Do You Need Flood Damage Insurance?
If you own a home, chances are your dwelling is located in an identified floodplain and your mortgage company required flood damage insurance. If you’re a first-time homebuyer or even if you make a living flipping house, we’ve pulled together some important facts you should know before acquiring flood insurance.
A few years back, FEMA (the Federal Emergency Management Agency) updated its flood zone maps. This move by the federal government put millions of more homes on floodplain maps when many homeowners were ignorant of flood risks. If you have not reviewed FEMA’s flood zoning, now might be a good time to look. They provide a good online resource here. Since the advent of these updated flood zones, there are very few properties that escape flood insurance requirements, even in high or dry states like Colorado and Arizona.
What is a “Flood Risk”?
There is a gradient for flood risk. Previously mentioned locations with arid climates, for example, would fall under the “low risk” flood category. Property within the Mississippi River delta region or the lowlands of Florida would, of course, assume higher flood risk. Flood damage insurance premiums then, it follows, also falls along this risk gradient. According to the statisticians at FEMA, the average homeowner in the United States pays approximately $600 per year in flood insurance premiums. Though hundreds of dollars are nothing to sneeze at, consider that FEMA also calculates the average cost of flood damage at $48,000 per home. So, pick your poison.
Understand Your Insurance Policy
As with any insurance policy you purchase, be sure you understand what damages are covered and what is not. Knowledge is power, and this is never truer than when it comes to catastrophes and insurance payouts. You can find additional related information on the difference between flood insurance and water damage insurance. Speaking of coverage, ask about your insurance company’s policy on waiting periods. Flood damage coverage sometimes takes effect 30 days after you’ve purchased the policy.
Based on your coverage options, you will then need to decide a comfortable deductible for your lifestyle. A good rule of thumb (especially if you live in an area of heavy historic flooding) is to select a flood insurance deductible that you can reasonably keep in a dedicated bank account. This account would ideally only pay for a flood damage deductible (and maybe some other minor emergency expenses) in the event disaster strikes. Some flood insurance policies require the insured to pay the entire premium up front. We’re guessing that the average homeowner (if you’re like us) would take a pretty good financial blow if they didn’t have knowledge of this when signing on the dotted line. So make sure you’re clear on this while shopping around.
Always, always, always get any of your questions answered in writing (yes, email counts) by a professional. Review your existing flood policy if it’s a little dusty. Review your new policy options if you’re shopping. Bookmark us if this information will be handy to you in the future.
Total Restoration of Texas provides the following services:
We serve the following Austin-area communities:
- Cedar Park
- New Braunfels
- Round Rock
- San Marcos