The Preferred Risk Policy
Floods can occur almost anywhere: on mountains, in deserts,
and in areas where there are no rivers or streams. Changing
weather patterns are increasing your chance of experiencing a
flood, even if you live in an area not considered to be high
risk. About one out of four flood insurance claims is paid on
homes located in low- to moderate-risk areas. Yet, thousands
of people who experienced flood losses in recent years had no
flood insurance because they never thought they would need it.
Are you willing to take that risk? With the National Flood
Insurance Program's low-cost Preferred Risk Policy, you don't
Doesn't Homeowner's Insurance Cover Flood Damage?
Flood damage is not covered under most homeowner's
policies. But National Flood Insurance policies, including the
special Preferred Risk Policy, do cover flood damage. And you
can have this protection with the Preferred Risk Policy, if
your home is outside of a high-risk flood area, for as little
as $106 a year.
Who Is Eligible for the Preferred Risk Policy?
This inexpensive policy is available for homeowners with a
1- to 4-family residential building located in a low- to
moderate-risk area, which is indicated by a B, C, or X zone on
the current Flood Insurance Rate Map.
The PRP is not available in the Emergency Program or in
Special Flood Hazard Areas. Condominium units, except for
townhouse/rowhouse type buildings, are not eligible under the
However, should any of the following conditions exist,
based on the building's flood loss history regardless of
ownership, a Preferred Risk Policy cannot be written:
- 2 loss payments, each more than $1,000;
- 3 or more loss payments, regardless of amount;
- 2 Federal Disaster Relief payments, each more than
- 3 Federal Disaster Relief payments, regardless of
- 1 flood insurance claim payment and 1 flood disaster
relief payment; (including loans and grants), each more
What Is Covered?
The Preferred Risk Policy provides the same coverage as the
standard flood insurance policy:
- Your building’s structural elements can be insured up
- The contents of your home can be insured up to $60,000
- Replacement cost coverage is also available for a
single-family, primary residence.
What About Federal Disaster Assistance?
Of all natural disasters that have occurred in the last 5
years, floods caused 61 percent of all property damage. When a
flood occurs, there is no guarantee that Federal assistance
will be available or that you will qualify for it. Before any
flood victim is eligible to receive Federal disaster
assistance, the President must declare a Federal disaster.
Even then, disaster relief is often a low-interest loan that
must be repaid, in addition to your mortgage and other debts.
And, you may be required to purchase a flood policy as a
condition of receiving Federal assistance. Your best financial
protection from floods is a National Flood Insurance policy.
Protect Yourself Today with a Preferred Risk Policy
No matter where you live, floods happen. And they can
happen to you. Just ask one of the thousands of victims each
year who thought it would never happen to them. Don't put your
most valuable possessions-your home and belongings-at risk.
Take advantage of the low-cost Preferred Risk Policy today.
Call the National Flood Insurance Program at 1-888-FLOOD29,
TDD# 1-800-427-5593, or ask your insurance agent about the
Preferred Risk Policy.
How much will it cost?
The Preferred Risk Policy is available for as little as
$106 a year for $20,000 of building coverage and $5,000 of
contents coverage for a building without a basement. The
charts below provide details about premiums for different
amounts of coverage both for buildings without basements and
those with basements.
Buildings Without Basement
Building deductible: $500
Contents deductible: $500
Deductibles applied separately
Premium includes Federal Policy Fee and ICC Premium
Rates effective 6/1/98.
The National Flood Insurance Program (NFIP) makes National
Flood Insurance available in communities that adopt and
enforce floodplain management ordinances to reduce future
flood damage. The flood insurance component of the NFIP is
administered by the Federal Insurance and Mitigation
Administration, part of the Federal Emergency Management
Agency. More than 19,000 communities participate in the NFIP.
Why You Should Have a Preferred Risk Policy
- The Preferred Risk Policy can save you money
- The Preferred Risk Policy ensures you financial
protection against flood damage at a special low price for
owners of homes not in high-risk flood areas.
- Flood damage is not covered under most homeowner's
policies. To get coverage, you have to buy a separate
- In the past 25 years, the NFIP has paid one-quarter of
its claims to cover flood losses to those homes in
moderate to minimal flood risk zones.
- The Preferred Risk Policy provides several coverage
combinations for both the building and its contents that
range from $20,000 building/$5,000 contents to $250,000
- People should consider this low-cost protection for
their homes and contents because floods occur even in
areas no one considers high-risk.
- When a flood occurs, there is no guarantee that it will
be declared a Federal disaster and that you will qualify
for Federal assistance.
- Disaster relief is often in the form of a low-interest
loan that must be repaid. This adds to your total debt and
may wipe out any equity that you have accumulated.
- As a condition for receiving disaster assistance, the
homeowner must purchase and maintain a flood insurance
policy for future protection.
- To be eligible for a Preferred Risk Policy, the building
must be in a low-risk (B, C, or X) zone on the effective
date of the current term.
- You can save about 30% of the standard application
premium costs if you purchase a Preferred Risk Policy.
Most people invest a major part of their income in a home.
Protecting these assets from loss must be a concern.
"Life is not waterproof-Be flood alert."
For more information, call 1-888-FLOOD29, TDD#
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