Flooding of your home or office can be a trying experience that taxes both your emotions and your finances. Even if you don’t live in a low flood-zone area, devastating flooding can still occur, often with very little warning. Hurricanes, heavy rainfall, or river or tidal surges can quickly cause excess water to build up, causing extensive damage to homes and businesses and destroying their entire contents. According to calculations on the government website floodsmart.gov, for example, a six-inch flood in a 2,000-square-foot home can cost the homeowner nearly $40,000 in damages and repairs. In this example, some of the larger repairs include flooring ($15,000), furniture ($6,000), and wall and door replacement ($7,000).
Although it may be impossible to avoid a flood once it hits, you can take steps beforehand to insure your property so that you are better prepared for it financially. Most standard homeowner or business policies do not cover flooding unless it results from a covered event, such as a burst pipe. Many victims of flooding may assume that federal programs would kick in to cover their losses, but this may not always be the case.
In 1968, Congress created the National Flood Insurance Program (NFIP) to help property owners protect themselves in case of flooding. The NFIP offers flood insurance to homeowners, renters, and businesses, but only if their community participates in the NFIP, agreeing to adopt and enforce ordinances that meet or exceed FEMA requirements to reduce the risk of flooding.
If your home or business is located in a high-risk flood area, you must have separate flood insurance in order to qualify for a mortgage from federally regulated or insured lenders. If you are located in a moderate- to low-risk area, you are typically not required to have flood insurance, but you may want to minimize your financial risk by purchasing a policy regardless.
You may wish to investigate Private Market Flood insurance as well, which may be available at lower rates than what is available through the federal program. According to the privatemarketflood.com website, which sells policies as an alternative to government FEMA-backed policies, “older homes, second homes, nonprimary residences, commercial properties, and small apartment buildings enjoy significant savings compared to FEMA policies.” In fact, the Private Market Flood insurance program now insures more than $1 billion of property value in thirty-seven states.
There are myriad factors that influence the cost of your premiums, including building size, location, amount of coverage desired, and deductible amount, so it’s best to consult with your insurance agent to determine whether an NFIP policy or private flood insurance policy makes more sense for your particular situation.
Get the latest news on insurance policies delivered to your inbox.