Should I get Flood Insurance for my Home?

There’s a lot of confusion surrounding flood insurance, and that’s understandable as it’s one of the most complicated and specific areas of the entire insurance industry. First off, homeowners and renters insurance policies do not cover any damages caused by flooding. It’s a common misconception that owned or rented property will be covered by an existing policy in the case of a flood, but unless there’s a flood policy in place, you won’t be protected. Not everyone is required to have flood insurance for their homes, but depending on where you live, you might be. If you live in a designated flood zone, your state will most likely require you to have flood insurance as well as your standard home or renters insurance policy.

Even if you aren’t legally required to purchase a flood insurance policy, it’s always good to do some research and determine if you’re at risk for a flood, and if you are, see what your options are. Flooding can occur outside of designated flood zones. Floods also don’t just come from hurricanes or similar natural disasters, they can come from a number of reasons:

• Spring thawing
• Heavy rain
• Storm surge
• Blocked drains
• Broken dams/levees

If your home seems like it may be in danger from any of these threats, you may want to consider flood insurance. If you decide it’s for you, there are two main options for finding coverage, depending on where you’re located. The National Flood Insurance Program (NFIP) is a government program run by FEMA. The NFIP offers a flood policy, which is sold through private insurance agents, not directly. This policy provides coverage up to $250,000 on the structure of your home and $100,000 for personal possessions. While the NFIP provides replacement cost coverage for your home, it provides only actual cash value coverage on your possessions. This means that if your home must be rebuilt, the policy will pay up to $250,000 to rebuild the house as it was before any of the claimed damage. For your possessions, this policy will pay you the estimated current value of your things at the time they were lost, which means if they’re older and have depreciated at all, this may not cover the full cost of replacing them.

If you don’t want to go through the NFIP, or their policy isn’t available in your area, you can look towards private market flood insurance, of which there are two types. Some companies have begun offering primary flood insurance policies which are comparable to the NFIP policy, but typically with higher levels of coverage. Excess flood insurance policies are now being offered as well. These policies are for homeowners who need more coverage than offered by the NFIP plan, or their primary flood insurance policy. These plans offer you coverage beyond the typical limits of either plan, or can provide you with coverage if your area doesn’t participate in the NFIP. While your current home may not require flood insurance, it’s good to check out your own personal risk, and know what options you have available to you.