The recent devastation caused by Hurricane Helene has led many people to consider purchasing flood insurance for their properties. Although not all homes and businesses are required to have it, Those located in high-risk areas and with mortgages from government-backed lenders should have this type of coverage.
Despite the dangers of living in areas prone to cyclones, hurricanes and torrential rains, 64% of homeowners assure that their residence is not at risk of floodingaccording to a 2023 Triple-I/Munich Re survey.
Understandably, most homeowners skip purchasing this additional coverage since it is not included in standard home insurance. According to Simply Insurance, about 85% of homeowners do not have flood insurance. Despite this, the Munich Re report highlights that “where it can rain, it can flood”, meaning that almost everyone is at risk.
According to the Federal Emergency Management Agency (FEMA), 99% of US counties experienced a flood event between 1996 and 2019. Of homeowners who consider their home could flood, only 78% have purchased a policy. Not having insurance to cover flood damage can be extremely costly.
“Just one inch of water can cause up to $25,000 in damage.”said FEMA.
How much does flood insurance cost?
The cost of purchasing flood insurance is paltry compared to the potential damages. Prices vary depending on factors such as flood risk, the size and age of the home, its elevation, and the type of policy chosen..
According to an analysis of 2024 National Flood Insurance Program (NFIP) rates by NerdWallet, The average premium in the US is $819 per yearwhich equates to approximately $68 per month.
The NFIP notes that policyholders receive an average claim payment of $68,000which should never be reimbursed.
How does flood insurance work?
Homeowners, renters and businesses can purchase this insurance through their insurance company or agent. The NFIPmanaged by FEMA, operates through a network of more than 50 insurance companies and is available to everyoneregardless of the risk of flooding.
There are two types of coverage:
- Building coveragewhich protects the physical structure and certain appliances; and
- Content coveragewhich covers personal items within the property.
It is important to note that not all types of flooding are covered. For example, if your sewer overflows, it will not be covered unless it is a direct result of flooding.
FEMA defines a flood as “an excess of water on land that is normally dry, affecting two or more acres of land or two or more properties.”
For more information, see the government’s Flood Smart website.
When considering the purchase of flood insurance, it is essential to remember that The policy generally will not take effect until after 30 days. There are exceptions if purchasing coverage is a requirement for financing through a government-backed lender or due to a change in the community’s flood map.
Investing in flood insurance not only protects your home and assets, but also gives you peace of mind in an uncertain climate. Prevention is key.
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