When it comes to flood insurance, the most important thing for homeowners to understand is that it does not come standard for anyone. In other words: No, your homeowner’s insurance policy does not protect you in the event of a flood.
Unless you have a separate flood insurance policy purchased through the National Flood Insurance Program (NFIP), the cost to fix or replace any loss or damage that you suffer as the result of a flood falls squarely on your own shoulders.
Do I Need Flood Insurance?
If your home is located within an area that is considered to be a high-risk flood zone – and you have a mortgage from a federally regulated or insured lender – then your lender is legally mandated to require you to purchase flood insurance. If you live in a high-risk area, your flood insurance is nonnegotiable.
And according to FEMA (Federal Emergency Management Agency), even if you don’t live in an area with a high flood risk a lender may require you to purchase a flood insurance policy at any time – even if the company is not legally mandated to do so.
If your home falls within an area that is considered to have a low or moderate flood risk, you are still five times more likely to experience a flood than a fire in your home over the next 30 years.
For homeowners without insurance who experience a flood, the average payout from FEMA – in the form of a disaster grant – is approximately $5,000 per household. By comparison, the average flood insurance claim payment over the past five years was nearly $69,000. Because of this, if there’s any chance your home could flood, purchasing flood insurance is certainly a good idea.
How Do I Obtain Flood Insurance?
Personal flood insurance has to be purchased separately from your basic homeowner’s insurance policy because it is a special protection that is managed by the government. To buy flood coverage, you must purchase it from the NFIP through a select group of private insurers and agents. Flood insurance cannot be purchased directly from the NFIP to the consumer.
Keep in mind that flood insurance from the NFIP is only available in participating communities; fortunately, however, most communities do participate at this time. If you are unsure of whether your property qualifies for insurance from the NFIP, you can look it up online in their Community Status Book.
How Much Does Flood Insurance Cost?
Premiums for buying flood insurance will vary widely depending upon your location – whether you are in a high (standard) or low (preferred) risk flood zone. While it can be pricey to purchase flood insurance for a home that’s located in a high-risk zone, the low-risk or preferred zones offer some very affordably priced policies.
According to FEMA, for many low-risk households, a flood insurance policy can cost less than $400 per year; considering a single inch of water in your home can cause upwards of $25,000 worth of water damage, the cost of the plan premium is invaluable for peace of mind.
How Quickly Will My Policy Go Into Effect?
The key to successful flood insurance is to plan ahead. Unless you are closing on a loan, there is a 30-day waiting period after your application has been submitted before your policy will go into effect. Because of this, you should be sure to apply well in advance of when you want your coverage to take effect!
Use Hanson & Ryan as Your Flood Insurance Resource!
FEMA and the federal government both manage two very informative sites that you can use as resources (www.floodsmart.gov and www.fema.gov). However, the team of insurance experts and Hanson & Ryan can helP!
At Hanson & Ryan, we’ve been in business for over 140 years. Because of this, we have gained a complete, comprehensive understanding of not only the importance of flood insurance but the coverage offerings, and the process of purchasing flood insurance. If you would like to discuss your options, feel free to call Hanson & Ryan at your convenience!