By
Alexander Carl on May 12, 2010
No doubt you've heard about the recent flooding in Nashville, and you've likely heard stories of homeowners without flood insurance. And before Nashville, there were major floods in New Jersey, New England, New Orleans...
But who should buy insurance? Is it just for those next to creeks and rivers?
The first thing to know is:
Normal homeowners' insurance does not cover floods. That is a fact, and it means that you must buy flood insurance separately.
But insurance companies are counting that you don't. In many disasters, such as hurricanes, severe thunderstorms and even tornadoes, insurers have claimed that
wind damage (which is covered) was actually caused by
water damage (which is not). Flood insurance eliminates this coverage cop-out.
Okay, but I don't live in a flood zone. Unfortunately, many federal flood maps are outdated, and roughly
one-
quarter of all flood damage claims originate from low to moderate risk zones.
So should I get insured? If you live in a high risk zone, your mortgage lender might force you to. Otherwise, it's your choice.
We are all trying to save money, but flood insurance could be valuable enough to make it worth the extra cost.
Oh great. How do I know? Go to
floodsmart.gov. You can type in your address and see your property's risk according to your community's flood map.
Of course, finding out you're in a low to moderate risk zone doesn't get you off the hook. The rule of thumb is that
if you can afford flood insurance, get it.
What does it cover? There are multiple levels of coverage: your home's contents, the structure itself, or both. Each level is increasingly more expensive.
I'm making an appointment with an agent. How much coverage do I need? Your agent will recommend getting coverage for the replacement cost— the value of rebuilding the home and its contents.
Even if you're a renter, you can still insure your home's contents. This is an excellent idea.
A major flood can cause catastrophic damage, and even a minor one will set you back thousands of dollars. Don't claim that “it can't happen here,” because it could.