Should You Have Flood Insurance

Should You Have Flood Insurance?

A Yearly Risk

Every spring snow melts and rain begins filling rivers and lakes to maximum capacity risking the chance of breaking dams and levees and causing flooding.  During hurricane season, rains and powerful winds can also strain levees and cause extensive flooding.  Yet, according to the Insurance Information Institute only 17% of Americans have flood insurance.

In areas that are designated as high-risk flood zones by the Federal Emergency Management Agency (FEMA), homeowners have to have flood insurance in order to obtain a mortgage.  But those who own their homes or rent are not required to have flood insurance.  Unfortunately, these are the people who end up losing everything when disaster strikes and their home and contents are destroyed by a flood.  That is why it is important for everyone to check with their insurance agent as to whether or not they should have flood insurance.

Who Needs Flood Insurance?

If you live in an area where inland flooding, seasonal storms or flash floods can occur then you should definitely have flood insurance.  Areas designated by FEMA as 100-year flood zones, areas where there is a 1% chance of flooding every 100 years, are required to have flood insurance if you have a mortgage on your home.  But people who own their home or rent in these areas should also have flood insurance to protect their investment and contents.  While everyone doesn’t need flood insurance it is important for everyone to check to see if they should have it.  You can talk to your insurance agent or go to fema.gov and see if you live in a designated flood zone.  The type of flooding that generally occurs in your area, the average height the water generally rises to and the location of your home will all be factors as to whether or not you will need flood coverage.

If you rent either an apartment or a house and you live in a designated flood area then you should purchase flood insurance for the contents of your home.  Even if the owner of the rental has flood insurance it will not cover your contents.  Prices for flood contents insurance are as little as $40 up to $200 a year depending upon the amount of coverage you need.

What about disaster relief in the event your area is considered a federal disaster area?   Don’t depend upon disaster relief to help rebuild your home or replace its contents.  Disaster areas are only declared federal disaster areas 50% of the time.  Even then, disaster relief usually comes in the form of no-interest or low-interest government loans.  With flood insurance you will receive compensation for your home and its contents whether or not the area is declared a federal disaster area.

What Flood Insurance Covers

Flood insurance comes in two forms; flood insurance for your home and flood insurance for the contents of your home.  A flood insurance policy for your home will cover up to $250,000 for the building and insurance for the contents of your home will cover up to $100,000. 

In the event of a flood, a residential flood insurance policy insures your house as well as installed fixtures in your home such as your cabinets, furnace, hot-water heater, stove, refrigerator, built-in dishwasher and permanent shelving.  If you have a basement your insurance will cover structural elements and equipment such as the air-conditioner unit, furnace, hot-water heater, fuel tank, light fixtures, foundation and the cost of the clean-up.  Items that are not covered in the basement are finished walls, ceilings or floors and any items or furniture stored in the basement.  Your flood insurance policy will also cover an attached or detached garage.  If your home is worth more than the allotted $250,000 you will want to check with your insurance agent on an excess flood insurance policy to cover the difference. 

Residential content flood insurance is a separate policy and can be set up for any amount up to $100,000.  This policy insures most of your personal property such as furniture, clothing, house wares, light fixtures, microwave ovens, home electronics, freezers, and washer and dryer.  Before buying a flood insurance content policy you should check with your insurance agent as to exactly what contents will be insured.

Where Do You Purchase Flood Insurance?

You can check with your regular homeowner’s insurance agent to purchase flood insurance.  All flood insurance is underwritten by one source, the National Flood Insurance Program (NFIP), so the price you pay will be the same no matter which insurance company you do business with.   Your insurance agent will have information on whether or not you need flood insurance and if your community participates in NFIP.  More than 20,000 communities across the U.S. participate in NFIP and this encompasses all of the communities that are at risk for flooding.  You can also check the website FloodSmart.gov to find an insurance agent in your area.

No one wants to think of a disaster destroying their home but it does happen.  You cannot control the weather or the damage it does to your home but you can be protected against damage in the event of a disaster.  If you live in a flood zone, having flood insurance will help to give you peace of mind in the event of a flood.

By Deanna Lynn Sletten