Do You Need Flood Insurance?

A few days ago we discussed whether you need to obtain earthquake insurance. Today we cover a topic that more often impacts the midwest, which is flooding.

Like earthquakes, your typical homeowner’s and renter’s insurance does not cover damage from flooding. If you live in an area that is prone to flooding, chances are your mortgage lender already requires you to maintain flood insurance. However, where your house is located has a huge impact on how much flood damage you are likely to sustain.

The federal government maintains a helpful website called FloodSmart.gov that can be useful for determining your home’s flood risk. If you live on a hill you are likely to sustain much less damage than if you live near a river. If you find that your home is particularly susceptible to flooding you should consider increasing your flood insurance coverage above the minimum that your lender has set.

Once you have determined your flood risk, you can contact the National Flood Insurance Program run by FEMA or private insurance companies to see how much additional flood insurance will cost. As with the cost of earthquake insurance, the decision about whether to obtain flood insurance is a balancing act between the ongoing cost of he policy and how much it would cost to repair your home in the event of a flood.

We next cover hurricane insurance, which is particularly timely since we are just entering hurricane season.