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Do I Need Flood Insurance If I’m A Renter?

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 | August 23, 2018
Do renters need flood insurance?

If you’re renting your home, you might think basic renters’ insurance is enough. You assume it covers everything you need like an all-inclusive package… but it doesn’t. Like many types of insurance, there are exclusions that apply to renters insurance.

One of those exclusions is flood. Flood coverage is not included in most renters’ policies—but it’s nevertheless an important coverage, especially in high-risk flood or rain areas.

There are 5 million flood insurance policies across the country, but only 2% of those are for rental properties. Talk about risk! In most U.S. areas, renters make up anywhere between one-fifth and one-half of inhabitants. That means that nearly half of people could be at risk for the serious and substantial costs that are associated with flood damage.

Should you consider renters’ flood insurance?

Yes—and here’s why.

What is flood insurance for renters?

Flood insurance protects your home and personal belongings (contents) in the case of a flood. Storms, rain, melting snow or ice, broken dams, mud overflows, or other natural disasters can cause serious flooding in your home. Flood insurance covers the costs associated with these risks including repair and replacement of your possessions.  

Flood insurance typically doesn’t cover water damage due to “internal” issues like broken pipes or plumbing issues. These are usually covered by your basic renters coverage

Read: 8 Flood Insurance Myths

Why do renters need flood insurance?

While it’s not required, flood insurance can be a beneficial supplemental insurance coverage for renters. Depending on where you live, It can be as important as your basic renters insurance itself.

1. Floods are expensive.

Even one inch of water damage can cost thousands of dollars in damage. The average estimated cost for 1-4 inches of water is $7,800.

Fixing a small area of your carpet can cost $300 alone. Then you have to replace all of your furniture and other contents that got damaged.

You’ll also need to consider other associated costs. Floods often beget mold and mildew due to the moisture and humidity in the house, which could further damage your things. You’d also have to pay to stay in a hotel or other relocation costs while your home is being renovated or restored after a flood.

These costs can quickly add up to make flooding one of the most expensive natural disasters for your rental unit. 

2. You need to protect your contents.

Renters typically ignore flood insurance because they aren’t responsible for the structure of their home. While that’s true, you’re still responsible for all of your contents inside the structure. Everything you own is yours to insure.

Your landlord’s flood policy will never cover your personal contents. Moreover, your basic renters’ insurance won’t cover your contents if they’re damaged due to flood.

The only way to protect your items from flood damage is with flood insurance.

3. You’re at higher risk.

Although all renters should consider flood insurance, some homes are at higher risk than others. FEMA has created a flood map for all communities across the nation. They use historical and geographic data to determine the likelihood that your home will experience a flood this year and in the next five years.

The highest risk areas are called Special Flood Hazard Area (SFHA). There are also low and moderate risk areas. However, even if you are renting a low or moderate risk unit, you still have some risk of flood. In fact, FEMA reports that 20% of all NFIP claims are from moderate- and low-risk zones—and these homes often report the greatest amount of damage (likely because they’re not properly prepped for a disaster like that).

You may want to check out a flood map before renting, especially if you’re going to be a long-term renter. Higher risk equals higher premiums for flood insurance, so you might want to rent in a moderate or low risk area.

Flood insurance is especially critical for those who live in areas prone to hurricanes and heavy rains.

4. You can’t rely on FEMA coverage.

In instances of national security, FEMA will step in with a relief fund to help pay for floods. A lot of renters and homeowners mistakenly think that FEMA will just step in if they go through a natural disaster.

However, this usually isn’t the case. FEMA will only provide funds if the disaster is declared a national emergency. Most floods are not covered by FEMA—even major floods over large areas.

Don’t think that FEMA will cover you if something happens. And even if they do cover you from a major hurricane or storm, it may not be enough to cover your expenses. Flood insurance is the only way to get comprehensive insurance to protect against flood-related damage.

How much does renters flood insurance cost?

Most renters need between $10,000 and $50,000 for their flood insurance coverage limits alone. The average cost for both renters and homeowners is $700 annually, but this is variable based on your situation.

Flood insurance premium costs depend on your coverage limits, risk, and rental home’s previous floods. Higher limits equal higher premiums; SFHA homes have greater premiums; and units with a history of floods will pay more for insurance.

Flood insurance can be one of the pricier supplemental coverage options, especially in high-risk areas. However, renters are in luck because it’s typically cheaper for rental units since you are only covering your items and not the actual structure of the home.

It’s important to note that the National Flood Insurance Program (NFIP) underwrites all flood insurance. This federal agency protects you in the case of a serious natural disaster. Your insurance company acts as a liaison between you and the NFIP.

Learn more about the costs of flood insurance here, and find out how to reduce your flood premiums here.

Conclusion

To fully protect yourself from the cost of replacing your personal property after a flood, whether its a natural disaster, storm, or hurricane, you’ll need flood insurance.

Whether you rent or own your home, make sure you’re protected. Contact an InsuraMatch agent today to learn more about flood insurance for renters.