Flood Insurance Coverage: Important Protection Even in Low-Risk Flood Zones

07 Feb

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Just because you don’t live in a high-risk flood zone doesn’t mean you shouldn’t buy flood insurance coverage to protect your home and its contents. The fact is that, of all the natural disasters that occur in the U.S., floods are the most common, and many of them occur outside high-risk flood zones.

The Federal Emergency Management Agency (FEMA) reports that about 25 percent of all National Flood Insurance Program (NFIP) claims are filed by homeowners who do not live in areas at high risk of flooding. However, a standard home insurance policy doesn’t cover flood damage from rising waters that enter your home from the outside.

So regardless of whether you live near a body of water or not, it pays to carefully consider the factors that determine your need for flood insurance coverage.

Flood Risk

Your mortgage lender may not require you to carry flood insurance, but as a property owner, you are still at risk of flooding and loss. According to FEMA, a home located in a low- to moderate-risk flood zone has a .20 chance of flooding each year.

Although that’s better than the 1 percent chance of flooding for properties located in high-risk flood zones, even a small chance of your home sustaining damage from a couple of inches of floodwater can cost you thousands of dollars.

Causes of Flooding

Florida residents in particular – including both those who live along the coast and those who live miles inland – are hit often by tropical storms and hurricanes. Therefore, even if you don’t live in a mandatory coverage zone or FEMA maps don’t show your location as a high-risk flooding area, heavy rains can still cause lots of problems.

Flood damage doesn’t have to be the result of a hurricane. Water damage from heavy rainstorms, poor drainage systems, broken water mains, and broken dams and levees also are covered by flood insurance policies.

Community Participation in the NFIP

Your insurance agent can tell you if your property is located in a community that participates in the National Flood Insurance Program. If it is, you are eligible for a policy rate discount. Premium discounts are based on your community’s rating class.

For example, if you live in a Class 1 community, you get a higher discount than if you live in a Class 4 community. Likewise, the discount residents of a Class 4 community get is higher than that which residents living in a Class 7 community receive. The NFIP’s Community Rating System (CRS) takes into account the level of action a community takes to reduce the flood risk to the area.

Preferred-Risk Policy

If you live in a low- to moderate-risk flood zone but you still want to buy flood insurance, you can purchase a lower- or preferred-risk policy through your insurance agent. You will get the same level of coverage but at a lower cost because you live in a lower-risk zone.

The amount of coverage you buy, the age of your home, and the amount of the deductible you choose also affects the cost of the flood insurance premiums you pay.

Consequences of Not Having Flood Insurance

When you don’t have flood insurance and your home and personal property incur flood damage, the cost to repair and replace what’s lost comes out of your pocket. If you are counting on the federal government to help cover your losses should a natural disaster occur, assistance is available only if the president declares the area a disaster zone.

Federal funding assistance generally comes in the form of low-interest loans to help you recover. You must repay the loan and still continue to make the mortgage payments on your home following the disaster. Keep in mind, too, that not every flood qualifies for federal disaster assistance.

Even if you live in a low-risk flood zone, the insurance agents at Family Insurance Centers can help you assess your coverage needs to protect against potential losses.