Purchasing waterfront property is a dream come true for most people but it also comes with its share of risks. One of the risks of living on a lake, river, or other water source is the exposure to potential floods. Rising water tables, wind-driven waves, worsening weather patterns and spring thaws all contribute to a growing increase in the need for flood insurance. A standard homeowners policy excludes any coverage for a loss resulting from a flood. A water and sewer backup endorsement may be purchased and will provide some coverage in the event that your sump pump fails or can’t keep up but if any ground water enters the residence from another source, there will be no coverage.
Flood insurance can be purchased both through the private market and through the National Flood Insurance Program. Coverage through the NFIP is only available if you live in a participating community and can be purchased for both the building and contents. If you live in a low risk flood zone, you can purchase a preferred risk policy at significantly lower rates. If you live in a high risk zone and you have a mortgage on your home, you will be required by your lender to purchase flood insurance. It should be noted that even flood insurance has limited coverage in basement areas. A basement area is defined as having all sides of the lowest floor below grade level. In those areas, generally there is coverage for the rough structure (walls, electrical, mechanical, etc) but no coverage for the finished areas (floor coverings, trim, paint, etc). Prior to purchasing, be sure to protect your lakefront home by working with a trusted local agent who is flood certified and can fill in the gaps when it comes to your insurance.