Home Insurance. Flood Alert

Are you still wondering if your home is at risk of flooding? If you’re not sure which type of flood insurance might be right for you, or where to get a quote, we’ve got the answers!

This post will explain what flood insurance covers and how much it costs. It also has links to a variety of flood maps from the US Geological Survey (USGS), showing just how likely any given place is to experience flooding in the next 10-20 years. Finally, it details some interesting sources for flood stories and statistics that may help homeowners understand the true risks they face.

What is home insurance?

Home insurance is a type of property insurance that covers loss to your property from certain disasters. These disasters include fire, theft, and windstorm. Flooding is its own separate event and must be covered with flood insurance. Because flood events are so different from other kinds of disasters, it’s important to know whether your home is at risk before you make the decision to buy flood insurance or not. It sounds like an easy decision at first: if you live in a coastal town like Galveston, Texas or Venice, Italy—or even in the Sacramento Valley where I was raised—you’ve probably seen flooding in your back yard. This is a terrible tragedy for the people of these areas—but it’s also an understandable conclusion. For most people, flood insurance is the only way to insure against flooding. It’s a bit like buying car insurance to protect your car against theft; it may seem like a good idea, and it might be more convenient than buying another kind of insurance, but if you don’t know how much theft would cost your family and you have no idea whether or not your car has been regularly stolen, it might not make sense to buy coverage for theft at all.

To understand why this is so important, we need to look at what happens when water goes over a house in the US.

How does flooding happen?

When water goes over a house it will come in through the ground, under the house, or through the walls. While these are all bad outcomes, they don’t hurt your home for any particular reason. Your house will flood just as easily from a broken water pipe or a lawn sprinkler gone rogue as from a raging river. For that reason, underwriters call these “random” losses. They happen for reasons that have nothing to do with the location of your home. When your home floods because of particular places or features, we call it a “specific loss” and they are important to consider before you buy insurance.

In the US, specific loss events are caused by heavy rainfall, melting snowmelt, tropical storms/hurricanes, or tsunamis (though tsunamis are rare). The water that comes into your home through the ground will come from a nearby river or stream. It may also come through the cracked foundation from a nearby earthquake or sinkhole. And because you’re often standing in the middle of your house when water comes in, it can wash away your belongings and flood your basement. Think of this as “direct loss”—like being robbed at gunpoint. The cause of the damage doesn’t matter as much as the fact that someone did it to you, and that you didn’t do anything to stop it.

Specific loss events also take place when the water comes in through the walls. It can come from broken pipes, overflowing gutters, or clogged drainpipes. These are “indirect loss” events—like being robbed at a restaurant. The amount of money you pay for insurance is based on the risk of being robbed each year based on the chance of theft, and with direct and indirect loss risks included together in your policy, your risk will be lowered.

How much does flood insurance cost?

In most areas where flooding is a real possibility, it’s fairly simple to find out whether or not your home is at risk. The USGS provides free flood maps for pretty much all the major rivers, and it’s possible to search for your zip code on their website ( here ) and find out if you’re at risk. Once you’ve found a map, look for one that shows the “100 year floodplain”—the area that has a 1% chance of flooding in any given year. Do you live in this area? If yes, then congratulations! You are at risk of flooding. Even just a few inches of water can cause considerable damage to your home. The good news is that there is affordable flood insurance available for homeowners in these areas: the National Flood Insurance Program (NFIP).

All NFIP policies are purchased and administered through private insurance companies like Allstate, State Farm, Liberty Mutual, and more. Prices vary widely but you can get an average quote for your area by visiting here . Every new policy must be backed by a NFIP policy so if you’re in a high risk area you should consider this option. Not every insurance company offers flood insurance (I recommend The Hartford) but it is always possible to find another company that does. The advantage of the NFIP is that there is no limit to the amount of money it will cover, whereas most private policies have relatively low limits—usually about $250k worth of coverage. If, after all of this, you still believe the risk is too high and that your home really isn’t at risk, then it’s worth considering buying a policy through another insurer.

To understand flood insurance first we need to look at some basic concepts. What determines the cost of flood insurance? How much will we insure against flooding over a certain period of time? And what happens if I flood my house? These are the questions we must answer before we decide whether or not to purchase insurance against flooding.

How much does flood insurance cost?

The price of flood insurance varies with geographical location, how much coverage you want, and other factors. For example, a one-story home in the Memphis flood zone might cost $1,000 per year to insure. A two-story house in the same area would be twice as expensive. The NFIP base rate is $3,000 per year for homes up to 50 square feet and $1,500 for larger ones. So how much does it cost to insure a 2200 square foot house? It’s about $34,000 per year on average if you buy flood insurance with the National Flood Insurance Program (NFIP).

Conclusion: If you live near a river, then your house has a high likelihood of flooding, and you’ll need to get flood insurance.

How long does flood insurance last?

Flood insurance lasts for up to 30 years and is renewable. You can buy an annual policy instead of paying for it all at once, but the price will be higher each year. Flood insurance has a payout limit (sometimes called the “base rate”) that we can pay if there is damage or loss during the policy period. It’s also based on $250k worth of coverage and ranges from under $10k to over $2m in some areas.