If it rains, it can flood. If it floods, you could potentially face tons of damage, from your home’s structure to all the belongings inside. Carrying flood insurance is a great start in helping to protect yourself from the financial aspect of flood damage, but your policy is only as good as the coverage it offers. Do you have enough flood insurance to cover your home and possessions in the case of a devastating flood?

How much flood insurance is required?

Flood insurance is required if you have a federal mortgage that’s backed by the government, and your home is located in a Special Flood Hazard Area (SFHA). This usually means your home is in a high-risk flood zone with a 1% chance or more of flooding (also referred to as a 100-year flood zone).

Some private mortgage lenders also require flood insurance if you’re in a high-risk flood zone. Some lenders may always require flood insurance, based on their discretion and the terms of your loan.

Why do mortgage lenders require insurance?

A lender is investing in your home. They have a financial stake in your property. If a flood came through and completely destroyed your home, their asset (or promised asset) would also be damaged. They want to make sure your home is protected in case of a natural disaster.

How much flood insurance do I need?

If your home has a federally backed mortgage, you are required to have enough insurance that’s equal to your property’s rebuilding cost or the maximum limit of coverage available.

That’s the rule… But it’s a pretty good guideline for anyone to follow, regardless of what your lender requires.

We recommend that everyone have enough flood insurance to cover the total value of rebuilding your home and replacing your possessions. If a flood came through and destroyed everything, you’d want your flood insurance to pay for you to rebuild your home and your life from the ground up.

How do you know how much your home is worth?

So you know you need enough flood insurance to rebuild your home and repurchase your possessions in the case of a total and devastating flood. But how much does that really cost? What is the actual total value of your property?

This generally includes structure and possessions. that’s the cost to rebuild your home, like the size of house, quality of materials, and cost of labor plus all of your furniture, appliances, and belongings.

To make it easy, your flood insurance should mirror your standard homeowners insurance. Your insurance company has likely already set an approximate rebuild cost for your home in your dwelling coverage, and you’ve listed the value of your belongings in your contents coverage. Use those same numbers for your flood insurance to ensure your home is covered in its entirety.

Should I get public or private flood insurance?

The National Flood Insurance Program (NFIP) offers flood insurance through FEMA. This is the right option for some people, especially those who get subsidies through FEMA. However, the NFIP limits are often lower than what private flood insurers offer. 

The NFIP limits are:

  • Building structure = $250,000
  • Personal property = $100,000
  • Valuables + business property = Up to $2,500 combined (fine art, collectibles, fur, jewelry, business property)
  • No coverage for additional living expenses

These limits aren’t very high, so they may not cover all of your home and possessions. If your home’s structure is worth more than $250,000 or your personal belongings equate to more than $100,000, you should consider purchasing private flood insurance.

Also, if you have a lot of fine art, jewelry, collectibles, or other valuables, you may want to consider a supplemental rider to cover these goods.

The NFIP doesn’t offer coverage for additional living expenses. That means if a flood renders your home inhabitable, you are responsible for the cost of temporary relocation (additional rent or hotel expenses, for example). Private insurers will usually offer additional living expenses as part of your flood insurance, so you aren’t left with these additional costs while dealing with all of the other headaches of a flooded home.

Cover the cost of your home

The purpose of insurance is to prepare for the worst. So, you should have enough flood insurance to cover the entire value of your home and possessions in the case that the flood washed everything away.  

Oftentimes, the NFIP policies don’t offer high enough coverage to completely protect your home. That’s why we recommend shopping around for a flood insurance policy, to see what coverage is out there and to ensure most of your expenses would be covered in the case of a loss.

Shopping for the right flood insurance is easy with InsuraMatch. You can start getting quotes from the most reliable flood insurers right now.  Give us a call at (844) 819-2230 today.


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