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Top 10 Reasons Your Home Needs a Flood Insurance Policy
When it comes to insuring their most valuable asset—their home—most people only consider homeowners insurance. However, many insurance providers don't include flood damage in their homeowner policies.
The National Flood Insurance Program (NFIP) was created by Congress in 1968 to offer insurance protection for homeowners, renters, and commercial properties, as well as drive partnerships with communities to better prepare for floods. The NFIP offers flood insurance coverage to homeowners if their community participates in the NFIP. Participating communities agree to adopt and enforce ordinances that meet or exceed Federal Emergency Management Agency (FEMA) requirements to reduce the risk of flooding.
All federally regulated and insured lenders require flood insurance coverage on properties located in high-risk areas to secure a loan. Nevertheless, all homeowners should consider purchasing coverage to protect their property and belongings—even if their property isn't technically in a required flood zone.
So why should flood insurance coverage be on your priority list? Consider the following 10 reasons according to facts provided by floodsmart.gov, the official site of NFIP:
- Floods are the #1 natural hazard in the U.S.
Floods and flash floods occur in all 50 states, meaning everyone lives or owns a business in a flood zone.
- Moderate- to low-risk flood areas make up 20% of insurance claims
As flood plains can change over time, and Mother Nature can be unpredictable, high-risk areas are not the only areas affected by flooding. Properties on hills or in low-risk areas may have a significantly reduced risk, but they are still not immune from flood danger.
- You are more likely to experience a flood than a fire
For those who live or work in high-risk areas, you are more likely to experience a flood over a fire. According to the NFIP, you are 27 times more likely to experience a flood than a fire during a 30-year mortgage period.
- New land developments may create new problems
New, nearby land development construction can create changes in natural runoff paths, putting your home at risk for flood damage.
- A little bit of water can do a whole lot of damage
Did you know as little as one inch of water can cause significant property damage? Or that two feet of water can carry a car away? Small amounts of water, in addition to catastrophic situations, including flash floods, can produce 10 – 20 foot walls of water—causing serious destruction.
- Rain and hurricanes are not the only causes of flooding
Overlooked weather scenarios that can also cause flooding include mudslides, winter storms, and melts. Inadequate drainage systems and failed protective devices such as levees and dams can also cause floods.
- Accepting Federal disaster assistance can be costly
Federal disaster assistance is treated like a loan with interest that must be paid back to the government. For example, if you receive a $50,000 loan at 4% interest, your monthly payment would be around $240 a month ($2,880 a year) for 30 years. Compare that to a $100,000 flood insurance premium, which is about $400 a year ($33 a month).
- Flood insurance coverage is affordable
Premiums are determined by a number of factors, your community rating system, and coverage types. Homes in moderate to low-risk areas may qualify for a Preferred Risk Policy for as low as $129 per year.
- Reimbursement for damage-preventing measures
If you are insured and are facing an imminent threat of flooding, you may be eligible to receive up to $1,000 in reimbursement expenses for preventative measures. Examples of expenses that qualify include storage space to protect belongings and pump rentals.
- Excess insurance is available
Most standard flood insurance policies only provide coverage up to $250,000 for residential property. If your estimated cost to rebuild is higher than these limits, you need an Excess Flood Insurance policy to be sure that funds are available to repair your home.
Click here to check out our infographic and learn why most Americans need excess flood coverage.
To see if your community is a part of the NFIP program, visit the Community Status Book and search by city and state.
If you're interested in obtaining a quote on flood insurance coverage, call 800-499-7922 (Texas residents or 866-913-5180 (all other states).
This article is for information purposes only. Flood insurance rates vary depending on flood zone ratings.Jacki Cameron
Jacki Cameron is the Personal Lines Manager for SWBC Insurance Services. She specializes in all personal insurance product lines and has significant experience working with clients who often have varied, unique asset protection requirements. Known for her knowledge and for developing outstanding customer relationships, Jackie has more than 20 years in the insurance business and is a key expert in the industry.
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