How sure are you? Many farm insurance policies don’t cover flood damage
for Tri-State Livestock News
Fire, lightening, wind, and hail are all covered as basic perils under most building insurance policies, but not flooding. To ensure protection from water damage, policy holders must expand their coverage by purchasing an additional policy.
Katie Ringland, chief of Floodplain Management for the Nebraska Department of Natural Resources, stated that “most homeowner’s insurance policies do not cover flood losses, so a flood insurance policy must be purchased separately.”
“Similar to homeowner policies, farm/ranch policies also do not cover flooding,” Kelly Pargett of State Farm Insurance explained.
Ringland went on to say that “Most people purchase flood insurance through the National Flood Insurance Program (NFIP); however, there are private companies that provide coverage as well.”
Anyone can purchase flood insurance, but people who are located in a Special Flood Hazard Area SFHA and who have a mortgage are required to have it.
“Flood zones are determined through floodplain studies. The studies include: hydrology (the amount of water), hydraulics (depth of water), and mapping (the extent of water). These boundaries are then published on the Flood Insurance Rate Maps (FIRMs),” Ringland explained.
Property owners can look up flood zones via FEMA’s online maps to see if flood insurance would be necessary for them. Along with that, when purchasing insurance, “agents will give customers a quote based on the zone that they live in,” Ringland continued.
According to a handout produced by FEMA, an NFIP flood insurance policy pays for damage up to the replacement cost, but the replacement cost is not guaranteed. Along with that, the contents of the buildings must be covered in another policy.
While flooding is not covered in a basic homeowner or farm/ranch policy, drowning is a basic peril included in basic livestock insurance.
When producers are establishing their farm/ranch policy it is important to itemize cattle in the plan.
Jay Hollenbeck of Farm Bureau Financial Services in Valentine Nebraska explained that producers must insure livestock for their value at the time of the creation of the policy.
For example, if a policy holder insured a bred cow for the current market value of $2000 and at the time that the cow was lost the market was paying $1,500 for bred cows, the insurance company would only pay $1,500. On the flip side, if at the time of loss, bred cattle at the local market were bringing $2,200 the policy holder would still only receive the initial $2,000 that the cow was valued at at the time of the creation of the policy.
When purchasing insurance, it is important to deal with an agent that you trust and one that will help you determine the appropriate types and amounts of coverage for your specific situation.