Should I buy flood insurance, P.2 | Florida Real Estate Attorney Blog

In our previous post, we began discussing how to go about deciding whether to purchase flood insurance. As many in the Northeast found in 2011, flood damage can be devastating. Without insurance coverage, a family could take years to recover from a disaster.

We left of discussing the consideration of your worst case scenario. Most homeowners insurance policies exclude flood damage from coverage unless the policy is through the National Flood Insurance Program, though a flood that is severe enough to be declared a federal disaster could make a homeowner eligible for federal disaster relief. In such a case, the homeowner could apply for a federal grant or perhaps a low interest loan.

The next consideration would be whether you're eligible for flood insurance. Although a homeowner needn't live in a high-risk flood zone to purchase flood insurance, the homeowner must live in a community which participates in the National Flood Insurance Program. Fortunately, most communities do. A homeowner can find out whether their community participates in the program by contacting their homeowners insurance agent or checking the National Flood Insurance Program's Community Status Book online.

Another thing to keep in mind regarding flood insurance is that it can be limited in what it covers. NFIP policies cover up to $250,000 of damage to buildings and $100,000 for contents. Coverage for basements is limited. It is important to understand the limitations of any flood policy.

It is, of course, important to consider the premium cost in any policy. Moderate to low risk areas may be eligible for a preferred policy.

It is important for homeowners to consider whether they may be in need of flood insurance. According to statistics, one's home is over twice as likely to be damaged by flood than by fire. And even though flood policies do have limitations, they can be a lifesaver when the waters come.

Source: Fox Business, "Five Steps to Assess Your Need for Flood Insurance," Jay MacDonald, January 31, 2012.

Source: http://www.floridarealestatelawattorney.com/2012/02/should-i-buy-flood-insurance-p2.shtml

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