Flood Insurance: Do You Need It?
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 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 dont live near water all, coverage may be seen as a waste of money especially since its generally not required. Its this last group of homeowners who are continually caught be surprise.
Not in a flood zone, but flooded
Thats 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, doesnt 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 doesnt cover their losses and they were told that they didnt 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 whats 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, thats 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 youre ever in doubt as to whether something is or isnt covered on your insurance policy and cant get a straight answer from your insurer, contact a insurance bad faith attorney to discuss your situation without charge or obligation.