Revisiting the Need for Flood Insurance

February 8th, 2012

With the winter season beginning to wind down and spring right around the corner, now is a good time for homeowners across the nation to reassess their possible need for a specialized form of homeowners insurance: flood insurance. Contrary to popular perception, the standard homeowners insurance policy does not cover water damage that is the result of a flood. In order to be protected, homeowners must pay for a specific flood insurance policy.

Large parts of the United States consist of areas that can be logically expected to receive significant flooding. Areas of the U.S. are, in fact, rated for their likelihood of experiencing a flood. Such ratings usually carry labels such as ?10-year flood area? or ?100-year flood area.? There are even ?1,000-year flood areas? in the nation. What these designations mean is that a serious flood can be expected sometime during the time frame indicated.

Homeowners who live in a 10-year flood area may not see a serious flood every single decade, but on average they can expect severe flooding to hit them that often. In such areas, flood insurance is a definite must, and in fact, many homeowners in these kinds of areas cannot get financing on a house there unless they can demonstrate to the bank that they have secured a flood insurance policy.

Those who live in a 100-year flood zone have a more difficult challenge in some ways. Their banks may not require the insurance, which means that many homeowners will choose to do without. They may feel safe doing so because, after all, a century is a very long time. This is still a mistake, however. Such a rating means that a flood will quite likely hit during the lifetime of the people living there, and moreover, a 100-year flood rating is no guarantee at all that a serious flood will strike only once per century. Some experts believe that climate change trends will result in more floods in the future and may even cause some areas of the nation to need a reassessment of their true flood frequency.

During 2011, extensive areas in the Midwest and Northeast received flooding that was regarded as a ?once in a lifetime? event. The fact that such flooding is not likely to recur soon was little solace to those who had not planned ahead by purchasing flood insurance. Many homes were all but gutted from Hurricane Irene and other severe weather events, and those homeowners who did not have flood insurance were left high and dry, though in this case, high and wet is probably a more apt phrase.

The federal government issues flood insurance through a system known as the National Flood Insurance Program, but such insurance is often used by people who happen to live in a ?Special Flood Hazard Area? as designated by FEMA, the Federal Emergency Management Agency. For others, a more viable option may be flood insurance provided by private homeowner insurance companies.

Source: http://www.insurancecoverageplus.com/home-insurance-articles/revisiting-need-flood-insurance/

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