Shop Smart: How to buy flood insurance

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In recent years, the Federal Emergency Management Agency has been rolling out new flood maps of the entire country, reclassifying some moderate-risk flood zones as high-risk. Homeowners who live in these new "special flood hazard" areas and have federally secured home loans will have to buy coverage.

In addition, some mortgage lenders are requiring flood coverage for houses outside high-risk zones. And a 2012 law reduces federal subsidies on mandated coverage for mortgage holders living in high-risk areas, which could mean that they'll face significant increases in premiums.

Though you might be able to buy a homeowners insurance rider to cover, say, a sewer backup that floods your home, your best -- and often only -- option to protect yourself from naturally occurring floods is a government-sponsored flood policy.

Even if you don't live near a body of water, flood insurance can be a wise purchase because it includes more than the overflow from rivers, streams and ocean tides. Also covered are mud flows and pooled water from oversaturated or still-frozen soil, and paved driveways and parking lots that divert rainwater into basements and crawl spaces. In fact, those events account for many claims.

The National Flood Insurance Program, the FEMA division that administers most residential flood insurance policies, says that more than 20 percent of claims are filed by homeowners in medium- and low-risk areas. A survey this spring by the Consumer Reports National Research Center found that almost 30 percent of homeowners affected by Superstorm Sandy could have benefited from flood insurance, but they didn't have it.

Policies can be as little as $129 a year; the average flood policy costs $625 annually but can cost thousands for the maximum coverage in high-risk zones. But you could lose much more from just a few inches of water. The average residential flood claim between 2007 and 2011 was almost $30,000, the NFIP says.

According to Consumer Reports Money Adviser, property owners and renters can buy flood insurance if their town participates in a federal program that requires it to implement certain "floodplain management" measures; more than 21,000 communities do. Communities that go further -- requiring new homes in flood-prone areas to be raised, for instance -- can earn their residents flood insurance discounts.

The agent or company representative who sold you your homeowners policy can sell you a national flood-insurance policy. Or go to the Agent Locator at floodsmart.gov, the FEMA website for national flood insurance.

Before you buy, you can get an estimate of your premium on the site. (Fill out the red "One-Step Flood Risk Profile" on the home page.) And you can see where your home sits on the FEMA flood map for your neighborhood, which contributes to your premium (type "flood maps" in the search box).

Flood insurance usually has to be in effect for 30 days before you can use it. Coverage is capped at $250,000 per dwelling and $100,000 for your home's contents. Most installed items -- including major appliances, some carpeting, paneling, bookcases, cabinets and window blinds -- are covered; detached garages and debris removal also are included. Clothing, furniture, electronics and valuables such as artwork and furs worth up to $2,500 are insured under personal property coverage.

A few private insurers offer excess insurance above the $250,000 federal limit. Depending on your location and level of coverage, it could cost several thousand dollars more. Consumer Reports Money Adviser warns that you might still be liable for out-of-pocket costs that aren't covered by either homeowners or flood coverage.

Consumer Reports: www.consumerreports.org


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