My agent keeps nagging me to buy flood insurance. We live in a flood zone, but there hasn’t been a flood in twenty years. How should I decide?
Because of the catastrophic loss potential of flood losses, it'd be best to at least look at a flood insurance quote and determine if you are prepared to absorb the loss.
You may want to consider these questions...How much would you be out if you lost everything? How much is it to insure against the potential loss?
If you are in a flood prone area - it isn't a matter of if, it's more likely a matter of when. What is the likely risk of flood? Is it every 20 years? Have measures been put in place to limit flooding?
Do the math. Would you be out more if you added up the average vs. the potential loss?
There are maximum limits of coverage. So, it probably would be wise to exceed those limits. It wouldn't be wise to have a $500,000 property when $250,000 is available to replace it - unless money is not an issue.
Can you afford to lose what could be lost?
Insurance is generally considered a bargain after a loss.
| 10.15.13 @ 19:43
Michael, to add to the great advise that Timothy gave you (you should always do the math), all you need do is look to the folks who have lost their homes to floods who didn't have flood insurance. One of the biggest issues for the people of Louisiana after Hurricanes Katrina & Rita were not just that they lost their homes from these storms, but that because most lost their homes due to flooding after the fact (whether or not they were in flood zones), and they didn't have flood insurance, they couldn't get any replacement value for their homes because it wasn't a covered loss. Also, if you're in a flood zone, and you decided to refinance your home at any point, the lender will most likely require flood insurance to move forward with a loan. Just as Timothy pointed out, insurance is always a bargain after the fact and without it, the losses could be detrimental. To note: the flood policy itself with it's limits at $250,000 covers only the dwelling, not the land or personal belongings. It's simply meant to correct damage from flooding or rebuild, if necessary. Be sure that you have some insurance for your personal belongings as well because those will not be covered by a flood insurance policy. Hope this helps. | 04.17.15 @ 17:43