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Flood Insurance: Do You Need It?

UPDATED: December 16, 2019

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Flood insurance is a topic that many of us don't fully understand. When you buy a home, your lender will either require you to obtain flood insurance or it won't. While purchasing a home on a lake or a river will likely require flood coverage, others who live nowhere near water later wish they purchased coverage. So, do you need flood insurance?

What is flood insurance?

Flood insurance essentially covers homeowners when their home has been damaged by water. However, homeowners' insurance policies do not provide for flood insurance coverage. To obtain that, you must go through the National Flood Insurance Program which is run by the Federal Emergency Management Agency (FEMA). So, when do you need it?

For homeowners living very close to water, coverage is almost a given and will likely be required by your lender. For homeowners living somewhat near water, coverage is generally determined on a case by case basis depending upon the topography of your land. For those homeowners who don't live near water all, coverage may be seen as a waste of money - especially since it's generally not required. It's this last group of homeowners who are continually caught be surprise.

Not in a flood zone, but flooded

That's what many homeowners have experienced with the recent floods in the Midwestern states. A local Kalamazoo, Michigan paper, the Kalamazoo Gazette, recently focused on one couple whose house was nowhere near water, but was flooded nonetheless. The couple, Norron and Gretchen Lee, doesn't live anywhere near a body of water. However, recent heavy rains caused severe flooding in their area and their home sustained nearly $60,000 in flood damage. Unfortunately for the couple, their homeowners' policy doesn't cover their losses and they were told that they didn't need flood insurance. They told the Gazette that they would have purchased the insurance had they known that something like this could have happened.

Understanding what's covered

Too many homeowners assume that if their home is not in a flood zone that their homeowners' policy will pick up the tab. As the Lees realized, that's simply not the case. Homeowners should discuss the matter with their insurance agent and find out from neighbors and town officials if any type of flooding has occurred in the area in the past few years. As always, if you're ever in doubt as to whether something is or isn't covered on your insurance policy and can't get a straight answer from your insurer, contact an insurance bad faith attorney to discuss your situation without charge or obligation.

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