Flood Insurance if You're not Near Water?

Dear Insurance Adviser,

I've heard that homeowners insurance doesn't cover flooding. But do I need flood insurance? How would I know? My neighborhood isn't near a river, and I don't think we've ever had a flood.

- Dry Guy

Dear Dry,

You're right. Homeowners policies don't cover flooding or any kind of water damage from water that enters the house at or below ground level. Fortunately, the federal government offers flood insurance. The question is: Do you need flood insurance if you don't live along a body of water like a lake or river? The answer is: maybe.

For sure, you need flood insurance if you live near a coastal area, as disastrous storms such as Katrina and Sandy have proven. Flooding often accompanies hurricanes, and not just along the coast but miles inland. Also, ocean-based earthquakes can cause tsunamis capable of causing flooding not just directly along the coast but also for some distance inland. (Remember the tsunami that was predicted to ravage the Oregon-Washington state coast two years ago, caused by the quake off the coast of Japan?)

But you might still consider flood insurance even if you live far from a beach or riverbank. The policies cover not only overflows of bodies of water but also torrential rain runoff, though only in certain circumstances. If heavy rain pours into your basement in Drytown, USA, flood insurance might provide some compensation, but only if:

One other home nearby also is flooded, or you own two or more acres.
Your basement or lowest level is a walkout or has a ground-level access door, so the water can flow out, not just in.

Also note that the policies wouldn't cover belongings in the basement other than large appliances, such as your washer and dryer.

Talk to your homeowners insurance agent, who can help you evaluate your need for flood insurance and how much, if any, coverage to buy. You can plug your home address into the National Flood Insurance Program's website to get a quote on coverage as well as information on whether your flood risk is low, medium or high. Be sure to buy the insurance well in advance of any flooding, because there's a 30-day waiting period for new policies.

Find your flood risk

Plug in your address at the National Flood Insurance Program's FloodSmart.gov to determine your flood risk:

Source: FloodSmart.gov.

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