Should I Get Flood Insurance? A Homeowner’s Guide
“Should I get flood insurance?”
If you live near water, or in an area where storms often cause flooding, this question will inevitably cross your mind. In 2017, almost 100,000 people got losses covered by flood insurance. However, it’s hard to say how many more people were affected by a flood that they didn’t have insurance for.
Getting flood insurance can help you regain a peace of mind and protect you from the devastation in a worst-case scenario. Ready to learn if flood insurance is right for you?
Keep reading to learn more.
Should I Get Flood Insurance?
If you live in a flood-risk zone and have a mortgage, chances are good that the mortgage lender required you to take out flood insurance. But if you live in a moderate- or low-risk flood zone, rather than a high-risk zone, the requirement may not apply. This can leave you wondering what to do.
The flood insurance cost is variable depending on how much risk there is. You might spend a just few hundred dollars a year, or up to thousands a year, on insurance. Is the cost worth it? Here are a few things to keep in mind as you decide whether or not flood insurance is right for you.
Homeowners Insurance Doesn’t Cover Flood Damage
If you have homeowners insurance, you might feel like you have all the protection you need already. This type of insurance does cover damage from water in the air, such as rainfall. However, it doesn’t apply to water on the ground in the form of a flood.
Flood insurance is the only kind of coverage that will cover flood damage. If there’s a rainstorm, and rainwater gets into your home and causes damage, homeowners insurance will cover it. But the definition of a flood is precise and different. The only way to get covered in case of flood damage is to take out a flood insurance policy.
Everyone Lives in a Flood Area
There’s no such thing as a flood-free zone. A flood can happen anywhere. It might be due to the overflow of a creek or the ocean tides, from unusually high precipitation, or by a mudflow.
Some places have more flood risk than others, such as those with low elevations that are near water. But since floods have many different causes, they can happen anywhere.
No matter where you are, you can buy flood insurance. It will be more expensive depending on how your area’s risk has been rated, though.
Don’t think you’ll need flood insurance in your low-risk zone? One out of every five flood insurance claims actually comes from a low-risk or moderate-risk zone.
The Government May Not Help
The government has offered aid in some high-profile flood situations, which might make you think that you can rely on it for help. However, most government aid offered is actually loans that need to be repaid.
And, to qualify for a government loan, the area needs to get declared a federal disaster area. Your neighborhood can easily flood without qualifying as a disaster area. The government assists fewer than half of flooding situations.
You Don’t Need to Live in a Floodplain
One common misconception about flood insurance is that it’s only available in certain high-risk areas.
It is true that your mortgage company probably won’t give you a choice about buying flood insurance in a high-risk area. However, flood insurance is available to anyone with a home to protect.
The map of high-risk flood areas is also subject to change. Just because your home wasn’t in a floodplain when you bought it doesn’t mean it isn’t in one now.
Your insurance agent can help you find out whether or not your home is in a floodplain area.
How Much Coverage Do You Need?
If flood insurance is starting to look like a pretty good idea for your home, it’s time to think about how much coverage you would really need.
To figure this out, first, make a home inventory. Then, estimate how much it would cost if you had to rebuild or repair after a flood. These two numbers give you the total potential loss you would face from a flood.
Federal flood insurance covers rebuilds up to $250,000, and up to $100,000 in lost possessions. If you need more coverage than that, you’ll need to buy a private “excess coverage” policy to insure the rest of the value.
However, many people choose private flood insurance over federal insurance, even if they don’t need excess coverage. Private flood insurance can actually be a lot cheaper than the alternative – visit this company for more.
How to Buy Private Flood Insurance
When you buy private insurance, not only can it be cheaper, but you can also get a higher claim limit to cover the entire value of your home. This is a great choice if your personal possessions are worth more than $100,000, or if your home is valued at more than $250,000.
Wondering how to save more money on your flood insurance? Consider getting an elevation certificate by elevating your home to keep it out of the path of the most floodwaters.
However, although an elevated home is safer, it’s not completely protected. Even people who live in high-rise condos can benefit from flood insurance since a flood can damage the structure of the whole building and make them need to relocate.
Talk to insurance agents in your area to get a quote and find out the type of flood coverage that’s right for you.
Ready to Buy Flood Insurance?
For most homeowners, the answer to “Should I get flood insurance?” is yes. If you live in a high-risk zone, it’s mandatory, or at least strongly recommended. And if you live in a low-risk zone, your premiums will be lower, and you’ll still benefit from the coverage.
Thinking about other ways to protect yourself with insurance? Check out our guide to insurance plans for seniors here.
