The national flood insurance program received new attention in 2017 when Hurricane Harvey struck the Gulf Coast. After devastation in Houston, Puerto Rico, and beyond, many homeowners began wondering if they needed it themselves. Most home insurance does not cover damages related to floods and many homeowners do not even know if their homes lie in flood plains.
Here is a breakdown of the basics of the program: what it is, if you need it, and how to get it.
What is National Flood Insurance?
The National Flood Insurance program was created in 1968 and currently insures about 5 million homes. It is a federal program that uses federal taxpayer money even though most homeowners find coverage through an insurance agent.
Do I Need It?
If you have received disaster aid in the past for flood damage, you will likely be required to have federal insurance for floods. In addition, if you live in high-risk flood areas, especially in Florida, Texas, Louisiana, or the Gulf Coast of Alabama, your mortgage lender may require you have insurance for flooding. A mere 20% of homes at risk of flooding participate in the National Flood Insurance Program.
That being said, one can still sign up for and receive insurance coverage for floods. Check the flood maps for your area. If you live in any flood zones up to a 200-year flood, it is a good idea to add a flood insurance rider to your home insurance contract. The changing weather patterns have created 200-year flood zones that are likely to be affected by flood waters every 20 years or so.
How to Get It
Your home insurance provider will have information on how to add coverage to your current plan. If your insurance provider does not currently provide federally-backed insurance for floods, call the NFIP referral center at 1-800-427-4661. Make sure to ask if the insurance covers the structure, the contents of the building, or both.
There are ways to pay less for insurance for floods. Retrofitting your home that have water-resistant properties reduce the cost of your insurance premiums. Keeping your appliances in great shape with a low-cost home warranty is also an excellent way to ensure your insurance premiums stay low.
If your neighborhood participates in the Community Rating System, you may also be eligible for a reduced rate. In addition, many homeowners pay a lower rate once they purchase and present to their insurance provider an Elevation Certificate that says exactly where your house falls on the flood map.
Insurance against flooding isn’t necessary for everyone. It’s up to each family and business owner to decide if it is worth the cost to cover their structure from flooding. Take the time to examine the likelihood of a flood in your lifetime, and make an informed decision with your partner. While having that conversation, see if purchasing a home warranty is right for you. No amount of coverage can protect you completely, but when it comes to disasters and appliance breakdown, it is only a matter of time.