What you need to know about flood insurance


By John Adams

ATLANTA – We have all watched recent devastation in the Carolinas from Hurricane Florence, as the catastrophic storm flooded homes and destroyed communities in the aftermath of the weather event. Here to sort out the facts is real estate expert, John Adams.

Question: John, why is flood insurance an important topic for most homeowners?

Adams:  Let me share five quick facts:

FACT 1: Just 1 inch of water can cause $25,000 of damage to your home.

FACT 2: Homeowners and renters insurance does not typically cover flood damage, but 43 percent of homeowners believe insurance covers them for flood losses.

FACT 3: More than 20 percent of flood claims come from properties outside high-risk flood zones.

FACT 4: Flood insurance can pay regardless of whether or not there is a Presidential Disaster Declaration.

FACT 5: Disaster assistance comes in two forms: SBA loans, which must be paid back with interest, or a FEMA disaster grant, which is about $5,000 on average per household.  By comparison, the average flood insurance claim is nearly $30,000 and does not have to be repaid.

Q:  So who needs flood insurance and who does not?

A: It’s based on the likelihood you will experience a flood, and that is determined by flood zones, which are geographic areas that FEMA has defined according to varying levels of flood risk and type of flooding. These zones are shown on the Flood Insurance Rate Maps.

Q:  AM I required to have flood insurance?

A: If you are in a FEMA flood hazard area and have a federally insured mortgage, the answer is YES.  Otherwise, NO. 

Q: And will that cover everything?  

A: Of course not. The maximum payout for a single family dwelling is only $250,000.  Not a penny more.

Q: So, can some of us just ignore the issue?

A: Unless you live on top of Stone Mountain, the answer is no.

Everyone lives in an area with some risk of flood—it’s just a question of whether you live in a low, moderate, or high-risk area. 

Q: Is the cost of flooding simply a matter of dollars and cents?

A: Not at all.  Flooding can be an emotionally and financially devastating event.  Without flood insurance, most residents have to pay out of pocket or take out loans to repair and replace damaged items.  With flood insurance, you’re able to recover faster and more fully.

Q: Doesn’t my homeowners insurance policy cover flooding?

A: No. Flood damage is not typically covered by a homeowners insurance policy.

Q: What about federal disaster assistance to pay for my damages?

A: Federal disaster assistance is only made available when there is a Presidential Disaster Declaration, and most flood events do not result in a declaration. Federal disaster aid typically comes in the form of low-interest disaster loans that must be repaid, along with whatever loan payment you may already have had for your property.

Q: How can I tell what caused the damage to my property?

A: Flooding is defined as rising waters. Damage caused by falling rain, water and wind is not considered flood damage. Talk to your insurance agent for more information about what is covered under your policy. 

SUMMARY: Every homeowner should determine their own risk for flood damage, and take steps to protect their homes and possessions while they can.

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