Do I Need Flood Insurance?

Anyone who's ever had a burst pipe or a leaky roof knows how destructive water can be. That's why floods are such a scary event for homeowners. Even just one inch of water can cause $10,819 in a 1,000 square foot home with $20,000 worth of possession in it according to FEMA—and homeowners and renters insurance won't always cover flood damage. Living in a landlocked area doesn't completely protect your home from flooding, either. In fact, most of the counties in the country have had some sort of flood event according to data from FEMA.  

So, is it time to consider getting extra flood insurance? 

Do I have to have flood insurance?

In some cases, you do absolutely have to have flood insurance. That's thanks to a federal mandate that says lenders who loan money for homes in high-risk areas have to require the owner to carry flood insurance. Some lenders even require the insurance even if your home isn't in a high-risk area because the protection ensures you're covered for at least the amount you owe on your mortgage.  Normally you can pay for this insurance through your escrow account, the same way you pay for your homeowner's insurance. However, that mandate doesn't extend to home owners who own their home outright. If that's the case, you can choose whether or not you want to carry flood insurance, but if you're in a high-risk area, it's always better to be safe than sorry. 

If you do have flood insurance and your home has flood damage, you'll likely be reimbursed up to the limit of your liability. So, if your limit is $100,000 and your repairs cost $50,000, then you'll be completely covered. But if your repairs cost $200,000, you'll have to pay for the extra $100,000 out of pocket or get a loan to cover the costs. You get reimbursed up to your limit of liability.

What does flood insurance cover?

There are different types of flood insurance, so be sure you check to see exactly what your plan covers. Some cover just your building while others cover both your building and your personal property inside it. The second plan would be good if you have a lot of expensive electronics, appliances, and furniture that might be ruined in a flood. No matter which plan you choose, there are always going to be some things that aren't covered. Those usually include things like your car or any paperwork that gets destroyed in the flood. 

So, is it worth it?

It depends. You could go your whole life and never experience a flood event. But on the other hand, you could be in the path of a broken dam or the waters released from a reservoir during a flood. It all depends on the level of risk you're comfortable with.