Flood Insurance….. Do You Need It?

The Price You Will Pay

The average price of flood insurance in the United States is around $600 annually, though it can depend on the flood zone in which you live.  In some flood plains, you are likely going to be required to purchase flood insurance even if the property has never flooded.  Flood Insurance is purchased through the National Flood Insurance Program (NFIP).  Shopping for an agent to provide flood insurance will not change the rate, as it is set by the  NFIP.

It Can Be a Safe Choicegutted home

But what if you aren’t required? Should you spend that extra money every year? What if the area you have lived in has never flooded?  These are all questions to consider. A Homeowner’s Insurance plan is not going to cover water damage from a flood. And flood damage can cost tens of thousands of dollars, and possibly more depending on the level of destruction.

Weigh the options—any place that has never flooded in recorded history can still flood, and it can cost you a whole lot of money (that you may not have) to get back into your home. You could pay a minimal (in comparison to the potential) fee every year and still be protected just in case.  Recently, areas of Louisiana that did not require flood insurance, flooded catastrophically.  Many homes did not have flood insurance.  The Federal Emergency Management Agency (FEMA) did have to step in and provide shelters, mobile housing and money.  LAflooding

Flood plain maps can also change—the land around you is constantly changing and one day you could be in a historically non-flood area,  and the next day your home could be in a flood zone.

Flood Insurance When Buying a Home

Buying a home can be overwhelming.  Whether or not the homes for sale in the area that you are looking in requires flood insurance will make a difference in your overall affordability.  When financing a home, your mortgage lender will let you know if you are required to have flood insurance.

For instance, if the homes in a particular area do NOT require flood insurance than even if you choose to acquire it, it will be much less expensive.  If the homes you are looking at DO require flood insurance, you will want to get that flood quote and factor that into the overall note of your new home.  In most instances, if you are purchasing a condo, the condo association will have flood insurance — but that may not cover your contents.  You will want to review the condo documents for your association to make sure.

Flood Insurance When Selling Your Home

There are a few things to keep in mind, about flood insurance, when selling your home.  For the same reasons as mentioned above, its important to let any potential home buyers be aware of not only what flood zone your home is in, but how much you pay per year for flood insurance.  Its also good to note that National Flood Insurance is assumable.  So in many instances, the new homeowner will request to “assume” your current flood policy.

There are a variety of reasons that may not be possible, such as your current flood policy insures the home for LESS than you are selling it for — or if the policy is about to expire.  Although as the home seller, you should work with any buyer in letting them assume your current flood policy, the act of acquiring the flood policy does fall on the home buyer.

What Flood Insurance Does & Does not Cover

Flood insurance covers both the structure and the contents of a home. Many plans cap out at certain amounts and are dependent on the amount of damage, but you can also purchase supplemental plans. If you have anything that is particularly valuable, it may be best to take out a separate insurance policy.  It is best to do your homework ahead of time on what is, and what is not covered.

Also, important to note is that not all water damage is created equal. In other words, flood insurance is going to cover water damage if your area floods. However, if your water heater leaks or your roof caves in during a storm, your regular Homeowner’s insurance should cover that.

Who Decides

Unless required by your mortgage lender, who holds the mortgage on your home, the question still lies with you—to get flood insurance, or to not? Whether or not you decide to purchase flood insurance, you should still set aside emergency money for repairs just in case of a disaster as seen in the recent Louisiana flooding of August 2016.

FEMA and Flood Insurance

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