Do I Really Need Flood Insurance?
Living in southeast Texas, residents experience all sorts of weather conditions from hurricanes to tornadoes to hail storms to flooding. With the most recent, devastating flooding in our area and as we head into this year’s hurricane season, it’s important to look at past storms and what we’ve learned from them. Although many floods in our area are caused by huge storms like hurricanes, more floods occur every day resulting from small, localized events, such as a typical afternoon thunderstorm. It’s a common misconception that flooding related to hurricanes and other tropical disturbances are limited to coastal areas. However, some of the most damaging flooding can happen well inland and days after a storm makes its initial landfall.
As a homeowner living in this region, you should be prepared for any type of storm as they all can pose different threats to your home and property. The most important question you need to ask when buying a home is whether you live in a high-risk area for flooding. Why? Flood insurance in mandatory if you live in a high-risk area and have a mortgage from a federally regulated or insured lender. In high-risk areas, there is at least a 1 in 4 chance of flooding during a 30-year mortgage.
There are many reasons why some areas are at a higher risk of flooding. The two most common reasons include: many older subdivisions were built before our current understanding of flooding potential and before current regulations that restrict certain uses if flood-prone land. Streets and storm sewers are typically designed for normal rainfall accumulation and when heavy rains fall, especially in a short period of time, the systems become overloaded with water. As a result, water ponds in the streets and flows overland to try to runoff into a nearby creek or bayou, sometimes flooding homes and roads in the way.
If you live in moderate-to-low risk areas that have mortgages from federally regulated or insured lenders, you are typically not required to have flood insurance. Even though flood insurance isn’t federally required, everyone is at risk and anyone can be financially vulnerable to floods. In fact, people outside of mapped high-risk flood areas file nearly 25 percent of all National Flood Insurance Program flood insurance claims and receive one-third of Federal Disaster Assistance for flooding. When it’s available, disaster assistance is typically a loan you must repay with interest. Remember, a lender can require flood insurance, even if it is not federally required.
Flooding happens every day in all regions of the country. Consumers must prepare for flooding no matter where they live. The National Flood Insurance Program wants consumers to know that while homeowners insurance won’t cover them against flooding, they can protect their home and property by purchasing a flood insurance policy separately through their local insurance agent.
Many people are under the misconception that they are ineligible for flood insurance because of where they live, or their mortgage status. But the truth is, as long as your hometown is a National Flood Insurance Protection community, most homeowners, business owners and renters can get flood insurance.
Remember the basics of flood insurance:
You CAN get flood insurance nationwide.
You CAN get flood insurance if you live in a floodplain or high-flood-risk area.
You CAN get flood insurance if you live outside a floodplain, or a low-to-moderate flood-risk area – and at lower cost.
You CAN get flood insurance if your property has been flooded before.
You CAN get flood insurance from insurance agents in your area.
You CAN buy flood insurance even if your mortgage broker doesn’t require it.
No matter where you live, it is important to remember that just a few inches of water in a home can cause thousands of dollars of damage. Talk to your lender before purchasing a home to see what your options are. Armed with the proper information about your flood risk and protection options, consumers can make more informed decisions about protecting their home.