Could You Need Flood Insurance and Not Know It?

Tobie Stanger

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Hurricane season is here, and based on predictions by the National Oceanic and Atmospheric Administration, Americans are likely to see "above-normal" activity this year.

That means many residents of coastal areas may face the triple task of protecting their homes and property from a storm's fury at the same time they're dealing with health concerns and the economic fallout from the coronavirus pandemic.

One potential layer of security is flood insurance. Flood insurance protects you financially against perils that homeowners insurance doesn't cover. Water entering your home from the outside, from any number of sources, is typically covered only by flood insurance. Homeowners insurance doesn’t cover flooding unless it’s the result of a pipe or another part of your water system that breaks within your house. 

And the time to buy flood insurance is now. The coverage requires a 30-day waiting period before it kicks in, so the earlier you can purchase it, the better. (Due to the pandemic, the NFIP is extending the time for current policyholders to renew to 120 days from 30; the new grace period applies to policies up for renewal from Feb. 13 to June 15, 2020.)

And it's something you should think about buying even if you don't live near a river or waterway. One-third of claims filed with the National Flood Insurance Program are from areas deemed low- and moderate-risk. 

Here are some surprising situations in which you might need that coverage.

You Live in an Area Affected by Wildfires

Large-scale burned areas, like those affected by last year’s California wildfires, can become flood plains. 

“Sometimes the fire burns so hot that the land is baked like a brick,” says Heather Williams, a spokesperson for California Natural Resources Agency. What is more, the fire burns the cellulose from the vegetation into a gas that then solidifies into a water-resistant layer on top of the soil.

The risk of flooding can remain high until new vegetation has a chance to grow—a period of up to five years, according to the NFIP (PDF).  Dry areas with little vegetation can quickly become inundated after monsoons. 

Mudflows, which can move down slopes quickly after a rainfall, also are a risk. Only flood insurance covers those perils.

You Live in a New Development

Basement flooding is more likely in newly developed areas, where new roads and parking lots cover soil that otherwise would absorb rainfall. With no place to go, water from, say, a heavy rain can seep through porous foundation walls.

Flood insurance supplied by the NFIP covers major systems in your basement, such as your boiler, water heater, electrical wiring and controls, central air conditioner, heat pumps, and sump pumps. It will also cover cisterns and the water in them, fuel tanks and the fuel in them, solar energy equipment, water tanks, and pumps.

The NFIP also provides a list of what is covered (PDF). Keep in mind that it won’t cover furniture, carpets, or personal property in your basement, and has numerous other exclusions. 

Your Neighbor Has an Aboveground Pool

If your neighbor’s aboveground swimming pool collapses and the water flows into your home, flood insurance covers it.

If a water main break damages your home and at least one other home in the neighborhood, you can make a flood insurance claim. Don’t count on your homeowners insurance to cover it.

You Live Where the Ground Freezes

When spring rain that falls on frozen ground has nowhere to go, it can seep into basements and cause havoc. Heavy snowpack that melts quickly can cause floods as well. That happened in California last summer after a record snowpack began to melt.

Flood insurance covers those perils, even if the president doesn’t make a disaster declaration for your area. 

You can buy flood coverage for residential and business properties.

Flood Insurance Isn't Costly

The good news for people who live in areas that aren’t at high risk for floods is that the coverage is relatively inexpensive. While the average annual premium is about $700, most homeowners pay less than $400 a year for coverage in low- to moderate-risk areas, says the Federal Emergency Management Agency, which runs the NFIP.

Federal flood insurance coverage is capped at $250,000 per dwelling and $100,000 for contents, though you can purchase policies with lower limits. 

You can also buy renters flood insurance. Unlike flood policies for homeowners, which cover the structures and personal property you own, renters flood coverage just covers personal property—up to $100,000 worth. (Buying less, or taking a high deductible, will save you money.)

To get an assessment of the risk that you will be a victim of a flood, as well as an estimate of your annual premium and a link to area agents who sell federal flood insurance, go to the FEMA Flood Map Service Center, enter your property address in the search bar. This will take you to the official flood insurance rate map for your area.  

To get coverage, your municipality must participate in the NFIP. Check on this and other requirements with a homeowners insurance agent, or call the NFIP at 800-427-4661.

The Private Flood Insurance Option

Depending on your situation, you may find that private flood insurance, sold through an agent, has lower premiums than the NFIP version.

Private coverage also may cover your living expenses if you have to relocate during cleanup, something federal flood insurance won’t do. In some cases, private flood coverage is sold as a supplement to federal flood coverage; in other cases, it becomes your primary flood coverage. Contact an agent to compare the costs of federal and private coverage.



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