Anyone residing in areas prone to flooding or experiencing such events more frequently should seriously consider purchasing flood insurance.
Buying flood insurance before the hurricane season could spell the difference between financial disaster and relief. Even if you don't reside in a hurricane-prone area, experts suggest considering flood insurance for your home.
The National Oceanic and Atmospheric Administration (NOAA) predicts an above-average hurricane season this year, with as many as 19 named storms compared to the usual 14. While hurricanes might be associated with coastal areas, inland regions have also seen severe flooding in recent years, a result of extreme weather events caused by climate change.
Standard homeowners insurance policies don't cover flood damage. Instead, you'll need a separate flood protection policy, which usually covers damage caused by rising water entering a home. The Federal Government's National Flood Insurance Program (NFIP) offers such coverage to homeowners and renters in participating communities. Or you might consider private insurance providers like Neptune or Aon Edge, which offer policies beyond NFIP limits, and flexible options for higher coverage limits and additional coverage features.
Amy Bach, executive director of United Policyholders, an advocacy group for insurance consumers, recommends buying flood insurance if you can afford it, given the high costs of repairing a flooded home. FEMA provides financial assistance and basic needs to disaster victims but reminds that it's not a substitute for insurance. FEMA grants for individuals and households averaged $3,200 from 2019 to 2023, while the average claim payment under the flood insurance program reached $52,000.
Annual premiums for flood insurance differ depending on the location, property size, construction, and other factors. The average annual premium for a federal NFIP policy is approximately $898, but costs can range widely, with premiums often much higher in flood-prone areas. Furthermore, rates for many federal policies have risen since late 2021 when FEMA adopted a pricing system that reflects a home's specific flood risk more accurately.
Keep in mind a 30-day waiting period before coverage starts for most federal policies, although some exceptions exist, like when buying insurance when taking out a mortgage. Private insurers may have a shorter waiting period of 15 days. Damage from wind or rain driven through broken windows is usually covered by your main homeowners insurance policy. However, hurricane deductibles within coastal areas might be separate and higher. And car damage due to floods is covered by your vehicle's comprehensive insurance policy.
Consider consulting multiple insurance agents to find the most suitable policy for your needs and location.
- The government-backed National Flood Insurance Program (NFIP) offers coverage to residents in flood-prone areas who want to protect their housing from damage.
- In light of an expected above-average hurricane season, the government's forecast warns of potential hazards in both coastal and inland regions, highlighting the importance of climate-related considerations in personal-finance management.
- Even though Seattle is not typically associated with hurricanes, flood insurance is still something worth investigating for Seattleites, as experts suggest being prepared for all possibilities regarding home-and-garden protection.
- When compared to financial assistance provided by FEMA, the average claim payment under the flood insurance program has been significantly higher, emphasizing the importance of investing in proper protection, particularly in regions at higher risk of flooding.
- While annual premiums for flood insurance can vary based on location, property features, and other factors, policyholders in high-risk areas may find themselves facing higher costs as FEMA has recently implemented a rate system that reflects a more accurate assessment of individual flood risks.
- Travelers should be aware that comprehensive car insurance policies often include coverage for flood damage, ensuring vehicles are protected alongside homes in the event of extreme weather conditions.
- For sports enthusiasts who live in coastal areas or flood-prone regions, a higher hurricane deductible may be an added cost to consider when managing personal-finance and lifestyle choices.
- As you plan your food-and-drink preferences for the upcoming summer travel season, take some time to review your insurance policies and ensure adequate coverage to protect your home and wealth-management plans from potential flooding during hurricane season.
