Facts About Flood Insurance

With Hurricane Gustav producing flooding rains in Louisiana and Texas last week, it’s a powerful reminder to homeowners that they should check on their flood insurance. Floods are the most common natural disaster in the US—the odds that a home will experience a flood during the span of a 30-year mortgage are 1 in 4, compared to a one in 25 chance of a fire.

More than 19,000 communities across the country participate in the National Flood Insurance Program, which provides insurance specifically aimed at protecting those who live in flood-prone areas. Rule of thumb: If flood insurance is available in your community, you should have it. In fact, if your home is in what the NFIP designates as a Special Flood Hazard Area, your mortgage lender, by law, must require you to have flood insurance protection. Even if you’re not in an SFHA, flood insurance is a good idea. According to the NFIP, 25% to 30% of flood insurance claims come from medium- or low-risk areas.

Relying on federal disaster assistance for help if a flood occurs is not a good idea, since disaster aid is a loan that must be paid back, with interest. Also, the government must declare the flood as a federal disaster for federal aid to kick in. Flood insurance, on the other hand, will pay you for covered losses even if the area is not designated a federal disaster area, and the money doesn’t have to be paid back.

You can get flood insurance on your home for up to $250,000. Premiums vary according to risk and the amount of the policy. To evaluate your risk of flood and estimate how much flood insurance will cost you, go to www.floodsmart.gov/floodsmart/.