With the recent flooding in south Louisiana and Mississippi, flood insurance has been a question brought up to me recently. If I am “not in a flood zone”, do I need flood insurance?
I guess the first thing I would say is that everyone is in a flood zone. Flood zone X, the one that is commonly referred to as not in flood zone, simply means that the area has a less than 1% chance of flooding during a 30 year mortgage. The risk is low and not in immediate danger of flooding caused by overflowing dams or hard rains. However, many property owners in Baton Rogue learned the hard way that just because you are in a low risk area, doesn’t mean you can’t flood. According to FloodSmart.org, 20% of all flood claims happen outside of high risk areas.
Flood insurance for those not in federally required flood insurance areas isn’t as expensive as you would think. The National Flood Insurance Program offers Preferred Risk Policies for these low to moderate risk areas that reduce the price significantly.
Lastly, if you have a home valued at more than $250,000 make sure that you get a quote on excess flood insurance. The cap on flood insurance for residential buildings is $250,000, but there is an excess option that will provide the coverage that you need.
Do you need flood insurance? My response would be, why not? Your home is your most important asset, so why take the chance even if you are “not in a flood zone”.