You Need a Flood Insurance Policy Even if You’re in a Low-Risk Flood Zone


Flood insurance is one of the several insurance policies that you need to have when buying a home. Flood insurance is common for homes in high-risk flood zone areas. As a first-time homebuyer, you might find it silly to get a flood insurance if the property that you’re about to buy is in a low-risk flood zone. The Federal Emergency Management Agency or FEMA has a good explanation of why every homeowner should have a flood insurance policy.

The importance of flood insurance

You’ll typically need a homeowner’s insurance policy if you buy a home. However, it’s important to understand that most homeowner’s insurance policies will not cover flooding. FEMA will not provide you financial assistance if there is no Presidential Disaster Declaration. If your home was flooded and the government officially declares the area in a state of disaster, you can obtain government-backed low-interest disaster loans, but you need to repay it. A federal disaster loan may frustrate homeowners because they will not totally recover property losses caused by the flood. This disaster assistance was not designed to restore the home to its pre-disaster condition or to replace damaged or lost treasure household items.

A flood insurance policy, on the other hand, will restore a home to its condition before the flooding took place. Unlike a federal disaster loan that you have to repay, you don’t have to pay back flood insurance once you use it. Flood insurance is often comprehensive enough to cover a home’s foundation elements and other equipment that support the structure. Items found in the basement like the furnace, circuit breaker and water heater are covered by flood insurance.  

Flood insurance is a must for every homeowner

If you plan to buy a home in a low or moderate-risk flood zone area, FEMA still advises you to get a flood insurance policy. Any homeowner can suffer great financial loss because of flooding. An inch of flooding inside a 2,500 square-feet home with $50,000 worth of possessions could sustain damage worth $26,807 combined loss or even more. Potential financial losses tend to increase as the depth of floodwater increases. Even if you plan to buy a home in a community that has never been flooded, you still need to get flooding insurance. Heavy rainfall can cause floodwater to build up if the community has a bad drainage system. Flooding doesn’t spare even homes located outside the federally determined flood-prone areas. FEMA said, more than 20 percent of the National Flood Insurance Program (NFIP) policyholders who have benefitted from filing a flooding claim come from areas outside of mapped high-risk flood zones.

If you’re going to buy a home on a hillside, you probably still need a flood insurance to get coverage for broken water mains, snowmelt, and mudflow that can cause serious damage to your home. A home in an elevated land like a hill only reduces the chance of flooding, but not eliminate it.

The federal government may or may not require flood insurance

If you’re using an FHA loan or any government-backed mortgage to buy or build a home in any Special Flood Hazard Areas, you’ll need to get flood insurance. The federal law requires it. If you take a 30-year fixed-rate mortgage on a home in a low-risk flooding zone, a lot of unpredictable disasters could happen as you pay back your mortgage, and your lender might require you to get a flood insurance even if federal law doesn’t require it. This could happen if the community where your home is located becomes a part of a high-risk flooding zone.

It pays to have a flood insurance policy

Whether you’re planning to buy a home in a high or low-risk flood zone area, a flood insurance is a must. Flooding can cause serious damage to a home’s foundation and belongings inside the property that are very expensive to recover. Flood insurance provides you comprehensive coverage that’s far better than obtaining a federal disaster loan.