Did you know that floods are the second-largest natural disaster? Flood insurance, however, is not covered in a regular homeowners’ policy and as a result, many Minnesotans do not have it.
And although loss due to flood is not always a common risk, that doesn’t mean you can’t or shouldn’t purchase flood insurance.
According to FEMA, private insurance companies did cover flooding up until 1929, which is the year a devastating flood hit the Mississippi River. After that, the government stepped in to offer post-flood disaster relief, which is not the same thing as insurance.
Then, in 1968, Congress created the National Flood Insurance Program (NFIP) enabling property owners to purchase government-administered flood insurance as an alternate to the disaster relief that is still offered by the government today.
So, as long as your community participates in the NFIP, as most Minnesota communities do, you can purchase flood insurance from your property insurance agent. You do not need to live in a designated floodplain to get it, but if you do, you cannot get a federally backed mortgage without flood insurance.
Before considering flood insurance, it’s important you understand how a flood is defined.
Although many policies do not specifically define what a flood is, those that do describe it as “general and temporary condition of partial or complete covering of normally dry land areas from the rapid accumulation or run-off of surface water.” Still, be sure to talk to your insurance agent so that you understand what constitutes a flood in the policy you purchase.
And, even if you do not live in a flood-prone area, you should consider flood insurance because approximately 25 percent of flood claims come from property owners who live outside of high risk areas.
It makes sense that the cost of flood is less for properties located in a low and moderate risk area than it is for those located in a high risk area. Still, the cost pales in comparison to disaster assistance, which is difficult to obtain, is usually offered in the form of a loan, and must be paid back.
You can purchase flood insurance any time (and as long as your community participates in the NFIP), but there is a 30-day waiting period after you applied and paid the premium before it becomes effective. You also are eligible for flood insurance if your property as been flooded in prior years.
There is never a wrong time to add flood insurance to your homeowners’ policy. If you’d like to learn more about your flood insurance options, contact us. We are here and happy to help.