Most people do not have flood insurance, and it’s not surprising; after all, most private insurance companies don’t offer it in the first place, and it’s usually not required by law or by mortgage lenders. But there is no location that is absolutely immune to flooding, and its results are devastating. It is wise to consider whether this kind of insurance is right for you.
This kind of insurance is not likely to provide a profit for insurers; few people want it or believe they need it so that the cost of coverage for the few who do file claims usually outweighs the earnings those few purchasers provide to the company. Because of this, it is typically not available with a homeowner’s or renter’s policy. However, the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP) work with private insurance companies to provide the needed coverage, particularly to those who need it most.
NFIP applies to many areas, particularly high-risk communities, which have agreed to meet certain standards for flood safety practice. In these areas, insurance is available for a yearly cost, usually between $500 and $600. If your home is in high-risk areas or has been flooded, you may be eligible for insurance and in fact, it may be required by law that you have it.
If you need to file a claim after a flood, your payout will usually be in actual cost – that is, the fair market value of your losses minus any depreciation. You will likely need to fill out a form outlining your losses, and typically an adjuster will need to visit the home to examine the damages. Be sure to document any and all damage, and don’t throw out any ruined possessions until the adjuster has seen them.
Although flooding occurs in relatively few locations, its costs are higher than most home perils. In the event of a major storm such as a hurricane, whole communities of homeowners often find that their losses are not covered. Don’t take the risk; consider insuring your home and property against flooding.