Do I Need Flood Insurance? Top Reasons to Seriously Consider It.
Flood insurance is for people with waterfront property, right? Not exactly. About 20% of flood claims are from homeowners in low to moderate flood risk areas. Flood damage can happen to anyone, almost anywhere in the country.1 Yet many homeowners wonder, “do I really need flood insurance?” Here’s a brief explanation of what this policy does and how it can protect you.
What is flood insurance and what does it cover?
Here’s a hint: you won’t find coverage for flood damage in a typical homeowners or renters policy. That’s because flood insurance is a separate policy that you purchase through the National Flood Insurance Program (NFIP) or a private company. Flood insurance specifically covers damage caused by floods, whereas homeowners and renters policies can cover water damage from unexpected home events, like burst pipes or a broken dishwasher.
The best way to financially protect your home from flood damage is by purchasing separate flood insurance. Some homeowners forgo buying flood insurance because they think they’re not at risk. But the truth is, floods can happen anywhere, even if you live inland. Here are the two main types of floods anyone can face:2
When runoff from heavy rain inundates the ground and overflows a body of water (like a stream or river), flash floods can occur. Dry areas with rocky terrain create the perfect conditions for a flash flood because they prevent water from seeping into the ground. Instead, the water quickly flows on top of the soil, causing a flood.
This type of flood happens when excessive rain or snowmelt makes river water levels rise. Usually, it takes a lengthy storm, but sometimes an ice jam or excessive high tide cause a river flood.
According to the Insurance Information Institute, nearly 90% of all U.S. natural disasters involve flooding of some sort.1 And the consequences are costly. Just one inch of water in your home can cost as much as $25,000 to repair.3
- Appliances (refrigerators, stoves, and dishwashers)
- Foundation walls and staircases
- Furnaces and water heaters
- Heating and electrical systems
- Wall-to-wall carpeting
- Window coverings, like blinds
- And much more
This type of coverage is called “building coverage,” and it’s designed to help repair your home from damage. With your NFIP flood insurance policy, you can also purchase “contents coverage.” This can help pay for damage to:
- Area carpets
- Electronic equipment
- Valuables, such as artwork
- And more
Remember, without flood insurance, you could be on the hook to pay for damage all on your own. Fortunately, most NFIP policies offer up to $250,000 in coverage for your home’s structure and up to $100,000 for your items and belongings. If you’re a business owner, you can purchase commercial flood coverage and get up to $500,000 for your building’s structure and $500,000 for its contents.1,4
Keep in mind, flood damage to your car usually isn’t covered.1 You’ll need to call an insurance professional to ask what’s available through your auto policy.
The difference between NFIP and private flood insurance
At Amica, we can help our customers purchase basic flood insurance through the NFIP. But if you’d like even more coverage, consider private flood insurance. An Amica professional can point you in the right direction.
Here are the key differences between an NFIP policy and private insurance policies:5,6
Federal Emergency Management Agency (FEMA) standards.
NFIP insurance is backed by the federal government, while private insurers are not. This means that NFIP policies must follow certain requirements set by FEMA, while private policies don’t always adhere to the same standards.
The ability to shop for the best rate.
Generally speaking, a private flood policy offers rates that are based on your risk. Meanwhile, the NFIP offers more standard rates to customers. If you choose a private policy, you may be able to find a better deal, depending on where you live.
Limits on coverage.
A typical NFIP flood policy provides coverage for up to $250,000 in damage. However, private insurers can offer policies with coverage up to $1 million or more. Plus, a private policy may pay for temporary living expenses while repairs are made and more.
How long it takes for the policy to start.
The NFIP requires that consumers wait 30 days before their insurance can kick in, whereas private insurance companies usually have a 15-day wait time. If a big storm happens suddenly, your wait time can make a big difference.
Ultimately, you’ll need to decide if basic flood insurance is right for you or if you need more coverage. Amica’s team is here to help and can provide guidance to assist you in making the decision that’s best for you. You can also check a flood map online to see the risk where you live.
How to get a flood insurance policy
It’s fairly simple to purchase a flood insurance policy if you don’t have coverage today. Call an Amica insurance professional at 844-395-4419 to discuss NFIP basic coverage or broader coverage options through a private insurer. To make the most out of your conversation, be prepared to discuss:
- Your home’s location
- Details about your home’s structure and its contents
- Valuables, such as artwork, electronics, or jewelry
- Thoughts about your perceived risk of flooding
- What your auto policy covers for flooding
- If you’d like any other added homeowners protection
Once you decide on coverage, including its limits, you’ll sign insurance paperwork to make your policy official. Keep in mind, an NFIP policy requires a 30-day waiting period before it kicks in, while a private policy usually takes 15 days. Plan ahead if you’re buying a policy right before storm season.
When you’re done, sit back and relax. You’re one step closer to protecting your home from severe flood damage. If the water rises, you can rest easy knowing you’re financially safe and sound.
- Facts about Flood Insurance. Insurance Information Institute, n.d.
- What are the two types of floods? The United States Geological Survey, n.d.
- Big Cost of Flooding, FEMA, n.d.
- Flood Assistance and Insurance Information, Mass.gov, n.d.
- Private flood insurance vs NFIP, Policy Genius, 2019.
- Flood Insurance Options: The NFIP VS. Private Flood, National Flood Insurance, 2020.