Do I need flood damage insurance?
House protection is important, but less than 15 percent of homeowners in the U.S. have a separate policy to cover flood damage, and though cost is a main reason, another is the misconceptions people have about flood insurance. Here are some of the top misconceptions.
Homeowners insurance covers floods
My area rarely floods, so I don’t need extra insurance
Depending on where you live, your flood risk can be high, moderate or low, and your insurance rates and requirements are decided based on your flood zone:
- High-Risk Areas
There’s a 1 in 4 chance that a home in a high-risk zone will flood. That’s why homeowners in these areas are typically required to carry flood insurance by their lenders. Usually, they qualify for a Standard Risk Policy.
- Moderate-to-Low Risk Areas
The threat of flooding in these areas is not as high.
Even so, flood insurance may be something to consider, because residents in these areas have filed about 25% of all National Flood Insurance Program claims. Usually, homeowners in low-to-moderate risk zones can qualify for a low-cost Preferred Risk policy.