“I don’t need Flood Insurance,” a thought that crosses the minds of many homeowners, especially if they don’t live near a body of water. Also, probably one of the most regrettable statements ever made. Many people don’t know that flooding occurs in EVERY STATE and can occur far from large bodies of water.
Some people also assume that homeowners insurance covers flooding or that they don’t need flood insurance if they rent a home. If only it were that simple. Let’s discuss flooding, its causes, who needs flood insurance, and why.
What causes floods?
Flooding occurs when normally dry land overflows or becomes submerged in water. It is usually caused by heavy rainfall, rapid snowmelt, or storm surge. It is also the most common natural disaster.
Another cause of the flooding is new construction and road opening. It can alter the proper drainage of soil and cause flooding in areas that were not initially at risk. So areas initially zoned as low risk can quickly become high risk as new construction and development change the landscape. That’s why it’s a good idea to have a flood insurance policy.
Does homeowners insurance cover flood damage?
Are not. No, it does not. This is a common misconception that, unfortunately, leaves a lot of homeowners “stuck” when flooding occurs. The same goes for business owners or renters; These insurance policies usually do not cover flooding.
if you think or 100% sure your insurance covers flooding, we recommend that you call your agent to confirm. What will it hurt?
Who Needs a Flood Insurance Policy?
As mentioned above, flooding is a common disaster and unexpected situations can cause it. So even if you don’t live by the coast, it’s a good idea to bring flood insurance or at least talk to an agent to see if that’s a good option for you.
Home page And business Owners are equally at risk. You can check if you are in a high or low-risk area using a flood map provided by FEMA. Being in a high-risk area can mean higher rates; however, the average flood insurance claim in 2021 is $44,401. Only some home or business owners have that kind of safety net.
Some people may choose to rely on Federal disaster assistance, which comes in two forms. One is a loan that must be paid back with interest, and the remainder is FEMA disaster assistance, averaging about $5,000 per household. Still won’t make up for that $44k average loss. A flood insurance policy offers peace of mind, especially when just 1 inch of flood water can cause $25,000 in damage.
According to FEMA, $985 is the average annual NFIP policy premium in 2021. Right now, this is average, and your risk factor plays a role in your premium. But when the numbers to restore your home and the likelihood of disaster are so high – how much will you pay for the comfort of knowing that your home or business is insured when something goes wrong? expected to happen?
What is the NFIP policy?
NFIP is the National Flood Insurance Program. It is regulated by FEMA and offered to the public by a network of more than 50 insurance companies – including us! The government uses specific metrics and sets prices for this asset classesso they are the same regardless of the service provider you choose. At the end of the day, it’s best to choose a service provider that you trust.
Flood insurance may be required. The federal government requires mortgages in a Special Flood Hazard Area (SFHA) to be insured against flooding. The National Flood Insurance Program has changed the way flood risk is determined and flood insurance pricing with a Risk Rating 2.0.
Risk Rating 2.0 is a huge leap forward. It allows FEMA to set fairer prices and ensures fair price increases and decreases. Rates are easier to understand and better reflect the property’s flood risk for more personalized coverage and costs.
With the new risk rating, FEMA has the ability and tools to address rating differences by including more flood risk variables. These include flood frequency, variety of river overflow floods, storm surge, coastal erosion and heavy rainfall, and distance to water sources, along with asset characteristics such as elevation and construction costs. again.
Do I Need Flood Insurance? Talk to an agent
It is important to understand what a flood is and the risks it poses to your home or business. We hope this blog has given you some of that information. FEMA is another great resource with tons of tools that can help guide you in the right direction. But if all this is a bit overwhelming or you don’t want to do your own research, feel free to contact insurance agents near your place.
