Do I Need Flood Insurance?

Floods are the most common natural disaster in the United States, according to the Federal Emergency Management Agency (FEMA). Disclosure1 While the government only requires mortgaged homes in high-risk areas to have flood insurance, FEMA recommends that all homes have flood insurance, even if your home is in a low-risk area. Disclosure2  Why? Over 20% of floods happen in low- to moderate-risk areas, and floods can be caused by many things, such as heavy rains, melting snow, hurricanes and broken water mains, to name a few. Plus, FEMA encourages residents of the Western U.S. to purchase flood insurance to protect their homes from devastating flooding and mudflows, which can occur in the years following wildfires. Disclosure1

You may think you don’t need flood insurance. After all, you can get federal disaster assistance if your home ever floods, right? Not exactly. FEMA cautions against relying on federal disaster assistance for several reasons: Disclosure3

• Federal disaster assistance is only provided when there is a Presidential Disaster Declaration, and most floods don’t result in a declaration.
• When granted, federal disaster aid comes in the form of low-interest disaster loans that must be repaid, in addition to any loan or mortgage payments you already have on your property.
• Federal disaster assistance is not designed to restore your home to its pre-flood condition or replace all of your lost or damaged personal property items.
• Private flood insurance, on the other hand, doesn’t have to be paid back, and it’s designed to restore your home to its pre-flood condition.

Even if you don’t plan on getting federal disaster assistance, you’ve got homeowners insurance, and that will cover you if your home floods, right? Unfortunately that’s a common misconception. Flood damage is not typically covered by a homeowners insurance policy.

The only way to protect your home against flood damage is to purchase a flood insurance policy from a licensed agent or insurer. 

There are two basic types of flood insurance, both of which are sold through a licensed agent or insurer (there is no option to buy flood insurance directly from the government).

• The National Flood Insurance Program (NFIP) was established by the U.S. government in 1968 because, at the time, very few companies offered flood insurance. Claim limits for NFIP coverage are capped at $250,000 for residential structures (commercial coverage is higher). You can contact the NFIP directly about buying flood insurance, but they’ll redirect you to an agent or insurer to get coverage.
• Private flood insurance offers property coverage limits higher than $250,000, making this a more attractive option to many homeowners seeking flood coverage. In the past few years, many insurers have re-entered the flood insurance space, which provides you with more coverage options.

According to FEMA, the average flood insurance claim payment over the past five years was about $69,000. Disclosure1  Are you prepared for that type of loss if a flood occurs?

Flood insurance typically covers both the structure of your home and its contents, including appliances, cabinets, window blinds, and your personal property (clothing, furniture, electronics, etc.). However, coverage for contents is optional in some cases, and we can help you discuss your options.

There’s typically a 30-day waiting period before your flood insurance takes effect. An exception is when the flood insurance is required by a lender and is purchased as part of securing a mortgage. In addition, private flood markets typically offer shorter waiting periods.

Flood insurance typically doesn’t cover buildings built entirely over water or mostly below ground, landscaping, swimming pools, crops, animals, and most motor vehicles. Other exclusions may apply, so talk with a licensed agent about flood insurance to get more details. 

It’s important to explore flood insurance offerings from different insurers. Why? Because when you file a flood insurance claim, that company’s track record for handling claims can make the difference on whether your claim gets paid or not—and how quickly. That’s where McGriff can help. We’ll consult with you to understand your specific situation, providing you with coverage options from various insurers that best meet your needs for flood insurance.

To get started, contact us at 1-800-228-6978, or FloodInsurance@McGriff.com.