Flood insurance is very important for homeowners recovering from a flood. Here's what you need to know about buying insurance that will protect you and your family.
Heartland Flood Help is not connected in any way with any insurance company. Our only purpose is to help residents prepare for floods and recover from flooding. Flood insurance is very important for flood recovery.
Here is what you need to know about flood insurance for homeowners. You also should learn about flood insurance in general.
We hope this will help you make the best decision for yourself and your family.
As a homeowner, you will buy flood insurance for two separate things — building coverage and contents coverage.
Ask your insurance agent to tell you everything that is covered. It is important to know what the insurance will help you pay for after a flood.
You likely will be buying flood insurance offered through the National Flood Insurance Program (NFIP). The highest amount of building coverage you can buy with this insurance is $250,000. The maximum for contents coverage is $100,000. (The coverage amount is the highest amount of money the insurance company will pay you for flood damage.)
You must pay the insurance company each year for your flood insurance policy. This payment is called a premium.
If you live in a high-risk flood area, the average one-year cost of NFIP flood insurance is about $700. NFIP insurance is usually the only flood insurance you can buy.
You likely will pay less if your home is in an area at low or moderate risk for flooding. In those areas, you probably qualify for the NFIP Preferred Risk Policy. For example, for about $400 a year you may be able to buy a policy that covers $200,000 in structural damage to your home and $80,000 in damage to its contents.
The risk rating for your area can change. This happens when the Federal Emergency Management Agency (FEMA) uses new information to update your area’s Flood Insurance Rate Map. For example, the new map could raise the flood risk level for your area from minimal to moderate or moderate to high. These changes would raise the cost of flood insurance.
If this is happening in your area, it is important to take action quickly. It still may be possible to get flood insurance at a lower rate. For example, if you currently have flood insurance, you may be able to keep paying the lower annual cost for at least one more year when you renew your policy. You also may be able to get a lower rate for at least a year if you buy flood insurance before the effective date for the new rate map.
The NFIP calls these lower-rate options “grandfathering.” These grandfathering rules can be complicated, so ask your insurance agent for an explanation and advice.
Other factors that can affect how much you pay include:
In an ideal situation, you would buy building coverage that equals the value of your home.
You would also buy contents coverage that equals the value of the things in your home that are covered by the policy. If that is not possible, it would be best to buy enough contents coverage to pay for the value of the most important things you own inside your home.
For example, you find that the most important things you own in your home are valued at $40,000. So you buy flood insurance with contents coverage of $40,000. That means the insurance company is agreeing to pay you as much as $40,000 to repair and replace things that are damaged by a flood.
This value is usually based on what those things are worth now. It is not based on how much you paid for them. Your insurance company can help you determine what the value of those things is now.
You might decide that it costs too much for you to buy flood insurance that covers the full value of your home or the most important things you own. In that case, you will need to make a personal decision about how much coverage you can afford and need.
Everyone should buy flood insurance. But sometimes you must buy it as a condition of your home loan.
Your mortgage company will require you to buy flood insurance if:
You also must buy flood insurance if you live in a Special Flood Hazard area and:
When you must buy flood insurance in order to receive federal disaster assistance, you will have two options:
Starting the process for buying an individual/standard flood insurance policy is easy. Here are some simple steps to follow:
NFIP flood insurance rates do not differ from company to company or agent to agent. That means the price you pay for the insurance itself should be the same no matter which agent you buy it from.
Here are some examples of helpful questions to ask your agent:
Your insurance agent will ask you some questions at the start to figure out your flood insurance coverage options. The answers you provide will help determine the price you pay for insurance.