Why You Might Want Flood Insurance — Even if It’s Not Required

Between atmospheric rivers in California, Hurricane Ian in Florida, flash floods in Kentucky and monsoon rains in Las Vegas, flooding has caused billions of dollars in damage over the past year alone.

You may not think floods can affect your home. However, 90% of natural disasters in the US involve flooding, according to the Federal Emergency Management Agency. And if your home floods, your homeowner’s insurance likely won’t help.

Do you need flood insurance?

Many people assume their homeowner’s insurance covers flood damage, but that’s generally not true, says Michael DeLong, research and advocacy associate at the Consumer Federation of America.

Floods are different from water damage that is usually covered by your homeowner’s policy, such as from a burst pipe. In the insurance industry, a flood is an excess of water from a source such as an overflowing river, tidal wave or rainfall that cannot flow quickly. Nearly every homeowner’s policy excludes this type of damage, so if you want coverage, you’ll need separate flood insurance.

Many people who buy flood insurance do so out of necessity. FEMA defines certain places as “special flood hazard areas”, where there is at least a 1% chance of flooding in any given year. If you live in SFHA and have a federally backed mortgage, your lender will need flood insurance.

Most homeowners outside of the FEMA high-risk zone don’t buy flood insurance – but that can be a costly mistake. About 25% of flood insurance claims come from low or medium risk areas, according to FEMA.

Map limits shouldn’t determine whether you buy flood insurance, Jeremy Edwards, press secretary at FEMA, said in an email. “Where it can rain, it can flood.”

And don’t count on federal disaster relief if you decide not to buy flood insurance. The maximum FEMA grant to help flood victims rebuild their homes is $41,000, but most payments are much lower. Compare that to federal flood insurance, which pays up to $250,000 for the structure of your home.

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How to assess your flood risk

While FEMA maps are a good starting point, they aren’t the only place to check your home’s flood risk. At RiskFactor.com, you can see the likelihood that your home will be flooded now and up to 30 years into the future. This website is a product of the non-profit First Street Foundation, which uses scientific research to model the effects of climate change.

Unlike FEMA maps, which have historically focused on coastal and river flooding, Risk Factor maps also reflect the risk of flooding due to heavy rainfall. Because a warmer atmosphere can hold more moisture and produce more rain, scientists believe this type of flooding will become more common with climate change.

The Risk Factor will also show how much the flood will cost in various scenarios. This information can help you make an informed decision about whether to purchase flood insurance.

“Would you be able to pay for it yourself if that rare event happened?” said Matthew Eby, founder and CEO of the First Street Foundation. “If not, then you should think about insurance.”

Note that “a model is a model,” says Eby, and is not a definitive estimate of what will happen. If the Risk Factor says your home has a chance of flooding, Eby recommends doing more research by talking to your community’s floodplain manager. Your state or city government can help you find their contact information.

If you’re considering buying a new home, ask the seller if the house or neighborhood has flooded in the past, says DeLong. Certain states such as Texas and Louisiana require the seller to share this information.

How to get flood insurance

Most people buy flood insurance through the National Flood Insurance Program. These policies are managed by FEMA and sold by insurance companies such as Allstate and Farmers. A complete list of providers is on the NFIP website.

Depending on where you live, you may also be able to shop with a private flood insurance company for better coverage or lower rates. Local insurance agents can help find the best flood insurance for you.

Outside of insurance

If you can’t afford flood insurance or you need another way to reduce your risk, consider these tips.

Elevate expensive items. Eby recommends putting expensive equipment like a heating or air conditioning unit on a raised platform, which is generally less expensive than elevating your entire home.

Protect your dungeon. Sealing your basement walls with a waterproof compound can help keep out floodwaters. Have a sump pump to remove the incoming water.

Install flood ventilation. These openings in your foundation can prevent structural damage by allowing water to flow freely in and out of the lowest level of your home.

Consider a community solution. There’s only so much you can do to protect your home if the risk of flooding comes from outside your property. That’s why Eby encourages homeowners to get together with neighbors and local governments to see if investing in seawalls, dikes or improved drainage systems can reduce the risk of flooding on a wider scale. After all, says Eby, “Property is only as valuable as the community of which it is a part.”

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Sarah Schlichter writes for NerdWallet. Email: [email protected].

The article Why You Might Want Flood Insurance — Even When It’s Not Necessary originally appeared on NerdWallet.