“I don’t need flood insurance,” a thought that goes through the minds of many homeowners, especially if they don’t live near a body of water. Also probably one of the most regretted statements ever made. Many people don’t realize that flooding occurs in EVERY STATE and that it can occur even away from large bodies of water.
Some also assume that homeowners insurance covers flooding or that they don’t need flood insurance if they rent. If only it were that easy. Let’s talk about floods, their causes, who needs flood insurance and why.
What causes flooding?
Floods occur when normally dry land overflows or becomes submerged in water. It is generally caused by heavy rainfall, rapid snowmelt, or storm surge from a hurricane. It is also the most common natural disaster.
Another cause of flooding is new construction and paving work. It can affect the land’s ability to drain properly and cause flooding in areas that were not originally at risk. Therefore, areas originally considered low risk can quickly become high risk areas as new construction and development alters the landscape. That’s why it makes sense to take out flood insurance.
Does home contents insurance cover flood damage?
No. No, that is not the case. This is a common misconception that unfortunately results in many homeowners becoming “stranded” during a flood. The same applies to entrepreneurs or tenants; These insurance policies typically do not cover flooding.
If you think or are 100% safe If your insurance covers flooding, we recommend calling your agent to confirm. What harm would it do?
Who needs flood insurance?
As mentioned above, floods are a common natural disaster and can be caused by unexpected circumstances. Therefore, even if you don’t live on the coast, it’s a good idea to get flood insurance or at least talk to a broker to see if it’s a good choice for you.
Home and business owners are equally at risk. This allows you to check whether you are in a high or low risk area Flood map provided by FEMA. Staying in a high-risk area could mean a higher rate; However, the average flood insurance loss in 2024 was $44,401. Few home or business owners have such a safety net.
Some people may choose to rely on federal disaster assistance, which comes in two forms. One of them is a loan must be repaid with interestand the other is a FEMA disaster grant, which averages about $5,000 per household. I still won’t cover the average damage of $44,000. Flood insurance provides peace of mind, especially considering that just one inch of flood water can cause $25,000 in damages.
According to FEMA, the average annual NFIP insurance premium in 2024 was $985. Now this is an average number and your risk factor plays a role in your premium. But when the numbers to restore your home are so high and the likelihood of disaster is so high, how much would you pay for the peace of mind that comes with knowing your home or business is protected if the unexpected happens?
What is an NFIP policy?
NFIP is the National Flood Insurance Program. It is administered by FEMA and offered to the public through a network of more than 50 insurance companies, including us. The government uses specific metrics and sets prices for this type of propertyso they are the same regardless of the mobile provider you choose. Ultimately, it’s best to choose a provider you trust.
Flood insurance may be mandatory. The federal government requires mortgaged properties in Special Flood Hazard Areas (SFHA) to be insured against flooding. The National Flood Insurance Program has changed the way it determines flood risk and flood insurance pricing with Risk Assessment 2.0.
Risk Rating 2.0 is a transformational leap forward. It allows FEMA to set fairer rates and ensures rate increases and decreases are fair. Rates are easier to understand and better reflect a property’s risk of flooding, so coverage and costs are more personalized.
With the new risk assessment, FEMA has the ability and tools to address assessment discrepancies by incorporating additional flood risk variables. These include the frequency of flooding, multiple types of flooding – river flooding, storm surge, coastal erosion and heavy rainfall – and distance to a water source, as well as property characteristics such as elevation and replacement cost.
Do I need flood insurance? Speak to an agent
It is important to understand what flooding is and the risks it poses to your home or business. We hope this blog has provided you with some of this information. FEMA is another great resource with tons of tools that can guide you in the right direction. But if this all feels a bit overwhelming or you’d rather not do the research yourself, feel free to contact us to request a quote or speak to an agent. We would be happy to accompany you through the process.
