Do I Need Flood Insurance

When going through the process of setting up a home insurance policy, some homeowners wonder if they need flood insurance. While not every homeowner needs this type of insurance, it's important to consider whether flooding is a significant risk for the house.

FEMA reports that floods are the top disaster in the United States today. Even a few inches of water in the house can cause significant damage, requiring expensive repairs. The causes of flooding are not just living close to a body of water. From heavy rains to spring thaws, most homes have the potential for flood damage. When considering whether to purchase this insurance, there are a few key factors.

Flood Insurance Not Included in Homeowners Insurance

A standard homeowners policy likely will not cover flood damage. Homeowners should review their policy carefully to see if it addresses any type of water damage and what exactly it covers. This typically means that flood insurance coverage will require a separate policy. Flood insurance policies are purchased through the National Floor Insurance Program and managed by FEMA although they may also be sold by some private insurers.

Flood Insurance Costs Vary

Depending on the risk factors and coverage level, the cost to purchase this insurance varies greatly. The risk of flooding, what the policy covers, and how much coverage purchased all affect costs. Working with an insurance agent to review coverage needs is the best way to determine how much coverage is ideal.

Flood Insurance May Be Required

FEMA has a map which outlines high risk areas for flooding. If the house falls into one of these areas, flood insurance protection may be required. When using a mortgage from a federally regulated lender, the lender legally requires homeowners to purchase this type of insurance. This likely will not be required when the house is in a moderate or low risk area. However, even if not mandated by federal requirements, lenders can require the homeowner to purchase this type of insurance.

Living in a Low Risk Area Isn't Protection

For homeowners who live in an area of low risk, they may not want to pay for this type of insurance. However, it's worth noting that purchasing this insurance often pays off in the long run. In fact, over 40% of flood insurance claims were filed by homeowners who did not live in a high risk area. Additionally, when living in a low risk area, property owners are eligible for lower cost policies. This policy will still provide excellent coverage but come at a much lower cost.

Purchasing Flood Insurance

There are many benefits to purchasing flood insurance including peace of mind. When considering whether or not to purchase the insurance, talk to an insurance agent. This professional can review whether or not it's recommended, coverage levels, and the cost. With this decision, homeowners who are not mandated to purchase the insurance can then make an informed decision. Use this information to get a better idea of whether flood insurance is a good choice.