According to the Federal Emergency Management Agency, flooding is the nation’s most common and costly natural disaster. However, standard homeowners’ or renters’ insurance does not cover flooding.
What’s more, over 20% of flood claims originate from residents outside of a flood-prone area who may not even consider getting flood insurance. This article will run you through everything you need to know about flood insurance, why you may need it, and how much it may cost.
Understanding Flood Insurance
Homeowner flood insurance is a specialized type of policy that protects your home against the financial loss caused by floods. The National Flood Insurance Program is funded by the federal government and secured by private insurance brokers, such as those who sold you your homeowners’ insurance.
Most people think that if their home is not located near the coast or in an area prone to flooding, they do not require flood insurance. There are a variety of causes that might lead to floods, so they’ll examine topographical maps to check for elevation dangers and bodies of water.
However, according to FEMA, 20% of all flood claims originate from residences not located in high-risk zones.
Some unforeseen causes of floods include:
- Snow thawing in spring, especially when accompanied by rain
- Hurricanes and periods of heavy rain
- When wildfires alter the terrain and soil conditions followed by heavy rains
You will not be covered by flood insurance if you have a burst pipe or a washing machine that overflows. Your standard home insurance policy can cover this.
Do You Need It?
If you reside in an area with a high risk of flooding, you must get flood insurance.
Moreover, federally regulated mortgage lenders must require flood insurance on mortgaged homes in high-risk locations. This is implemented under the Flood Disaster Protection Act of 1973 and the Flood Insurance Reform Act of 1994. Even if you don’t live in a high-risk location, some lenders require it.
According to FEMA, just one inch of water may cause $25,000 in damage to your property. If you were one of the 20% of flood victims outside of high-risk locations, you would almost certainly wish you had insurance.
Make an appointment with your insurance representative. They can evaluate to determine whether flood insurance is appropriate for you.
What If You Are a Renter?
Like homeowners’ insurance, basic renters’ insurance does not cover floods. If the rental property owner has flood insurance, you could assume you’re safe. However, only the owner’s property would be covered under that policy, not yours.
If you live in a rented property and wish to be reimbursed in case of flooding, you need to get your own private flood insurance.
How Much Does It Cost?
The average cost of flood insurance coverage is $700 a year, but several variables might affect your premium.
When determining the cost of your policy, an underwriter will consider various factors, including the amount of coverage you need, the value of your property, and whether or not you want to insure only the building or the contents.
If you live or own a home in a high-risk flood zone, you must carry flood insurance by law. However, if you live in a low-risk area, you may still want to consider it. This is especially important if you have items you want to get reimbursed for in the event of flooding.
Are you looking for a flood insurance quote in Colorado? 5280 Insurance offers you the protection you can rely on for your property and family. Give us a call to learn more.