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Should You Keep Your Flood Insurance (Even If It’s Not Required)?

3-Minute Read
Published on August 27, 2019

If you’re a homeowner in a FEMA-declared flood zone, you’re likely aware that your mortgage lender requires you to have flood insurance. However, if the Federal Emergency Management Agency decides to remove that classification from an area, the homeowners living there may have the option of getting rid of their flood insurance. But should they?

Although it might not be required, there are still significant benefits to keeping your flood insurance.

Why Am I No Longer In A Designated Flood Zone?

FEMA has flood maps for communities all over the country that identify an area’s risk of flooding. These maps, which tell mortgage lenders whether a property will need flood insurance coverage, change depending on how an area’s flood hazards change over time.

An area’s flood hazards can change based on man-made developments that alter the way water flows and drains or based on environmental factors such as changing weather or wildfires, according to FloodSmart.gov, the official website of the National Flood Insurance Program (NFIP).

Why Should I Keep My Insurance?

If you’re trying to save money, it can make sense to want to pay only for what you need. However, even if your area is no longer considered to be a high-risk flood zone, you still may want insurance coverage. Floods are common in many areas, so you’re still at risk for flood damage.

If you allow your insurance to lapse, you may have difficulty getting back the rate you paid previously. Also, keep in mind there’s a 30-day waiting period before your coverage kicks in. So, if the weather forecast looks bad, and you find yourself scrambling to get insured before the storm hits, you’ll likely be out of luck.

What If I Have Homeowners Insurance?

Homeowners insurance typically doesn’t cover flood damage, so if you want flood protection, you’re going to need to buy insurance for it.

Additionally, many homeowners incorrectly believe that if their area suffers major flooding, they’ll receive aid directly from FEMA, according to a press release detailing why homeowners should buy flood insurance. The truth is that FEMA will offer grants only when the president of the United States declares a major disaster, and even then, the money you receive likely won’t be enough to cover the cost of significant damage.

According to FloodSmart.gov, people in low- to moderate-risk areas can purchase a lower-cost Preferred Risk Policy starting at less than $325 per year.

What Are The Odds That I’ll End Up Needing Flood Insurance?

You might never end up needing flood insurance. That’s the trade-off when you purchase any kind of insurance – you may end up feeling like the money you spent could have been better put toward other items in your budget. But the alternative – that you need insurance and don’t have it – can be financially ruinous.

Flooding is the most common natural disaster in the United States, and it doesn’t only affect people in high-risk areas. In fact, more than 20% of flood claims are filed for properties outside of FEMA’s high-risk areas.

According to FEMA, if you live in an area with low or moderate flood risk, you are five times more likely to experience a flood than a fire in your home over the next 30 years.

Even if you don’t have to worry about big floods, it takes only a few inches of water to cause costly damage to a home. Just 3 inches of floodwater in your home can mean having to replace drywall, baseboards, carpets and furniture. Without flood insurance, you’ll likely have to pay for these costs out of pocket.

The Bottom Line

Ultimately, whether you decide to keep your flood insurance or try to save money by opting out of it is a matter of how much risk you’re comfortable with. It’s possible that you don’t end up regretting the decision to get rid of your coverage and are able to save some money.

However, you’re risking a lot when you forgo a flood insurance policy. Floodwater can cause devastating damage to your property; flood insurance provides a safety net so that you’re able to recover without wrecking your finances. The decision to go without insurance isn’t one you should take lightly.

To learn more about flood insurance, visit FloodSmart.gov. If you have questions about flood insurance, contact your insurance agent. If you don’t have an insurance agent, contact the NFIP Help Center at (800) 427-4661 for a referral.