Flood insurance protects you from damage done to your home and personal possessions by rising water from an outside source like street flooding. It is NOT part of a standard homeowner’s policy and must be purchased separately. Recent weather events across Texas and the United States have demonstrated the devastation that flooding can cause, so it’s an important coverage to consider.
Flood insurance can be acquired through private insurance companies or through a federally regulated program called the National Flood Insurance Program (NFIP). Flood insurance can cover the physical structure and contents within it for both residential and commercial properties. NFIP coverage only covers up to:
for each injured person
for injuries per incident
for property damage
You can purchase Excess flood coverage to increase the amount protected since the federal program only covers up to the amounts listed above.
Flood insurance coverage can vary if purchased through private insurance companies versus through the NFIP. The table below can provide you a brief comparison when purchasing flood insurance through the feder- al government versus a private insurer:
It’s important to note that not all properties qualify for private flood insurance. Talk to an independent agent who has access to multiple private flood markets to ensure you are looking at all options available to you.
The cost of flood insurance depends mainly on the flood zone, the elevation of your home, the amount of cov- erage selected, and the deductible.
If you are in a preferred/moderate risk zone, like Zone X, the cost of flood insurance through NFIP is very affordable. The following table outlines the cost by coverage amount in a preferred zone:
Every property is assigned a flood zone by FEMA, and over 20,000 communities are in higher risk flood zones, meaning that they are more susceptible to flood risk. The following table outlines flood zones and their characteristics:
If your property is in a high-risk zone, the cost will vary based on the elevation of you home. We recommend obtaining an elevation certificate, although some private insurers may not require one.
You can obtain a copy from the current owner of the home or property and if they do not have one, we can recommend a licensed land surveyor for you.
Lenders will often require flood insurance for properties located in high-risk areas. Even if the property is not located in a high-risk area, the lender can still require flood insurance coverage.
It’s important to understand your mortgage contract and what is necessary prior to purchasing or refinancing your home.
If flood insurance is purchased prior to or on the date of closing or refinancing, there is no waiting period for your flood insurance policy to become effective. If not, a standard 30-day waiting period is required before the policy can go into effect.
Flood insurance is provided by the NFIP, but several companies manage and administer the program. We recommend that home- owners purchase their home and flood policies from the same com- pany if possible. That way, if there is a claim involving both policies, you have a higher chance of only dealing with 1 claims adjuster.
Some lenders will require you to carry flood insurance if your home is located in a high-risk flood area, as determined by FEMA’s flood zones.
If the lender does not require it, you should still assess your risk of flood damage. According to FEMA, 20% of all flood claim payouts occurred outside high risk flood zones.
Because flood insurance is highly subsidized by the federal government, it can be a relatively inexpensive product to purchase to give you peace of mind to protect one of your most important investments.
Determining the exact amount of coverage you need will require the help of a Texan Insurance agent who can assess the specifics of your situation. Critical factors include the location/flood zone of your property, the coverage amount of your home insurance policy, and the amount of personal possessions that need coverage.