Should You Carry Flood Insurance?

In the wake of devastation left by storms such as Hurricane Sandy, many homeowners wonder whether they should carry insurance for flooding. Although homeowners insurance protects your home against many perils, most specifically exclude weather-related flood coverage.


Determining Your Risk


Your residence will be assigned a risk rating based on published flood maps. If you are in a high-risk zone, your mortgage company will probably require you to carry flood insurance. If you are in a low risk or moderate risk zone, this may be more of an optional coverage for you. However, considering that your home is most probably your biggest asset, you may wish to give strong consideration to this coverage. Again, using Superstorm Sandy as an example, many people lost their homes entirely because they were either uninsured or did not have enough flood insurance to rebuild.


Types of Flood Insurance Available


  1. The National Flood Insurance Program (NFIP)
  2. Private insurance


The NFIP was created by an act of Congress in 1968 to provide homeowners and renters with set rates for flood insurance. These rates are based on several factors including the type of construction of the dwelling and the risk zone where it is located. If your community participates in this program, you are eligible for the insurance. The program is administered by the Federal Emergency Management Agency.


If the NFIP program is not available in your area, you will need to turn to the private insurance market.


The decision of whether or not to carry insurance for flooding is based on several factors such as risk and your mortgage lender’s requirements. Consult with an insurance agent to help determine the best coverage for your needs.