Do I Need Flood Insurance for my Home?
Homeowners' insurance covers repairs your home needs after it has been damaged by many types of natural disasters. Most insurance covers damage caused by snow, ice, wind, hail, or lightning. However, most homeowner's policies do not cover damage caused by flooding.
To be insured for floods caused by rainstorms or other natural disasters, you must purchase a flood insurance policy.
Does Renters Insurance Cover Floods?
Renters insurance does not cover damage to personal property caused by floods. The good news is your renter's policy does cover water damage from overflowing plumbing or appliances.
When Flood Insurance Is Required
Your lender may require you purchase flood insurance. The Federal Emergency Management Agency or FEMA states that lenders must require their borrowers to purchase flood insurance if the company is federally regulated or insured and the home is located within a high-risk flood area. High-risk flood areas are locations that have a 1 percent chance of flooding every year. Some private lenders will also require flood insurance before they will approve borrowers for a home loan.
When Flood Insurance Is Recommended
If your home is in an area that has been designated as a high-risk flood area, insurers recommend that you purchase flood insurance. These are areas that have less than a 1 percent chance of flooding every year. If your house isn't near water, the possibility of a flood may still exist. You may live near a creek or a pond that can overflow and flood your property. If you live near a hill, stormwater may cause a flood at your home.
How To Know If You're in a Flood Zone
If your house is near a body of water, you may be in a high-risk flood zone. Even if you don't see have a body of water nearby you may be in a floodplain or an area that doesn't have adequate storm drainage during a flood. To find out your flood hazard and risk, check the FEMA Flood Map Service Center. Determine your flood risk by examining the map on this website. Locations in Zones B, C and X are designated as the lowest risk for flooding. The V Zones exist along the coast, and they have the highest risk. The A Zones also carry a high risk of flooding.
You can find out your home's risk of flooding in other ways as well. For example, if you perform a title search, you can learn your flood risk, but you can also ask your real estate agent if you are in a high flood risk location or near a flood plain.
The National Flood Insurance Program or NFIP
FEMA runs the flood insurance program known as "NFIP," and it offers flood insurance policies that are underwritten by the federal government. Private insurance companies also sell these policies. You may be able to purchase a policy through the NFIP that covers the structure of your home for up to $250,000. It can cover personal belongings of up to $100,000. These policies will offer you the replacement cost so that you can rebuild your home as it was before the flood. Your belongings may be subject to depreciation compared to the current cost, so be sure to find out the details.
If you purchase flood insurance through the NFIP, you will receive a policy that is subsidized by the federal government. The average NFIP insurance policy costs $700 per year, but policy costs will vary based on your location's risk for floods. If you are in a high-risk area, your premium could be as high as $6,000 per year.
Flood Insurance from a Private Insurer
You may also purchase a flood insurance policy from a private insurer. A private insurance agent may offer coverage at higher levels than are available with NFIP. You can also purchase an excess flood insurance policy if you would like to augment a policy you purchase from the NFIP. If your area does not participate in the NFIP or you obtain your flood insurance from a private company, you can purchase excess flood insurance as well. You are entitled to purchase this extra coverage even if you are living in a high-risk area.
The Cost of Flood Insurance
When you purchase a flood insurance policy from a private insurer, it's a good idea to get quotes from several insurance companies. This allows you to find the best coverage for the best price.
If you are purchasing your flood insurance through the NFIP, the premiums vary based on several factors, including:
- The year your home was built
- The number of rooms in the home
- The number of floors
- The location of your belongings
- The area's flood risk
- The location of your first level in relation to the Base Floor Elevation
Reducing Your Flood Insurance Premiums
Anything that you can do to minimize the damage caused by flooding on your property will be something that may reduce your flood insurance premiums. The following ideas are things you can do right now with this objective in mind:
- A surveyor or engineer prepares elevation certificates. Your surveyor or engineer will inspect your home and determine where the lowest floor elevation in your house lies. If it is above expected inundation levels, your surveyor or engineer will be able to provide you with a certificate that you can present to your insurance company. This is one way that you can lower your flood insurance premiums.
- It is also a good idea to elevate your electric panel, water heater, and your HVAC unit so that they are less likely to be damaged in a flood.
- Good maintenance requires that you keep your storm drains and gutters clean. In addition to that, installing one-way valves can prevent water from flooding your drains.
- Basement walls that have been sealed also encourage insurers to offer you lower premiums as well as waterproofing your materials.
- Make sure that you keep your important documents and valuable items on higher floors or in the attic of your home.
Having Flood Insurance in a Low-Risk Area
If you are in a low-risk flood area, you may not think purchasing flood insurance is worthwhile. Keep in mind that flood damage is often catastrophic, significant, and costly.
Most Flood Policies Have a 30-Day Waiting Period
Don't wait to purchase a flood insurance policy because in most cases, there is a 30-day waiting period before flood insurance becomes active.
We restore flood-damaged homes and offices in these Austin-area communities:
- Cedar Park
- New Braunfels
- Round Rock
- San Marcos