With the recent damage caused by Hurricane Harvey, the cost of repair now estimated at up to $200 billion dollars, many homeowners across the country are suddenly becoming aware of the necessity for flood insurance for the very first time. While, thankfully, most of the homeowners in Houston were carrying at least some insurance, provided by the National Flood Insurance Policy (NFIP), others are currently at risk as the hurricane season ramps up.
These seven facts about flood insurance may change your mind about whether or not you need coverage, regardless of where you live.
#1. Coverage Isn’t Instant: Beware the Waiting Period
If you’re waiting until there's a hurricane or major storm forecasted for your area to take out a flood insurance policy, you’re leaving yourself unprotected. With a 30 day waiting period on flood insurance policies, you could be left vulnerable if flooding takes place during the first month after you've paid a premium when damages aren’t covered.
However, there are no limitations on getting a policy when a hurricane is coming. The NFIP will accept new policyholders even when they're currently flooded, but typically won’t make any payments on the policy until the waiting period passes. Existing and on-going damage is generally not covered.
Don’t get caught uncovered during a storm - be aware of the 30-day waiting period and hope your home stays dry during that initial month.
#2. Repeated Flooding is Common
So why bother to take out a policy during or after a flood if it won't help with your current emergency? If you're in the middle of a flood right now, there's a good chance you'll experience one again.
Flood areas seem to be expanding, at least according to the FEMA maps, and 33% of claims are repeated from a previous claimant. This means it's never too late to start a new flood policy.
#3. You Can’t be Denied Flood Insurance
You don't have to wait until FEMA declares your location a flood zone or until an actual flooding event to take out a policy. The NFIP accepts new policy requests from people anywhere in the country.
You won't be denied for living 2000 feet above sea level or for having no proof of existing flood risk. You'll simply get a very affordable premium rate instead, since the NFIP is a national program that is required to cover anyone, anywhere requesting a policy.
Private flood insurance, also known as excess flood insurance, is a different system that may require you to have a proven risk factor. But don’t worry - you can get NFIP flood coverage no matter where you live.
#4. Flood Zones Change
Just because you've never experienced a flood before says nothing about your future risk. As hurricanes continue coming further inland and seasonal storm patterns change, FEMA is constantly gathering geological survey, climate change, and homeowner data to keep the risk maps updated.
There's always a chance of a notification coming in the mail letting you know you're now considered to live in a flood plain and must take out a new insurance policy. Failing to heed this notification could put your mortgage at risk if you're working with a lender, since they require this insurance for any properties with a known risk for flooding.
#5. Elevation Certificates Matter
In order to get the fairest price and the right amount of coverage with flood insurance, you need to check your elevation certificate. This certificate is created when your lender orders it or when you take out a flood insurance policy on your own.
A professional checks your property's exact location against the FEMA risk zone maps, using the information to declare your specific risk. This is how your coverage amount is decided and how your premium amount is set.
If you suspect that certificate might be wrong, you can pay a property surveyor to check the exact GPS coordinates and measure the real elevation of your property. You can then use this information to petition to have your flood certificate changed and reissued, potentially saving you a bundle on insurance premiums.
#6. FEMA Support Must Be Repaid
Many homeowners living in flood areas assume that FEMA support is all they need in the event of flooding and that additional flood insurance is a waste. But you’re covering your bases by carrying flood insurance when you're not required to because FEMA support is issued in the form of a low or no-interest loan. And you must still repay the loan you use to repair or replace your home and other property.
If you're living on a fixed income, have children, or just don't have a lot of savings built up, paying back a FEMA loan can become difficult or impossible when flooding interrupts your business or career.
Flood insurance payments you receive are yours in full and for the keeping, not issued as loans. Don’t rely on FEMA support to help you rebuild after a flood. Insurance premiums are typically a more affordable option.
#7. Basement Myths, Busted
It's a common myth that the NFIP policies include no coverage for basements. The basic costs of drying out a basement and replacing stored items and freezers are all included. It's the costs of replacing or repairing a finished basement that is excluded from these policies.
If you have a finished basement, you may want to take out a private excess flood insurance policy instead or be prepared to pay out of pocket for post-flood repairs.
If you live in a high risk area, now is always the best time to look into flood insurance. The sooner you protect your investment, the less likely it will be that you’ll have to foot the entire bill - or pay it back - if storm waters rise into your home or business. Those of you who are lucky enough to live in low risk zones could also benefit from insurance in the case of unexpected flooding, and at a reduced cost for coverage. Don’t wait until you’re up to your ankles to consider flood insurance as a preventative measure to protect yourself against financial hardship.