Whether you live in an area that floods or not, the risk is not 0. We’ve seen crazy weather patterns as of late, and things we thought would ‘never happen’ have seemed to find a way to happen. Mrs. Money and I are currently in the process of moving, and even the homeowners’ insurance company asked if I wanted a quote, and advised me that it wasn’t a bad idea to – and I live 6 hours from the nearest ocean! Flooding is a big deal and causes more than $40 billion worth of damage worldwide annually. What’s scarier is that regular homeowner’s insurance does NOT cover it, and so if even something crazy like a flood happens – you’d be out of pocket for repairs. So, in an effort to continually educate ourselves, let’s learn a little about flood insurance, how much it could be and if it’s worth it.

How Much Is Flood Insurance?

The answer to this question depends on a number of factors. Flood insurance rates are based on the risk of your property sustaining flood damage. The higher this risk is, the higher your premium will be.

Therefore, if you live in an area that floods regularly or has a higher risk of doing so, your premium will be a lot higher than if you lived in an area with no history of regular flooding. So, my parents who live at the beach will pay a lot higher of premium compared to Mrs. Money and I, who live in Atlanta.

If you do live in a high-risk area, your home’s elevation will be a key consideration in determining your premium. Simply put, the higher your home is off the ground, the less risk that it will be damaged by floodwaters, and the lower your premium will therefore be. So, that’s why you see houses being built up on pilings, the higher the house, the lower the premium!

Other relevant factors are the value of your home and its contents, the construction methods that were used on it, and your deductible.

The average flood insurance policy is reportedly around $700 annually. I’m sure it’s higher at the coast and lower elsewhere but that’s not a bad number compared to having to pay for everything out of pocket if there was a loss.

What Does Flood Insurance Cover?

The devil is always in the details! Thankfully when getting a homeowners insurance quote recently, they did call that out at the end. It’s something you would think would be covered, but I guess not!

Flood insurance covers losses that result directly from damage caused by floodwaters entering your home. Any type of natural flooding is usually covered. Such flooding could result from persistent rain, melting snow, and coastal weather events. Floods that arise from the failure of certain manmade structures (such as a dam burst) are also covered.

The insurance will cover any structural damage that is suffered by your property. This includes damage to electrical and plumbing systems, damage to white goods, and flooring and carpeting. It will also cover damage to certain contents, including artwork, jewelry, clothes, and portable appliances.

However, there are some flood-related expenses that flood insurance will not cover. If you purchase flood insurance within 30 days of your home being flooded, the damage will not be covered. There are also limits on each policy past which no compensation will be available.

How Do You File a Claim?

Once flood damage occurs, it is imperative that you contact your insurance provider as quickly as possible. If you delay longer than is reasonable under the circumstances, this may affect your entitlements to compensation.

Aside from this, you must be careful to record your losses as accurately as possible. Separate your damaged property from your undamaged property as soon as you can, and estimate the value of everything that was damaged.

Is it Worth it?

How much is flood insurance? Whatever dollar amount it comes out to, you can be sure that it’s a lot cheaper than fixing major flood damage without insurance. If your house is at risk, it’s always better to be safe than sorry. It’s important to weigh the risks depending on where you live. You should be able to look historically to see your flood risk, and also get a sense of weather conditions in the future in your area. If in years past you’ve had a lot of rain that has made you worry more with a river nearby, or if more hurricanes have been in your area, it could be worth looking into! However if not, I’d say it’s not something that’s really worth it to me.

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