There are a very limited number of areas where flood insurance is not something that a homeowner should consider. In fact, unless it almost never rains where you live, then you should definitely give it some thought.
However, there are many misconceptions out there about flood insurance, and these misconceptions lead many people to make the wrong decisions when it comes to coverage for their homes and their possessions. If you could use some help figuring it all out, then you need to consider the four questions below.
Do You Live In a High-Risk Area?
If you live in an area that is deemed to be at a high risk for flooding, then your decision about whether to get flood insurance will be a simple one, in that you don’t actually have a choice. It is federally mandated for homes in high-risk flood areas to be covered by a flood insurance policy.
However, you should not assume that you are safe just because you live in a low- or moderate-risk zone. First of all, flood zones can and do change, and your area may be deemed high risk in the future. Second of all, a quarter of all National Flood Insurance Program (NFIP) claims come from homes in areas that are not considered to be high-risk. Your risk designation is no guarantee against flooding and flood damage.
Does Your Regular Homeowners’ Insurance Policy Cover Flooding?
A great many homeowners are under the unfortunate misconception that regular homeowners’ insurance policies cover flooding, when in reality they typically do not. If you are unsure about your current coverage, then make sure to contact your provider to find out.
Flood insurance is in most places only available through the Federal Emergency Management Agency (FEMA). If your non-FEMA policy does include some flood coverage, then you should still know that FEMA is the only provider which will cover floods caused by hurricanes.
Does Your Mortgage Lender Require It?
Mortgage lenders may sometimes require you to have a flood insurance policy, even if your home is located in a low- to moderate- risk zone. Make sure that you take note of any such fine print before signing your mortgage contract.
Furthermore, as discussed above, flood maps can change, and your lender may require you to secure flood insurance if your area is reassessed and deemed to be at a high risk for flooding. Your lender will likely reserve the right to do this even after you have started mortgage payments.
Why Take the Chance?
In the end, you need to ask yourself if you are willing to deal with the damages and expenses that even a few inches of water can bring. Flooding from heavy rains and spring thaws can happen in very unexpected areas, so you’re almost never completely protected. Plus, if you’re not located in a high-risk area, then you will likely be able to find a very affordable policy. If you are not federally mandated to get flood insurance but you value peace of mind, then shopping around for a policy is probably the right choice for you.