Flood Insurance in Miles City

A Walk Through

NFIP flood insurance policies for homeowners in Miles City have been around for a long time

Since 1968 policies have been available nationally and starting in February of 1980 in Miles City when the community joined the NFIP program and the first FIRM was created

Miles City is currently a Community Rating System (CRS) Class 7 Community, which provides a 15% discount on flood insurance premiums

While many policies have been written in the area over the years, there is still some confusion about flood coverage

A common misconception is that a standard homeowner’s policy will cover flood damage

Spoiler Alert

Standard homeowner insurance policies do not provide flood coverage

Miles City’s Reality

Ready For This?

The reality is, most homeowners insurance policies in Miles City will not cover flood damage

Consider 77% of the structures in Miles City are in the flood zone

Your home doesn’t even need to be in the designated flood zone to be damaged by a flood

FEMA has reported that a substantial percentage (40%) of structures damaged by floods are outside the flood maps

Concerning for residents of Miles City since our area is considered one of the most at-risk areas for floods in the State of Montana

Looking Closer

It’s A Pattern

The highest risk periods are early spring (March and April) and late spring (May and early June)

These times pose the most severe risk for flooding due to ice jams, snowmelt, and heavy rain causing high river flows

Miles City residents need to understand their flood risks and risk management options before facing a potentially devastating loss during an emergency

What Does a Standard NFIP Flood Insurance Policy Cover?

A Great Question

 A standard National Flood Insurance Program (NFIP) policy provides protection against direct physical damage caused by floods. The coverage is divided into two main categories:

Building Coverage: This protects the structure of your home, including:

• Electrical and plumbing systems
• Furnaces and water heaters
• Refrigerators, stoves and built-in appliances like dishwashers
• Permanently installed carpeting
• Permanently installed cabinets, paneling and bookcases
• Window blinds
• Foundation walls, anchorage systems and staircases
• Detached garages
• Fuel tanks, well water tanks and pumps and solar energy equipment

Contents Coverage: This safeguards your personal belongings, such as:

• Clothing, furniture and electronic equipment.
• Curtains.
• Washer and dryer.
• Portable and window air conditioners
• Microwave
• Carpet installed over wood floors
• Valuable items such as original artwork and furs (up to $2,500)

Note: Building and contents coverages are typically purchased separately and have distinct deductibles

Miles City Homeowners should carefully consider their needs when selecting coverage limits and deductibles for each category

What A Standard NFIP Flood Insurance Policy Doesn’t Cover

Can’t Do That

The specific cause of flooding plays a major role in determining insurance coverage under an NFIP policy

Consider These Examples:

• Covered: Water damage to your home resulting from a sewer backup during a heavy rainstorm
• Not Covered: Damage from a sewer backup caused by clogged pipes, unrelated to a flood event

Regardless of the flooding cause, certain items and expenses are consistently excluded from NFIP flood insurance coverage.

These include:

• High-value items:
  • Currency and precious metals
  • Stock certificates and valuable papers
• Vehicles:
  • Cars and most self-propelled vehicles
  • Vehicle parts
• Basement contents:
  • Personal property stored in basements
• Exterior property:
  • Landscaping and septic systems
  • Decks, patios, fences, and swimming pools
• Temporary living expenses:
  • Additional housing costs during home repairs
• Home business-related losses:
  • Financial losses due to business interruption

Coverage Limits and Deductibles

Kind of a Big Deal

NFIP flood insurance policies for Miles City residents offer the following coverage limits and deductibles

For Residential Building Coverage:

• Maximum coverage limit is $250,000
• Minimum deductible for policies of $100,000 or less is $1,000
• Minimum deductible for policies greater than $100,000 is $1,250

For Contents Coverage:

• Maximum coverage limit is $100,000
• Minimum deductible limit is $1,000

The Premium & Deductible Relationship

Miles City residents can modify the premium by adjusting the deductible. 

The maximum deducible available for residential policies is $10,000

Opting for a higher deductible will lower your premium, but that means you’ll need to pay more out of pocket when disaster strikes

Valuation

It Determines What You Get Paid

Two basis are used for valuation under an NFIP policy; Actual Cash Value (ACV) and Replacement cost value (RCV)

• Actual Cash Value: The cost to replace an insured item of property at the time of loss, less the value of its physical depreciation
• Replacement Cost Value: The cost to replace property with the same kind of material and construction without deduction for depreciation.  For buildings, RCV specifically includes the cost of the foundation

In the Miles City Area, the valuation basis for property under an NFIP policy can differ for building and contents coverage

• For Residential Building Coverage: Replacement Cost Value (RCV) if:
  • The building is a single-family dwelling
  • It’s the policyholder’s principal residence (lived in at least 80% of the year)
  • Building coverage is at least 80% of full replacement cost or the maximum available under NFIP
  • Actual Cash Value (ACV) if these conditions are not met
• For Contents Coverage: 
  • Always valued at Actual Cash Value (ACV)

The Term of a NFIP Policy is Standardized

It has the Life Span of a House Spider!

