Do you need flood insurance?

Summer storms prompt the inevitable question: Did I remember to bring an umbrella with me? But there's another question you might want to ask yourself this season, or any other time of year: Do I need flood insurance? The answer may not be that cut and dry (pun intended).

While your property's location may require flood insurance, there are many homes in sunny, dry locations where owners might not even think about flood insurance at all. But consider this: According to the Federal Emergency Management Agency (FEMA) National Flood Insurance Program, "More than 20 percent of flood claims come from properties outside [a] high-risk flood zone."

What's more, just one inch of water can cause $25,000 in damage, according to FloodSmart, FEMA's special website for flood information. As FloodSmart states, why risk it? Well, because it's expensive and maybe you live in the desert. Still, floods from rain or snow can happen anywhere and at anytime.

While you're most prudent to purchase flood insurance no matter what (remember, you'll pay much less for it if you're in a low-risk area), here are a few ways to better understand how it works and how to determine if it's right for you. 

Know What You're Covered for First

You already have standard homeowner's insurance (it's required if you're working with a lender), so you're all good, right? Not so fast. Even though homeowner's insurance does protect your home's structure and your personal belongings from something like a hurricane, it doesn't protect from flooding. So even if that hurricane came with a ton of rain, and all that rain resulted in a flood that ruined your house and destroyed personal belongings, the insurance company sees no connection. The hurricane is covered; the flood resulting from that hurricane is not. It’s frustrating but true. 

What if there's a freak hailstorm and your window cracks, and a bunch of rain gets in from the crack? And all that water ruins your original hardwood floors and your laptop to boot? Hailstorms are covered. But again, that floodwater? Probably not. And if your home is high up, it still might not be safe: if floodwaters cause pilings to erode and your house collapses, you won't be protected unless you have flood insurance.

To clarify, we're not talking about flooding that might occur from something like a burst pipe. Insurance typically covers water damage that is sudden and accidental as part of either dwelling coverage or personal property coverage—read more on those here.

Know the Flood Zone Categories and What They Mean

FEMA uses three designations for all properties, no matter where you live: high-risk flood zone, moderate-risk flood zone, or low-risk flood zone. Flood zone maps also occasionally feature undetermined risk areas, which just means that the particular area has not yet received a flood analysis—it may still be at risk. If you're looking at a FEMA flood map, an undetermined-risk area will show up as a letter D

Typically, high-risk areas are ones with a 25 percent chance of flood damage over the course of a traditional, 30-year mortgage. You'll almost certainly be required to carry flood insurance if you live in a high-risk area. Moderate- to low-risk areas may not require flood insurance, but if you do choose to carry it, it's less expensive than what you'd pay in a high-risk area. 

Look at Flood Zones—and If You're House Hunting, Consider Properties Outside Them

FEMA offers a flood zone map where you can plug in your address, or the address of a property you're thinking about purchasing (check it out here). Although FEMA is supposed to have the most up-to-date versions of area maps in its database, you can contact your local city and county government's department of engineering to acquire floodplain maps. You can also ask if there are any changes being made to shore up floodplains and thus change the maps in years to come. For example, the area I live in used to be a floodplain, but after my city completed lots of structural work and revitalized its pumps over the course of about three years, my property is no longer considered a high-risk area.

If you're in the process of house hunting, pay special attention to floodplain maps before you purchase a property. You'll pay less (and may have more peace of mind) if you choose a home in a moderate- to low-risk area. What's more, you'll also likely have an easier time selling that same home in the future if you avoid a high-risk area. While FEMA and city maps will show you the same information, the website Flood Tools may offer a more user-friendly way for you to check floodplains. 

Consider a City's Infrastructure and Pump Capacity

As mentioned above, the city I live in has undergone some revitalization and structural improvement over the years. What was once a more flood-prone area is now less so, thanks to newer, more sophisticated pump systems. Miami, for example, passed the $400 million Miami Forever Bond which aims to buttress climate resilience in the face of increased flooding. Homebuyers there might feel more confident in making a purchase, although it’s likely they'll still be required to carry flood insurance due to Miami's high-risk FEMA designation.

Understand How Federal Assistance Works—and How it Doesn't

Yes, the federal government may distribute aid in the event of a natural disaster such as a flash flood. But there are a few catches. First of all, the flood has to be severe enough to get federal disaster designation. Then, you'll have to apply for a grant. Then, you’ll have to wait to be accepted. This all takes time, and, according to Bankrate, maxes out at about $33,000. If FEMA's statistic is correct—that just one inch of water could cause $25,000 in damage—$33,000 may not even be enough to cover the cost of repairs for homes with significant flooding.

Remember You Could Be at Risk of Flooding No Matter Where You Live

As FEMA states on its FloodSmart website, "Everyone lives in an area with some flood risk—it's just a question of whether you live in a low-, moderate-, or high-risk area." FEMA recommends getting flood insurance no matter what, but what you'll pay will depend on the risk in your area. A local insurance agent can help provide you with a quote; rates vary too widely across regions and city-specific floodplains to offer a general idea for the purposes of this article, although the average cost is about $700 per year.

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