What is Flood Insurance and Do I Need It?

Many Florida homeowners are confused about flood insurance, and for good reason.

In insurance terms, “A flood is an excess of water (or mud) on land that is normally dry” according to the National Association of Insurance Commissioners:

The NFIP (National Flood Insurance Program) is even more specific.

“A flood is a general and temporary condition of partial or complete inundation of two or more acres or normally dry land area, or of two or more properties.”

That inundation can come from an overflow from a body of water, a “rapid and unusual” accumulation of surface runoff, a mudflow or the collapse of a shoreline.

Flooding does not include water entering the house through a damaged roof or wall, a backed up sewer or broken pipes inside the house.

Flooding can occur anywhere. In fact, nearly 25% of all flood insurance claims come from properties located outside a high-risk area for flooding. If you live in an area that gets rain, you can have a flood.

Spring thaws, ice jams and heavy rains all cause flooding. Even after a normal rainstorm, runoff from an area that’s been burned by a wild fire can cause flooding because the burned ground doesn’t absorb the water.

Fortunately, in Florida we don’t need to worry about the first two. But heavy rains, or even normal rains after a fire, cause a lot of damage to Florida homes – damage that isn’t covered unless you have flood insurance.

And flood damage is expensive – the average flood claim tops $33,000. (In comparison, the average flood insurance policy only costs about $500 each year. )

Floodsmart.gov provides information about flooding and flood insurance. Check out their Cost of Flooding calculator – you might be surprised at what you learn. For example, a small flood which brings only an inch of water into a 2,000 square foot home can cause over $20,000 in damage! Can you afford that risk?

Many homeowners believe – mistakenly – that their regular homeowners policy protects them from flood damage. It doesn’t.

Last year, the Insurance Information Institute found that about 26% of homeowners in the South incorrectly thought their regular homeowners policy covered flood damage from a hurricane.

So who really needs flood insurance?

Mortgagors require homeowners who live in designated floodplains to purchase flood insurance. FEMA (Federal Emergency Management Agency), not the bank, identifies these floodplains, also known as SFHA’s (Special Flood Hazard Area).

But, as previously mentioned, a quarter of the homes damaged by flooding every year are outside those high-risk areas. It only takes one hurricane or heavy storm to put you under water, literally and financially, so even if you don’t live in a floodplain you should have flood insurance.

Timing is important, too. Once you purchase flood insurance, there’s a 30-day wait before it goes into effect.