While inclusion of floods in home insurance coverage is mandated for properties located in flood-prone areas, regular home insurance policies do not include natural disasters such as floods in the risk coverage. However, the National Flood Insurance Program (NFIP) reports that a fourth of flood insurance claims were made by homeowners coming from low-to-moderate flood risk areas. This is due to the fact that the risk of floods can happen not only in flood plains, but also to anywhere else that are considered flood zones.
The most common natural disasters ever to hit the United States are floods. Homes located in flood plains have a high 26 percent possibility for flood damage that can happen anytime within a typical 30-year mortgage.
Homes in flood plains and areas prone to floods should have sufficient home and contents insurance coverage for floods caused by rains, tropical storms, hurricanes, melting snow, failure of drainage systems and failed or damaged flood control structures.
Even if your home were located in a low or moderate risk area from floods as protected by a network of levees, dams and dikes, it would still be worth it to include floods in your home insurance coverage. Some homes may be located on a hill or mountainside and would be way above flood occurrence, but would still be at risk from mudslides and should be covered by flood insurance.
According to the NFIP, homeowners living in low to moderate-risk areas can qualify for a Preferred Risk Policy, which offers contents home insurance at $39 per year or a home and contents insurance coverage starting at $119 per year. With the small premium for such insurance coverage, homeowners should consider obtaining flood insurance and assure protection for their homes.
A mere inch of floodwater in the home can result to $8,000 in damages and could jump up to $19,000 as the water goes higher. Having flood insurance could assure you of coverage for such costs; otherwise the damage cost will come out of your pockets.