Do you really need flood insurance? Well, here’s an amazing fact. Over the course of a 30-year mortgage, you’re home has a 9% chance of being damaged by fire and a 26% chance of being damaged by flood. Your normal homeowners insurance policy does not provide flood coverage.
Ah, but you’re thinking, “Not my home. I don’t live in a flood zone.” Think again. If it rains where you live, it can flood. Storm drains clog. Levees break. Tides surge. Snowmass melts. And when you realize that just one or two inches of floor water can cause thousands of dollars’ worth of damage to carpeting, furniture and anything sitting on the floor, you might want to look into homeowner flood insurance…now, before it rains.
As with all insurance, premiums for flood insurance policies and premiums are based on a number of factors, notably the risk zone you live in. Along with historical data, risk is assessed by factoring in rainfall, changes from building and development that alter natural run-off paths, topography and your community’s flood-control measures. If you don’t know your zone, FEMA publishes flood hazard maps that show flood risk at property-by-property level. They are updated periodically. When they do, your flood insurance premium will be adjusted up or down.
Other than moving to a lower-risk area, there’s not a lot you as an individual can do to effect low-cost flood insurance. You can, however, shop around for flood insurance quotes online to get the best possible policy. Make sure your policy covers the contents of your home, not merely structural damage. And be aware that there is a waiting period of 30 days from the date of purchase before your homeowner flood insurance policy will go into effect.
In addition to the zone you live in, your homeowner flood insurance premium will be based on things like when your home was built, the number of floors, the location of the lowest floor in relation to the elevation requirement on the flood map for newer buildings, the deductible you opt for and the amount of the building and contents coverage you select.
If your mortgage was issued by a federally regulated or insured lender, you will be required to buy a homeowners flood insurance policy. By the way, there are flood insurance policies for renters to protect them from damage to contents.