Is flood insurance necessary?

When heavy rains occur or last for an extended period, questions about flood insurance inevitably rise to the surface.

Swollen creeks, rivers, ponds, and lakes certainly can make any nearby homeowner a bit more nervous.

But is flood insurance needed?  The answer is … it depends.

First, it is important to know the insurance definition of a flood. 

The Federal Emergency Management Agency defines a flood as a general and temporary condition where two or more acres of normally dry land or two or more properties are impacted by an overflow of inland or tidal water, or the unusual and rapid accumulation or runoff of surface water from any source.

Simply put, if water overwhelms its natural course – creek, river, or body of water – or quickly runs of a surface area such as parking lot, road, or grassland, it can be considered a flood.

Insurance comes into play when that flood water enters a building through a normal opening such as a doorway, window, garage, or lower-level ventilation opening.

If that happens and flood insurance is in force, then the policy can help pay for damages to structures and/or personal property.  Flood insurance policies have two deductibles – one for damages to a structure and one for damages to personal property.

Flood insurance cannot be added to a traditional home insurance policy but is written through specialty insurance companies with FEMA oversight.  Policy premiums are calculated by reviewing the requested amount of coverage and deductible, and a building’s location in or near a flood plain.

A flood plain is a mapped area surrounding bodies of water. The mapping incorporates analysis of the land area with historical data regarding flood frequency.  The lower the level of the land around the body of water command higher premiums, just as an area where flooding has occurred several times in history.

So, who needs flood insurance? 

Technically, any building owner can purchase it, regardless of where the insured building sits in relation to a flood plain.  Most home loan institutions require property owners to purchase flood insurance if the building sits within specific flood plain areas to protect their loan collateral – the building.  Property owners outside of flood plains can get it as an extra measure of coverage.  Generally, those premiums are quite low due to the reduced chance the policy benefits will be needed.

Flood plain maps undergo periodic review and reconfiguration due to changes to bodies of water or government regulation.  Those changes could force property owners to purchase coverage. Conversely, property owners can challenge a lender’s flood insurance requirement by proving the property is not in a flooding risk.  An example of this may be if a home sits on a hill well above a body of water, even if that hill exists within the flood plain.

A traditional home insurance policy’s exclusion of flood coverage does not mean that the home insurance company refuses to cover all water-related losses.  Damages caused by broken pipes and storms that damage a roof and lets water in are covered, subject to deductible.

Homeowners who do not have flood insurance and are curious to see if they fall within a flood zone or qualify for coverage should contact their home insurance agents.  However, not all insurance agents are certified to write flood insurance.

Alan T. Girton is a veteran agent with Indiana Farm Bureau Insurance.  To learn more, visit https://www.infarmbureau.com/agents/Alan-Girton-Howard-Kokomo-IN.