5 Myths about Flood Insurance

Written by Sharon Epperson

 

 

MYTH: I have homeowner's insurance and don't live in a flood zone, so I don't need it.

FACT:  This summer, Kansas, Missouri, and Oklahoma residents suffered terrible flooding, and many were miles from the nearest river. "Flooding can happen anywhere. It has happened in every part of this country in the past 12 months," says David Maurstad, of the Federal Emergency Management Agency, Which runs the National Flood Insurance Program (NFIP).

             Homeowner's insurance policies do not cover flooding. A separate policy is needed and can be purchased from an insurance agent, or directly through NFIP, which administers the program. More than 20,300 communities nationwide participate in NFIP. So most, but not all, homeowner's qualify for flood insurance. Check the "Community Status Book" at fema.gov to find out whether your area participates. Then go to floodsmart.gov and click on "What's your flood risk?" to determine your odds and find a local agent.

 

MYTH: Flood insurance is pricey.

FACT: For fairly low-risk areas, lower-cost "preferred-risk" premiums covering the building and personal belongings can start as low as $112.00 per year. Full coverage, including $250,000 of building and $100,000 of contents coverage, cost $317 per year, or less than $30 per month. The nationwide average for flood insurance coverage is less than $500.00 annually. That's often less than the interest on a federal disaster loan, plus you don't have to repay the money.

 

MYTH: Federal Disaster Assistance will cover the damage.

FACT: Don't count on it. "A community must be declared a federal disaster area before it is eligible for disaster assistance," says Bob Rusbuldt, of the Independent Insurance Agents and Brokers of America. "Federal disaster assistance declarations are awarded in less than 50% of flooding incidents.

 

MYTH: My lender didn't require flood insurance, so I don't need it.

FACT: Lenders should notify borrowers in special flood hazard areas that they're eligible for flood insurance. But floodwaters don't stop at a line on a map. "One-third of flood insurance claims in a given year com from low to moderate risk areas." Maurstad says. Even in low-risk areas, ice jams, melting snow and inadequate draining systems can wreak havoc.

 

MYTH: Flood insurance will cover the entire house, including the basement

FACT: Comprehensive flood coverage should include two policies: one for the structure and one for the contents of the home. Yet, most contents in the basement are not covered, as I discovered when my home was flooded after heavy rains this spring. Basement contents coverage includes the washer and dryer, but it does not include finished walls, carpeting, floors, furniture or personal belongings.