A typical Illinois homeowners’ policy is written through Farmers, State Farm, Allstate, and Progressive, for instance, excludes flooding as something that will be covered under their homeowner’s policy.
In most cases, the only way to get flood coverage is by purchasing a stand-alone flood insurance policy. However, you should ask your homeowners agent if you can add an endorsement to your homeowner’s policy to cover flooding. Yet, don’t be too surprised if the answer is NO.
It is important to have flood insurance coverage in Illinois because our beloved Cowboy State has seen a fair share of flooding, and more is likely coming.
We believe that most homeowners think about Flood insurance in Illinois at some point, maybe before buying a home or during the closing process. Many of us only think about flooding when a big storm is threatened.
If your home or business is in a flood zone, that is considered a low flood risk area. Sadly, many homeowners decide to forgo purchasing coverage because they believe they are safe from flooding. Some real estate and insurance agents may even say you don’t need it.
I ask you to consider the facts: 20 percent of all flooding events across our nation come in areas that are considered low risk. After our last few major storms (Hurricane Harvey), we saw flooding in these low-risk areas. 80Eighty percent of these individuals had water in their homes or buildings and didn’t have flood insurance coverage.
In Harris county, nearly 135,000 homes were damaged. Three-fourths of these properties were considered low to moderate risk.
We often hear that people believe the government will help, which is true. However, a few things must align for you to get government assistance.
1. The president of the United States must declare the flooding event a state of emergency. If this doesn’t happen, then there won’t be assistance.
2. The average amount of assistance homeowners get after a flood when they do not have flood coverage is $5,000. The average cost of damage to one’s property after a flood is $38,000+. That $5K you get from the government? It comes as a loan, and you will need to pay it back. Are you willing to gamble on your financial future by forgoing flood insurance coverage?
One more note on these low-risk flood zone maps. Many of these maps are over 40 years old. If the area has been developed, there is likely more concrete, creating a barrier for land that previously might have absorbed the massive downpour.
Because of all these factors, it is difficult for property owners to know their true risk of flooding. FEMA admits that their flood maps only give an idea of part of the risk. Our recent storms are facts that it can rain anywhere within Illinois, and you should consider getting flood coverage so you are not uninsured when you need it most.
FEMA flood zone maps often take years to go into effect after the terrain was studied; this gives the impression that the area is “more up to date” than it is.
FEMA’s National Flood Insurance Program (NFIP) and all federally backed lenders rely on these Illinois flood insurance maps to assess risk, set premiums, and determine who is required to purchase flood insurance. Bad information about an area’s flood risk can leave property owners under or uninsured.
Illinois NFIP flood insurance.
Illinois has many options regarding flood insurance, but they fall into two main categories. The Government policy (called NFIP or FEMA) and Private flood insurance
The National Flood Insurance Program (NFIP), also known as FEMA, is the government option for flood insurance. The NFIP has enjoyed a 50-state monopoly on the flood insurance market.
Not “private flood insurance” but NFIP Resellers
Suppose you have Nationwide Flood Insurance, State Farm Flood Insurance, Progressive Flood Insurance, or any of the logos below. In that case, you are buying the NFIP flood policy that is just being resold through a government program. These companies are private companies, but their flood insurance is not. Here is a list of the 70 companies that resell the NFIP policy.
Illinois flood insurance low-to Moderate Risk rate and cost.
This is Flood Zone X, which is not lender required flood zone.
This is usually identified as an X-flood zone. Then we would suggest the government Preferred Risk Policy (PRP) which is a subsidized policy and has set flood insurance coverage limits (see the grid below):
Here is a link if you want to dig into this one. Be ready for an eye chart because every option is a public record and should be standardized to accost whoever writes these policies.
The average cost for flood insurance in Illinois with the maximum set limits in these Low-risk flood zone areas is $405 – $700 per year.
Your property is in a higher-risk flood zone, usually identified with a Flood Zone AE. Your lender will require you to have flood insurance. The cost of flood insurance in Illinois depends on many factors unique to the structure. We will try to give you an idea of the most common homes we see in Illinois with a basement foundation.
We will look at the Illinois cost of flood insurance for the NFIP maximum of $250,000 for the (building only) with NO CONTENTS and our recommended deductible of $5,000.
We will be rating this example on the NFIP and a few of our private flood insurance policies, specifically Lloyds flood insurance options in Illinois.
Illinois has 39,975 NFIP policies in force, with a total cost of $41,782,653. That would make the average for Illinois $1,045. Of course, some will pay more, and some will pay less.