Hello again all! I was recently asked by a customer to explain why they needed flood insurance and it dawned on me that there is a TON of information out there on this topic but it somehow seems to get lost in the shuffle until almost the closing table. I’d like to shed some light on this topic but keep in mind the best thing to do is talk to the professionals, your insurance agency! They have they exact low down on whether or not you will need it and the cost associated with it.

So what exactly is flood insurance? The National Flood Insurance Program(NFIP) was created by Congress through the National Flood Insurance Act of 1968. It allows owners in communities to purchase insurance protection against losses from flooding. Most homeowners do not realize that they are not covered through their homeowners policy for damage related to flooding. Policies do tend to vary so make sure to talk to your insurance provider.

Who needs flood insurance? There are a number of factors that go into dealing with whether or not you need flood insurance. This is one of the trickiest things as an agent to deal with. Home “A” may be in a flood zone while the neighbor to “A” may not be. We have tools to help us assist in determining this but I ALWAYS go to the experts to determine what coverage is necessary. Simply put an insurance agent has much more ability to determine your coverage. What most people do not realize is that even if you are not in a flood zone you are still able to purchase flood insurance. This is solely at the discretion of the homeowner but you may want to look into it to determine whether or not you are at risk.

What does it cover? That all depends on the value of your home, the amount of water damage in your home and of course your coverage. Most regular homeowners insurance policies do not cover flood damage. There is a limit to how much coverage you can claim. You can actually top out on the amount that you can receive even if your home is a total loss. Before you start to panic, keep in mind that most claims are around the $30,000 mark which is below the top out point. There are even different limits between personal and structural so again talk to the professionals about your coverage. (Seems to be a recurring theme)

When do I need flood insurance? If you are purchasing a home that is determined to be in a flood zone you are going to need flood insurance.  I start working with my purchasers on this as soon as we get under contract.  Something that I can’t stand is a last minute cost for the buyers.  If you are selling your home and have flood insurance I would tell your listing agent and prepare a sheet disclosing what you pay and when.  Not all homes that are in a flood zone require flood insurance, for example, if you are not taking out a mortgage you are not required to have it.  Lenders will require you to have flood insurance so if you are going to take out a mortgage plan for this associated cost.  A simple phone call to your insurance agent can save you a lot of headache and heartache down the road.

Where is it necessary to have flood insurance? This is the big question on everyone’s mind. There are a lot of factors that go into determining whether or not your new home will require this insurance.  The most simple one is determining what flood zone your home is in.  There are maps available online that give you a good overview of where the flood zones are and what level of insurance you will need but I would call my insurance agent to determine exactly what zone I am in and the coverage necessary. I don’t think I’ve mentioned to talk to the professionals yet have I? Yes, there are different zones that require different coverage.

Why do I need flood insurance? The most simple answer to this question is to protect yourself in the event there is a flood.  If you are purchasing your home and taking out a mortgage your lender will require you to have flood insurance.  To most people their home is the biggest investment that they will make and protecting that investment is crucial.

How do I get flood insurance? I have been harping on this long enough that you probably have the answer already but talk to a professional.  If you have an insurance agent or agency that you work with start there.  I would also call several other agents/agencies to see what their recommendations are.  Having more information in this case is better than not having enough.

I appreciate you taking the time to read this and I hope I was able to answer some of your questions about flood insurance.  While this is a quick overview, I highly encourage you to talk to your insurance agent if you have any questions regarding this topic.  Have a great week everyone!




Tom Klein