Why Should You Get Flood Insurance?

July 30, 2015

Why Should You Get Flood Insurance?

If you have a mortgage and you live in a high-risk flood zone, your lender will require you to have flood insurance. But what about those living in the moderate to low-risk zone, should they consider buying or getting one? The answer is yes. You might think that just because you live on hill, you won’t get flooded. Flooding can happen anywhere, as long as there is rain, there will be flood.

In this article, we will be discussing the importance, benefits and how much does flood insurance costs so that home owners will be able to be informed.

Flooding can result from the following natural causes – hurricanes, tropical storms, old heavy rains, cyclones, winter storms, spring thaws. It can also be caused by human error such as clogged drained systems or nearby construction. Evolution or development of infrastructures such as buildings, parking lots and roads has made flooding more severe. You can live miles away from water but you can still get flooded. With flood, it could only take minutes and few inches of floodwater for thousands of dollars to be caused in damage.

Homeowners will find it helpful when stricken by this type of disasters when the U.S. President declares a state of emergency. According to FEMA (Federal Emergency Management Agency), this is usually a loan that must be repaid with interest. Flood insurance policies pay out on qualifying claims whether or not a federal disaster is declared.

For high risk flood zones insurance is recommended. This area is required by FEMA to purchase flood insurance before getting a home loan from federally regulated or insured lenders. How are these declared? High risk zones are those to have at least 25% chance of flooding during the normal 30-year mortgage tenure. This is not only limited to residential structures but it is also recommended for commercial ones. And there is about 30 million of both who are in the high risk flood zones.

For low to moderate risk flood zones, it is still recommended. If your property is not close to a body of water such as stream, river coming over its banks or a creek, you may still want to consider buying flood insurance. According to the numbers, about 25% to 30% of flood insurance claims actually come from this areas that have less than or are in the low to moderate risk areas. Also, just for home owners to be aware, home owner’s insurance do not include or cover flood damages.

How do you get flood insurance and how much would it cost?

There are different types of flood insurance being offered such as the following:

· Flood Insurance for Home Owners (Moderate to Low Risk and High Risk)

With this type of insurance you can be able to insure your content and your home

· Flood Insurance for Renters (Moderate to Low Risk and High Risk)

If you are a tenant, you can be able to insure your content

· Flood Insurance for Condo Owners/ Renters (Moderate to Low Risk and High Risk)

For condo owners, you can be able to purchase building and contents coverage and if you are a renter, you can be able to purchase contents-only coverage

Now that we have been able to discuss what are the different types of flood insurance there is available and what are the factors to consider when buying flood insurance, one of the most essential question a homebuyer would ask is the premium. A cost of the insurance actually varies and there are several factors to consider such as the following:

· · Year of building construction

· · Building occupancy

· · Number of floors

· · The location and its contents

· · Flood risk or flood zone

· · The location of the lowest floor in relation to the elevation requirement on the flood map (this is applicable for newer buildings only)

· · The deductible you choose and the amount of building and contents coverage

There we have it, it is always best to speak to your agent about getting a flood insurance if you are planning to buy a home. If you are a home owner, speak to an NFIP agent locally to provide you with much detailed information about flood insurance.

Source: http://www.realtor.com/advice/buy/who-should-get-flood-insurance/

https://www.floodsmart.gov/floodsmart/pages/faqs/how-can-i-get-flood-insurance.jsp