Anywhere may experience flooding, and the damage it causes might vary from little inconvenience to major catastrophe.
In fact, just one inch of floodwater may result in up to $25,000 in damage, according to the Federal Emergency Management Agency (FEMA). A further insult is that flood damage is seldom covered by homeowner’s insurance. A different policy is needed for this.
What should a tenant, company, or homeowner do as a result? According to Mark Snyder, claims specialist at Hi Marley, an insurance communications platform, “the best way to mitigate the danger of flood is to avoid buying a home in a known flood zone at all costs.” But not all floods happen in flood zones, I can tell you from bitter personal experience.
What is flood insurance, and how does it work?
Similar to other types of insurance, flood insurance is a contract between you and the insurer in which you pay the insurer to cover your losses. In this scenario, flood insurance would cover any damages resulting from flooding or floods-related erosion brought on by waves or currents in conjunction with a strong storm, a flash flood, an unusual tidal surge, or anything like. In order to provide insurance to homes, renters, and businesses, the government creates maps of flood zones that are used to determine flood insurance premiums.
High-risk, moderate-to-low-risk, and uncertain risk categories are used to classify flood zones.
A 30-year mortgage in a high-risk flood zone has a one-in-four probability of flooding. All property owners in these Special Flood Hazard Areas (SFHAs), also known as Special Flood Risk Areas (SFRAs), who have mortgages that are federally regulated or insured are obliged to get flood insurance.
Zones of moderate to low risk have reduced danger, but not none. According to FEMA, these regions file more than 20% of claims to the National Flood Insurance Program (NFIP) and get one-third of the disaster aid for floods. Although it is not required, all homeowners and renters in these locations are advised to get flood insurance.
As one would anticipate, undetermined flood zones are places where a flood-hazard study has not been done. This does not imply that there is no chance of flooding. Similar to low-to-moderate risk zones, these don’t need insurance.
Risk Rating 2.0, an improvement to FEMA’s existing flood-zone system that offers property-specific flood ratings based on considerably more data, is a new development. According to FEMA, the goal of this new approach is to resolve rating inequities and make sure that each property owner is paying their fair share of the flood risk.
Do I Need Flood Insurance?
If you or someone you know is pondering the question “Do I need flood insurance?” The probability is high that the reaction is “Yes.” As per FEMA’s Assessed Flood Misfortune Potential, even a solitary inch of flooding in your home might bring about expenses of $27,000 or more, which would cover both the expense of fixing your house and replacing your personal belongings. You might consider purchasing flood insurance if the cost of those repairs and replacements exceeds your budget.
People who don’t live in areas with frequent flooding tend to believe they don’t need flood insurance. They often make mistakes and end up footing the bill for any damages. In reality, the National Flood Insurance Program reports that over 20% of claims are made by policyholders outside of high-risk flood zones, and only approximately one third of those claims result in government disaster aid.
Hurricane Harvey, which wreaked havoc on Texas and southwest Louisiana in 2017, serves as one recent example. According to a CoreLogic analysis featured in CNN Money, flood losses from Hurricane Harvey ranged in value from $25 billion to $37 billion. Insurance reportedly paid out anywhere between $6.5 billion and $9.5 billion. The remaining $18.5 billion to $27.5 billion is left to be covered by homeowners and renters.
In order to answer the question “Do I need flood insurance?” Undoubtedly, you do. Renting and owning should be done with caution.
How Much is Flood Insurance?
Each state and location has a different cost for flood insurance. However, the average price for a one-year coverage in the United States is about $700. That’s not too awful to protect your house and personal property from flooding and make sure you have peace of mind throughout each storm.
Entering your address into FEMA’s Flood Map Service Center will allow you to get an idea of what flood insurance would cost roughly in your region.
To protect yourself against the next storm season, you should get flood insurance as soon as you can since there is often a 30-day waiting period after you do.