Is It Okay to Skip Flood Insurance?

For more than 50 years, the National Flood Insurance Program (NFIP), under the administration of FEMA (Federal Emergency Management Agency), has been working hard to reduce losses suffered due to flooding by home and business owners in the US. It does this by providing affordable flood insurance, by educating the public about the risks flooding poses and by encouraging communities to not only adopt but to enforce flood plain management regulations.

Who Needs Flood Insurance?

No home is completely risk-free from experiencing flood damage. According to FEMA, floods are the most common natural disaster in the country and flood damage is almost never covered in your standard homeowner's insurance policy. Furthermore, FEMA says that 98% of all counties in the U.S. have experienced flooding at one time or another. It's simple – if it rains where you live, you're at some risk of experiencing flooding.

This means you don't have to live in a coastal area or next to a river to be in danger of flooding. While it's true that homes located in low-risk flood zones are less likely to be affected by flooding, it's important to understand that “low risk” doesn't mean “no risk”.

Flood insurance is like other types of insurance in that you don't really want it until you need it, but if you wait until you need it to get it, you've waited too long! You should also be advised that, when you get federally-backed flood coverage through the NFIP, there's a 30-day waiting period before that coverage activates.

Skipping Flood Insurance

If you've been living without flood insurance, perhaps you're now thinking it may not be worth the risk. If you live in a high-risk flood zone you're probably already covered, since your mortgage company likely requires it. But consider this: more than 20% of the homes and businesses affected by flooding are in the low- or moderate-risk flood zones, and as little as one inch of flood water in your home or business can cause as much as $25,000 worth of damage. Insurance that costs just a couple or a few hundred dollars annually to maintain is well worth the protection you receive against these losses. We've seen a rash of floods all over the country in the past few years and, if history is an indicator, flooding incidents just look to be getting worse.

Who Needs Flood Insurance?

Flooding is the most common natural disaster in the United States. It accounts for approximately 43% of all natural disaster events that have occurred here in the past two decades. Flooding is also typically not covered in most homeowner's insurance policies.

In order to be protected for the financial losses associated with most floods, you must purchase separate flood insurance for your dwelling. This type of insurance is sold through the National Flood Insurance (NFIP) Program, which falls under the administration of the Federal Emergency Management Agency (FEMA). You cannot purchase flood insurance directly from NFIP however, but must buy it through an insurance agent. Certain insurance companies also offer private flood insurance as an alternative to the federally-sponsored program.

Who Needs Flood Insurance?

FEMA categorizes the flood risk of any particular geographical area as an A (high risk), a B (moderate risk) or a C (low risk). Flood maps have been created and are regularly updated to show flood risks for each area of the country. Here you'll find a map for NC's Triad area. Be advised, these maps can change as the topography and other aspects of an area affecting potential flood risks change. New land use and development throughout the community can change the way water flows and accumulates. Flood maps show different flood zones in a community, flood plain boundaries and base flood elevations.

It's Where You Live That's Important

No matter where your home is located, some risk of flooding exists. While those living in high risk areas are more vulnerable to experiencing flooding events, more than 20% of floods occur in areas of low risk. Flooding can be caused by more than rising rivers or rising seas in coastal areas. Rain storms are also responsible for a large amount of flood damage. Consider this – it's estimated that a mere one inch of water flooding your home can cause as much as $25,000 in damage. Flood insurance in low-risk areas is extremely affordable and well worth the amount of protection received. For this reason, even those at low or moderate risk of flooding should consider adding flood insurance to their insurance portfolios.

If your home is located within a high risk flood zone and you have a federally-backed mortgage, your mortgage company will require that you buy and maintain flood insurance coverage. Other mortgage lenders, even if not federally backed, may require the same.