Common Misconceptions about Flood Insurance
We have all heard many different things about Flood Insurance, but do we know the real facts? Not knowing if you really need it, or if your policy covers flood damage can end up in costly repairs.
The White River, Stone County Arkansas, 2008
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Most homeowner's insurance policies do not cover flooding. The fact is that a separate policy specifically for Flood Insurance is needed and can be purchased through an agent or the National Flood Insurance Protection (NFIP), which administers the program. Most homeowners actually qualify for flood insurance and don’t know it. Some resources to check on your area are the "Community Status Book" at fema.gov, or go to floodsmart.gov and click on "What’s your flood risk?" to see for yourself.
You may assume you don’t need flood insurance if your lender didn’t ask for it. If you are in a special flood hazard area, the lender will normally require it. Many of the claims made each year come from low-risk areas due to ice dams in nearby rivers, melting snow, and improper drainage issues. Floodwaters don't stop at a line. You can live on high land and still get hit by water damage.
Don’t rely on flood damages being covered by Federal Disaster Assistance. The fact is that a community must be declared a federal disaster area before it is eligible for disaster assistance. You cannot count on this to cover your damages. Less than 50% of flooding incidents are awarded Federal disaster assistance.
Flood insurance is not expensive when compared to the cost of cleanup and replacing your belongings. In actuality, premiums covering the building and personal belongings in fairly low-risk areas can start as low as $112 per year. The nationwide average for flood insurance coverage is less than $500 annually. Often times this is less than even the interest on a federal disaster loan, plus you don't have to repay the money.
Make sure flood insurance policies cover the entire house, as well as the basement and your belongings. Be sure that your comprehensive flood coverage includes two policies, one for the structure and one for the contents. Normally the policy covers only the washer and dryer in your basement and not the finished walls, floors, furniture or personal belongings. Be sure to include items of value in your contents portion of the policy. It is always wise to keep receipts whenever possible for the valuables, remodeling upgrades (basement finishing), etc.
Take time to check into the cost of Flood Insurance for your area to save costly damage expenses later. It will be well worth your time.
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