When to buy flood insurance

Flood damage is typically not covered by your standard homeowners insurance, so it’s a good idea to talk to an insurance agent and investigate taking out a policy to protect your home. Just a few inches of flooding can cost tens of thousands of dollars in damage, according to the Federal Emergency Management Association (FEMA). If you’re thinking about buying flood insurance, start shopping for policies now because there is a 30-day waiting period from the time you buy the insurance until the policy becomes effective. Here are some other factors to consider:

When to buy flood insuranceBy looking at FEMA’s location maps, you can see whether your home is located in a “high risk” or “moderate-to-low risk” area. This will greatly affect how much you pay for insurance. Additionally, premiums are calculated on factors such as building occupancy and height, as well as what year the residence was built. Most homeowners in a moderate-to-low risk area are eligible for coverage at an annual rate as low as $120 through The National Flood Insurance Program, which was created by Congress in 1968. The program offers flood insurance to homeowners, renters and business owners (provided their communities participate in the program). If your residence is in a high-risk area, you must take out a standard-rate policy if you have purchased a mortgage from a federally regulated or insured lender.

What if I live in a low-risk area?It’s still a good idea to buy insurance even if you live in a low-risk location because floods can affect all areas. The Federal Emergency Management Association estimates that people living outside of high-risk areas receive one-third of disaster assistance for flooding. Flooding can be caused by many factors, including poor drainage systems and excess snow.

What does flood insurance cover?Your policy generally covers any physical damage to your building or personal property that is directly caused by a flood. For example, you would be covered if flooding caused a sewer backup that in turn damaged your property. Check your policy to see what would not be covered. Temporary housing expenses and property outside of an insured building, such as a swimming pool or patio, would not be covered.

If I’m a renter, should I buy flood insurance?Experts still advise buying flood insurance if you are a tenant. Again, your premium will still be based on whether you live in a moderate-to-low risk or high-risk area. Most renters in moderate-to-low risk areas are eligible for a preferred-risk policy premium, which can be as low as $49 per year when purchased through The National Flood Insurance Program. If you live in a high-risk area, you must buy a standard-rate policy.

Which deductible should I choose?You will pay a lower premium with a higher deductible but keep in mind that your claim payments will also be lower. You can choose different deductibles for coverage on building property and personal property. Hold on to your receipts for large household purchases, expensive clothing, electronic equipment and other items you might want to file a claim for in the event of damage. Your claim will be processed faster when you can prove how much you paid for certain items.