Is It Wise to Skip Flood Insurance?

Here's a scary statistic – of all the natural disasters faced by U.S. homeowners, including hurricanes, 90% have involved flooding. This, according to the federal government (FEMA), makes floods the #1 most common natural disaster affecting our nation. And it doesn't take a hurricane to cause flood damage. Just a few inches of water coming into your house can cause significant, costly damage to your home and its contents.

Anytime and Anywhere

While certain areas are more susceptible to flooding than others, it's been shown that floods can occur anywhere and at any time. They can be caused by any number of conditions besides hurricanes, such as a rapid spring thaw, heavy rainfall or the accumulation of water following extinguishment of a wildfire.

Statistically, however, as few as 12% of homeowners carry flood protection. Even in coastal areas, which are most at risk of flooding, the percentage of flood-insured homes is only about 20%. This, in spite of the fact that a standard homeowner's insurance policy typically doesn't cover floods. Flood coverage is only available with a separate, specialized policy written for that specific peril.

Buying A Flood Policy

Though sold and managed through participating private insurance companies, insurance for floods is offered through the National Flood Insurance Program (NFIP), which was created by Congress in 1968 and is overseen by FEMA. To be eligible for this coverage through the NFIP, you must live in a community that participates in the program. See if your North Carolina community participates here.

Even if you reside in a low-risk flood area, you're still financially vulnerable to falling victim to floods. Those living in high-risk areas are likely required by their mortgage lender to carry flood insurance. If your mortgage is federally backed, the coverage is federally mandated.

Even those living in low- or moderate-risk flood areas should seriously consider buying flood insurance. Premiums are lower than in high-risk areas, and, statistically, more than 20% of flood insurance claims come from those with homes in low- to moderate-risk flood areas.

Since the protection is provided by the federal government, premiums within the same risk area don't change from one company to another writing flood coverage. Experts suggest you purchase your flood insurance from the same company that carries your homeowner's insurance. If you have a flood insurance claim, you'll likely have a homeowner's claim also. Dealing with a single agent makes claiming simpler.