With last year’s flooding in Houston, and periodic downpours that cause many parts of Austin to overflow, it’s a natural question to wonder whether or not you need flood insurance.
Don’t I already have coverage for floods?
You may be surprised to know that most homeowner insurance policies do not cover floods. A Flood is defined as, “A general and temporary condition of partial or complete inundation of two or more acres of normally dry land or two or more properties, one of which is the Insured’s.”
If your house is in a designated Special Flood Hazard Area (a high-risk area), then federally regulated or insured lenders must, by law, require that you buy flood insurance as a condition of your loan. If you financed your home when you bought it, then you most assuredly were forced to procure flood insurance. If you paid cash, then you should find out if your home rests within a flood zone.
Realtors have access to the latest flood zone maps. We can find out for you very quickly if your home appears to be within or near a flood zone.
If you are not required to buy flood insurance, it is still a good idea to look into it and possibly procure it. A home does not need to be near water to flood. Floods are caused by many perils including storms, hurricanes, water backup due to inadequate or overloaded drainage systems, broken water mains, and changes to land as the result of new construction.
It is not just high-risk areas that flood. In fact, more than 20 percent of all National Flood Insurance Program (NFIP) flood claims come from outside mapped high-risk areas.
Can I just rely in the Government to step in?
Relying on Federal Disaster Assistance is not the best answer. Availability of Federal Disaster Assistance is dependent upon a Presidential disaster declaration.
NFIP flood insurance responds to covered losses even though a disaster declaration has not been made. Also, Federal Disaster Assistance is often a loan that must be repaid with interest, in addition to existing mortgages, other loans, and debts. Generally, NFIP flood insurance claim payments do not need to be paid back.
How can I obtain flood insurance?
You can purchase NFIP flood insurance from any one of the many companies writing and servicing flood insurance on behalf of FEMA. NFIP flood insurance can only be purchased through a licensed property and casualty insurance agent.
If you are buying a home and the seller of the property currently has an NFIP flood insurance coverage on the building, that policy can be assigned to the buyer at the time of property closing.
How much does flood insurance cost?
Flood insurance premiums vary, depending upon the date the building was constructed and the degree of risk for flooding. To obtain a quote, contact your property insurance agent. If you do not have an agent, you can call 1-888-435-6637 for assistance in locating an agent selling NFIP flood insurance in your area.
NOTE: There is typically a 30-day waiting period from the time of policy application and payment to the policy effective date. However, there are exceptions to this rule. For example, if the initial purchase of NFIP flood insurance is done so in connection with a loan closing, there is no waiting period.
Be prepared … flood insurance is not cheap! But the risk of NOT having flood insurance may greatly outweigh the predictable cost of annual premiums.