NFIP flood insurance policies are valid for one year and must be renewed annually

There is a 30 day waiting period for all new policies which is intended to prevent purchasing a policy just before a flood is expected

Exceptions to the Rule

• New or renewed mortgage: There’s no waiting period when purchasing flood insurance while making, increasing, extending, or renewing a mortgage loan.
• high-risk and insurance is purchased within 13 months of a map update
• Policy changes at renewal: There’s no waiting period when changing flood insurance coverage on an insurance policy renewal bill
• Policy transfer: When a policy is transferred from a home seller to a new homeowner, there is typically no waiting period involved

Factors that Determine the Cost of a Policy in Miles City

Depends on the Details

NFIP rates are standardized and do not vary between insurance companies or agents

The cost of an NFIP flood insurance policy is determined by various factors, all of which contribute to assessing the property’s flood risk and potential claim costs

Factors Include

• Property characteristics:
  • Year of construction
  • Elevation of the lowest floor
  • Distance from water sources
  • Building occupancy
  • Construction type
  • Foundation type
  • Number of floors
• Location-based factors:
  • Proximity to flooding sources
  • Types of flooding risks (river, coastal, or heavy rainfall)
  • Elevation of the property in relation to flooding sources
• Policy details:
  • Coverage amounts for building and contents
  • Deductible amount
  • Primary residence status
• Historical factors:
  • Prior flood insurance claims
  • Compliance with local floodplain ordinances

The NFIP’s Risk Rating 2.0 system uses these factors to calculate premiums that more accurately reflect each property’s individual flood risk

This new rating methodology aims to create more equitable pricing by considering a wider range of variables than the previous system, which primarily relied on flood zone maps

Available Discounts for NFIP Policies in Miles City

Savings? Yes, PLEASE!

Residents of Miles City can benefit from several discounts when purchasing an NFIP policy.

FEMA offers these discounts to encourage policyholders to reduce their buildings’ flood risk

• Mitigation Discounts:
  • Machinery & Equipment Elevation: A discount is available for elevating all covered machinery and equipment to at least the elevation of the floor above the building’s first floor
• First Floor Height Discount:
  • This discount applies to buildings with a higher elevation of the first floor above the Lowest Adjacent Grade (LAG)
  • Generally, buildings that are higher off the ground have lower risk and qualify for larger discounts
• Foundation Type Consideration:
  • The type of foundation is a reasonable indicator of where flooding is likely to begin and the associated risk level
  • Certain foundation types may qualify for discounts based on their flood resistance
• Community Rating System (CRS) Discount:
  • Miles City participates in the NFIP’s Community Rating System as a Class 7 community.
  • This participation provides residents with a 15% discount on their flood insurance premiums.

What Does an Elevation Certificate Do For Me?

What’s Your Superpower?

An elevation certificate is a document provided by a licensed land surveyor or professional engineer that provides detailed information about your property’s flood risk.

Miles City homeowner’s might want to consider an elevation certificate assessment because:

• Potential premium reduction: While not guaranteed, an elevation certificate can potentially lower flood insurance premiums if it shows the property has a lower flood risk than initially assumed
• Accurate risk assessment: It provides detailed information about the property’s flood risk, helping homeowners make informed decisions about flood mitigation strategies
• Future planning: The information can be valuable for future home renovations or additions, ensuring compliance with floodplain regulations
• Property value: An up-to-date elevation certificate can be an asset when selling the property, providing potential buyers with accurate flood risk information
• Compliance verification: In some cases, it may be required to prove compliance with local floodplain management ordinances

What You Need to Know

• What It Shows:
  • Compares your building’s height to expected local flood water levels
  • Includes key information such as:
• How It Affects Your Insurance:
  • Helps insurers accurately assess your property’s flood risk
  • Generally, a higher first floor elevation means:
• Why It Matters:
  • Water naturally flows downward
  • Higher first floor elevation typically results in less flood damage risk
  • Less risk often translates to lower insurance costs
• How to Obtain One:
  • Your home may already have an elevation certificate on file with your community
  • Contact your local floodplain manager to check availability
  • If not available, consider having one prepared by a licensed surveyor or engineer

Get It Before You Need It

Disaster Doesn’t Wait

Floods are the most common and costly natural disaster in the United States.  That’s why flood insurance for homeowners in Miles City, Montana, where 77% of structures are in the flood zone, has been available since 1980

NFIP policies protect Miles City residences against direct physical flood damage to buildings and contents

Miles City’s participation in the Community Rating System provides residents with a 15% discount on premiums, and additional discounts are available for various mitigation efforts

Whether you own a policy or are considering purchasing one, knowing your policy details, waiting periods, and the benefits of elevation certificates can help Miles City’s homeowners make informed decisions about their flood insurance needs

Armor Insurance Agency

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