The Gardner Group Blog

Alycen Delrie
Alycen Delrie Agency of Farmers Insurance
(512) 280-5977

Devastating floods occur throughout the United States every year. The risk of flooding increases as weather patterns change, coupled with overdevelopment and leveling of forests that reduce the land's natural ability to absorb water. Even those who don't live near water are at risk. Flooding causes more than $2 billion in property damage every year. Fortunately, Flood insurance is available to cover homes and businesses and their contents in communities that participate in the National Flood Insurance Program (NFIP). Here are some myths and facts you should know about Flood insurance:

Myth: "It won't happen to me."

Fact: You don't have to live by water to be at risk. Approximately 25 percent of all flood claims occur in low- to moderate-risk areas.

Myth: "My homeowners insurance is enough."

Fact: Homeowners insurance does not cover flood damage - federal flood insurance does. Flood insurance also covers damage from mudflow, dirt and debris resulting from moving water.

Myth: "I don't need flood insurance."

Fact: Homeowners with mortgaged property in a Special Flood Hazard Area (SFHA) are now required by federal law to obtain flood insurance. Lenders must comply by requiring flood insurance on the outstanding mortgage balance for the life of the loan.

Myth: "The government will pay."

Fact: To receive federal disaster assistance, a flood must first be declared a federal disaster by the U.S. president. Less than 50 percent of the floods that damage homes across the country every year wind up being classified as federal disasters.

Myth: "Flood insurance is expensive."

Fact: Flood insurance is affordable. Flood damage is not. The average loss of property and contents from the 2007 flooding in Marble Falls, Texas was more than $25,000. Compare this to the average annual flood premium of $350. Your coverage is based on your home's value, minus your land value. Flood insurance up to $250,000 is available for residential buildings. Since flood policies are backed by the U.S. government, all valid claims are 100 percent guaranteed.

Myth: "Flood insurance covers contents."

Fact: Standard flood coverage doesn't cover the contents of your home. Separate Contents coverage is available up to $100,000. Preferred Risk policies for structures in low-risk areas offer "combination coverage" of up to $250,000 for a residence and $100,000 for its contents. A separate contents deductible applies on all contents claims.

Myth: "I can buy flood insurance anytime."

Floods can happen anytime: There is a 30-day waiting period between purchasing a flood policy and being covered by it.

Here are a few exceptions to the 30-day wait:

• There's no waiting period if you have an existing flood policy and an additional amount of flood insurance is required with making, increasing, extending or renewing of a loan, such as a second mortgage, home equity loan, or refinancing. Coverage is effective immediately, as long as the premium is presented at or prior to loan closing.
• There's no waiting period when flood insurance is required by a lender for a loan. Coverage is effective immediately, as long as the premium is presented at the completion of a loan application.
• There's a one-day waiting period when an additional amount of insurance is required as a result of a map revision. This applies when the map revision from a non-Special Flood Hazard Area to a Special Flood Hazard Area, only if the endorsement is received within 13 months of the map revision. The increased amount of coverage will be available 24 hours after the amount of coverage is applied for and the additional premium is made.

Discover the advantage of personal service from the Alycen Delrie Agency

When you're covered by the Alycen Delrie Agency of Farmers Insurance, you have a personal, professional agent helping you every step of the way. Here's how the personal touch can make a difference to you:

• I will work with you to identify your needs and find the right coverage for you.
• You won't be alone when you need assistance or go to file a claim - you'll deal directly with me and my staff.
• I will review your policy each time that it renews in order to insure you are properly insured.
• Should an unfortunate incident occur, my agency will be there to help get you back where you belong.

I will be glad to speak with you at your convenience to discuss flood insurance and share with you the benefits of allowing Farmers to provide you with flood insurance. If this sounds good to you, please give me a call at (512) 280-5977 and I will give you - without obligation - a free flood insurance quote.

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How much would it cost to rebuild your home at today's prices?

Consider this...
You're talking with your insurance agent, who explains the coverage available under your homeowners policy. You're surprised to find out that the estimated replacement cost of your home is different from its purchase value. Why? Here is an explanation.

Purchase price vs. replacement cost

The appraisal industry bases its valuations on the availability of comparables to select the appropriate costs.  Appraisal-based cost data reflect typical labor efficiency, the cost of money, fees and many other items, which are not included in the basic costs of labor and materials.  They are designed to give accurate present-day costs that will form a sound foundation for the cost approach to valuation. Within the appraisal industry, the term "replacement cost" means the replacement cost of a building as the total cost of construction required to replace the subject building with a substitute of like or equal utility using current standards of materials and design. In the insurance industry, replacement cost and reconstruction cost mean the total cost of construction required to replace the building with one of like kind and quality, as quickly as possible, at an existing site.  The replacement cost of your home can be 30 percent to 40 percent higher than the cost of new construction. The difference is due to:

• No economies of scale
• Limited site access due to existing structure
• Increased wages for a labor force skilled in reconstruction
• Lost productivity from working within an existing site
• Replacing the home with the same materials and style that existed prior to loss

Farmers Computerized Dwelling Replacement Cost (CDRC) program

In the past, the most commonly used replacement cost methodology was the square foot method.  This method takes the measurements of the home, garage, and basement area, and then multiplies each by a specific amount (e.g., $50 x first floor square footage plus $35 x Garage Square Footage plus $20 x basement square footage = estimated minimum replacement cost for the dwelling).  It was designed when average home styles and features were more common and consistent.  More recently, companies, including Farmers, began using component-based systems to calculate the replacement costs of dwellings.  Instead of assuming that all homes of the same size and age require the same amount to rebuild, a component based system incorporates the actual features of an insured dwelling in the replacement-cost estimate.  Farmers contracted with Marshall & Swift to provide the core labor and material costs used by our Computerized Dwelling Replacement Cost (CDRC) program to calculate the minimum estimated replacement cost for your home.  Currently, Marshall & Swift monitors 2,621 locations in the United States. The labor and material cost information it provides helps estimate the cost to rebuild a house on its existing lot, as opposed to other systems that calculate the cost to build a new house on a vacant lot.

Determine the adequate amount of insurance for your property

As already mentioned, Farmers agents use the CDRC program to calculate the replacement cost
of your property. You advise your agent about the features/and components of your house, and he or she then inputs this information into the CDRC program. The program determines a replacement cost based on labor/and material costs for the features of your property.  It is very important that you provide accurate information about your property so that our CDRC program can calculate an adequate replacement cost estimate for your property. Once the replacement cost estimate is established, you can use it as a reference to determine the amount of insurance you need. 

I will be glad to speak with you at your convenience to discuss the construction details of your home and share with you the benefits of allowing Farmers to provide you with homeowners insurance.  If this sounds good to you, please give me a call at 1-866-380-9088 ext. 705 and I will give you - without obligation - a free comprehensive replacement estimate on your home.

Alycen Delrie
Agent

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