If you don’t have to buy flood insurance, should you?
El Nino is coming.
A key location in the Pacific Ocean is currently hotter than it has been in the last 25 years which points to a monster El Nino winter. Scientists are predicting that it could easily be the most powerful El Nino on record.
What is El Nino and why should you care? El Nino is a weather phenomenon that involves a section of the Pacific Ocean, located west of Peru that warms up. The increased heat causes dramatic changes in global weather patterns.
Unfortunately, for residents of California and other southern states, El Nino shifts the track of winter storms, moving the heavy precipitation that Central America and Mexico usually receive to California and the southern United States.
Due to the predictions of a massive El Nino, government officials are trying to convince homeowners to purchase flood insurance before it is too late.
FEMA and Flood Insurance
The Federal Emergency Management Agency (FEMA) is currently encouraging homeowners to purchase flood insurance. The recommendation applies not only to homeowners in high-risk areas but those that live in low to moderate-risk areas as well.
FEMA has a vested interest in the widespread adoption of flood insurance. It runs the National Flood Insurance Program, which sells flood insurance to property owners through local insurance agents. Pricing is set by the federal government so shopping by price is not necessary, but the more people that purchase flood insurance the cheaper it gets, especially for homeowners in high risk areas.
It takes 30 days for flood insurance to take effect so waiting is never a good option. Experts recommend giving some thought to the condition of your home and the surrounding areas. If there is even a remote chance that it could flood in the event of a major rain event, you should get a quote for flood insurance.
Flood insurance can be expensive but in the event of a flood, it can be a financial lifesaver. According to FEMA data, the average premium for a flood insurance policy is running around $700 across the nation and $850 in the state of California. In low to moderate risk areas the cost of a policy can be even less, homeowers are paying between $130 and $450 a year, which will be a real bargain if the worst happens.
Flood Policy 101
A standard homeowners policy does not cover damage caused by flooding. It will cover water damage that is a result of burst pipes, washing machine leaks, or even rain that comes in through a hole in your roof. Coverage varies by policy so be sure to read your policy exclusions carefully so you fully understand your protection. All other water related damage would have to be covered by a flood policy but there are restrictions on those policies as well.
Here are a few restrictions on flood policies that you should be aware of before purchasing one. A standard flood policy covers up to $250,000 in damage to your house and contents. Deductible options range from $1000 up to $10,000. If this is not enough coverage it is possible to buy additional flood coverage in the private market but it tends to be pretty pricey.
Flood policies also do not cover damage to basements but it will pay for damage to heating and cooling systems even if they are located in the basement. In addition policies do not cover the cost of living expenses if you must move out a flooded home. It may be possible to find a private market flood insurance policy that covers these additional expenses.
It is not just high-risk properties that benefit from flood insurance. According to FEMA data, almost 20% of flood insurance claims come from low to moderate risk flood zones. One benefit of maintaining flood insurance while not in a high-risk zone is that if changes in the flood map moves your property into a high risk zone you may be eligible for grandfathering which keeps your flood insurance premiums at the lower moderate-risk rate.
One great way to determine which risk zone your house falls into is to go to https://msc.fema.gov/portal and enter your address. You can also go to www.floodsmart.gov. These sites will give you a general idea of what flood insurance will cost at your particular location. Remember, the government sets flood insurance prices so there is no need to shop on price.
We can help you find the perfect flood policy for your particular needs. Simply fill in our quick and easy flood insurance quotes application and we will send you a multiple quotes with all of the details included.