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The basics guide to flood insurance

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    As global temperatures rise, so does the need to reevaluate your homeowners’ insurance policies. In 2021, a Stanford University study confirmed climate change caused nearly $75 billion in flood damage in the U.S. in the past three decades. You may think you’re safe from flood damage if your home historically wasn’t considered a flood risk, but as climates progressively change, you could find yourself in a position where a flood insurance policy may come in handy.

    What is a flood risk?

    Flood risk is the statistical likelihood that your home is in an area susceptible to flooding and flood damage. Insurance companies assess a home’s historic and projected flood risk to determine policies and premiums. Lenders require flood insurance if your property is located in a special flood hazard area (SFHA) as designated by FEMA. If you live in a high flood risk area, then your insurer may require you to have a flood insurance policy as part of your overall homeowners insurance package. 

    A homeowner’s flood risk assessment

    Because of unprecedented weather patterns posed by climate change, historic flood risk doesn’t always suffice as a predictor. Note that a home may not be in a flood zone today but may be a risk for flood in the future. Whether you are thinking about buying a home, or already have a home and are looking to access equity, resources are available to help you understand your flood risk.

    Common questions around flood insurance

    If you suspect your home may need flood insurance but aren’t sure how to move forward, here are some answers to some commonly asked questions around flood insurance:

    When is flood insurance required for a mortgage?

    Flood insurance is a type of homeowners insurance that provides additional coverage to potential damages caused by flooding. Flood insurance is usually required when a home is in a high-risk federal or local flood zone. But each home is assessed on a case-by-case basis based on current FEMA guidelines. Some insurers may recommend flood insurance based on your home’s projected risk, or you can opt-in to a flood insurance policy as well. Note that flood insurance often raises your premium because it serves as increased coverage and have a higher deductible. 

    I already own my home. Do I need flood insurance?

    If you already own a home and have either experienced a flood, reassessed your home’s flood risk or pondered climate concerns, you can speak to your insurer about adding flood insurance to your homeowner’s insurance policy. 

    Are roof leaks covered by flood insurance?

    Standard homeowners insurance policies usually cover sudden or accidental roof leaks, but flood insurance policies may provide more comprehensive coverage. Your current or prospective insurer may be a valuable resource to learn more about policy coverage. 

    In summary

    Attributable to new and worsening climate change conditions, a new demographic of homeowners may need to consider flood insurance. Assessing your flood risk can help you determine whether you should take out a flood insurance policy, especially as climate change continues to impact homeowners nationwide.

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