A flood insurance policy is one of the most important protection you will need if you live in an area that is prone to flooding.
In our previous article, we talked about some interesting facts about flood insurance but in this article, we will discuss various reasons why you need a flood insurance policy, the cost of flood insurance by state, coverage, and possibly how you can get an affordable flood insurance rate in the United States.
1. Homeowner’s insurance doesn’t cover floods
Although homeowners’ insurance policy covers both lightning strikes, volcanoes, and every other thing that falls out from the sky like a tree damaging your rooftop, it doesn’t cover floods.
To gain a level of financial protection when rainfall takes over your building, you will need a flood insurance policy from an insurer near you.
2. Most homes in the United States are at risk of flooding
In the United States, 142 homes and properties were given a flood-risk score by First Street Foundation. With a tool like Flood Factor, you are able to learn for free if a property has flooded from major events in the past, is currently at risk, and how that risk changes over time.
3. Areas that are perceived to have low risk of flooding are riskier than you think
According to a FEMA report, those living in a low- to moderate-risk zone can still experience devastating flooding. Their chances are like five times higher than having a fire over a 30-year period. Flood insurance statistics have it that homes in these zones account for about a fifth of all flood insurance claims.
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4. 100-year floods can happen more frequently than expected
The term “100-year flood” is used in an attempt to simplify the definition of a flood that statistically has a 1-percent chance of occurring in any given year.
How often do 100-year floods occur? Over the course of one million years, these 100-year floods can occur 10,000 times. However, we’ve had cases where it happened more than once in a year.
In the mid-2000s, in Goffstown, New Hampshire, USA, 100-year floods occurred twice within a year.
5. Flooding is one of the most common natural disasters in the United States
In the United States, especially in states like Texas, Florida, and Louisiana, the most common natural disaster is flooding.
Flooding contributes to 90% of all-natural disasters, according to the Insurance Information Institute.
6. The damage caused by a flood can be very expensive to correct
In 2019, the impact of floods and flash floods caused approximately $3.75 billion worth of property and crop damage in the United States.
Just one inch of water in your backyard can result in so much loss in profit. One foot of flash flood is enough for cars to start floating.
In England, about 2.4 million people live in flood-risk areas. To help make life run smoothly for these residents, the UK government spends £4.4bn on flood defense. While others wait for help from the government, your flood insurance policy will help you save the cost of repair and replacement of damaged properties.
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7. Waiting for FEMA may not always help you
There are cases where FEMA steps in fully to help you but that can only happen if the U.S President declares it a disaster. Unfortunately, this doesn’t happen in all cases of flooding.
Plus, most FEMA aid is in the form of a low-interest loan. Not everyone is lucky to get a grant from FEMA, and even if you do, it can’t cover as much as your flood insurance policy would have done.
8. Flood insurance coverage is not expensive
Flood insurance premiums are determined by quite a number of factors, such as your community rating system, and coverage types. Homes in moderate to low-risk areas may qualify for a Preferred Risk Policy for as low as $129 per year. This is a figure you can easily afford compared to applying for a Federal disaster assistance loan with an annual interest rate of 4% over a period of 30 years.
What does your flood insurance policy cover?
Flood insurance covers the costs of:
- removing debris.
- professional fees (such as solicitors, architects and surveyors)
- repair or replacing damaged furniture and belongings.
- alternative accommodation while you can’t live in your home.
- drying out, repairing and restoring your property and its fixtures and fittings.
How much is flood insurance in the United States?
If you work with the best insurance company near you, the average cost of flood insurance in the United States is $958 per year.
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The table below explains the cost of flood insurance policy by state:
Cost of Flood Insurance by State
|State||Average annual cost||Average monthly cost||% households with flood insurance|
|District of Columbia||$817||$68||1.72%|