifications, forced placed insurance or flood map revisions.

Mandatory Flood Insurance

Before a person can receive a loan or other financial assistance from one of the affected loan agencies or lenders, there must be a check to see if the building is in a Special Flood Hazard Area. The Special Flood Hazard Area is the base (100-year) floodplain mapped on a Flood Insurance Rate Map (FIRM). It is shown as one or more zones that begin with the letter "A".

The mandatory purchase requirement applies to all forms of federal or federally related financial assistance for buildings located in a Special Flood Hazard Area. This requirement affects loans and grants for the purchase, construction, repair or improvement of any publicly or privately owned building in the Special Flood Hazard Area, including machinery, equipment, fixtures, and furnishings contained in such buildings.

Financial assistance programs affected include loans and grants from agencies such as the Department of Veterans Affairs, Farmers Home Administration, Federal Housing Administration, Small Business Administration, and Federal Emergency Management Agency. The requirement also applies to secured mortgage loans from financial institutions, such as commercial lenders, savings and loan associations, savings banks, and credit unions that are regulated, supervised, or insured by federal agencies such as the Federal Deposit Insurance Corporation and the Office of Thrift Supervision. It also applies to all mortgage loans purchased by Fannie Mae of Freddie Mac in the secondary mortgage market.

How it Works

If the building is in a Special Flood Hazard Area, the agency or lender is required by law to require the recipient to purchase a flood insurance policy on the building. The requirement is typically for structural coverage equal to the amount of the loan (or other financial assistance) or the maximum amount available, whichever is less. The maximum amount available for a single-family house is $250,000.

The mandatory purchase requirement does not affect loans or financial assistance for items that are not covered by a flood insurance policy, such as vehicles, business expenses, landscaping, and vacant lots. It does not affect loans for buildings that are not located within the Special Flood Hazard Area, even though a portion of the lot may be floodprone.

Additional Information is available about the NFIP from FEMA.

More information:

Tom Smythe
Water Resources Engineer
Lake County Water Resources Department
255 N Forbes Street
Lakeport, CA 95453
(707)263-2344
tom_s@co.lake.ca.us

January 3, 2013