If you’ve been following our blog, you probably already know that damage caused by flooding is not covered under regular homeowner’s insurance policies. And you’re probably wondering – do I really need flood insurance? You might be tempted to skip this expense, especially if you do not live in a high-risk flood zone. Here are some guidelines and pivotal moments to keep in mind while you consider if you should buy a flood insurance policy.
Of course, the main consideration when determining if you really need to invest in a flood insurance policy is the location of your property. If your property is located in a high-risk flood zone according to FEMA’s flood maps, purchasing flood insurance is mandatory.
But even if your home is not within an established high-risk flood zone, FEMA still cautions that not having flood insurance could be a huge risk: “If you live in an area with low or moderate flood risk, you are 5 times more likely to experience flood than a fire in your home over the next 30 years.”
There’s also the financial risk to consider: “Flood insurance can be the difference between recovering and being financially devastated,” cautions FEMA. “The damage from just one inch of water can cost more than $20,000.”
Real Estate Transactions
It can be devastating to finally find your dream home only to learn it is located in a floodplain. Nevertheless, it’s an important question to ask the seller if they don’t disclose this upfront. Make sure your realtor does his or her due diligence and inform you of the flood zone and low elevation areas of all the properties you are interested in.
Most likely, your mortgage lender will require you to secure flood insurance if the property is located in a high-risk flood area. But some lenders might even require it for low to moderate risk areas. Make sure to discuss the lender’s policy regarding flood insurance before you enter in an agreement with them.
The third moment flood risk should come up during the process of buying a home or commercial property is during the house or property inspection. A reputable inspector will take time to research and evaluate the property’s location regarding floodplains in the area. Any risk of flooding or water damage should be listed in the inspection report and will serve as an indicator of whether you should purchase flood insurance.
Flood Insurance Policy Renewal
Flood insurance policies, like homeowner’s insurance, last one year. Oftentimes at renewal, you might question if renewing your flood insurance policy is necessary. You might have been paying it for years and never used it. Nevertheless, you need to consider that flooding is unexpected and can happen any time, under many circumstances. Anything from a broken pipe or a faulty washing machine to natural disasters can wreak havoc on your belongings. You will also want to check with your home lender before you even entertain the idea of canceling your flood insurance policy.
Even when you know you have to invest in a flood insurance policy, we might be able to help you lower its cost. Contact us today for a free flood zone audit to determine if your property is correctly rated.