Should You Buy Flood Insurance?

Despite the past examples of the floods in the Midwest and the flooding caused by Hurricane Katrina, there are still people who are skipping the flood insurance. The cost of the premiums or the misconception that the government takes care of all the problems are some of the reasons that people give for forgoing the flood insurance. The truth is that flood insurance is one gamble you need to take.

Everyone can get flood insurance if they live in a community that participates in the National Flood Program. It is highly recommended that anyone living within the FEMA 500 year flood zone consider purchasing flood insurance. It is now law that banks require mortgage holders to have flood insurance if they live in the 100 year flood zone. Recently floods have shown that people in adjacent areas should also be insured.

The truth is that the federal government does come in and help out during natural disasters. It offers low interest loans to people who have lost everything and are required to start over from scratch. Unfortunately it can not magically pay back the mortgages that are still owed on homes that no longer exist. Typically homeowner’s end up taking out federal loans to payback the mortgages and still have nothing left to show for all the money they owe.

There are some things that you should consider when you are purchasing flood insurance:

*Flood insurance only covers flood damage. Damage that comes from flood conditions (like drains backing up) is not covered.
*Flood insurance determination will require a survey.
*Flood insurance premiums pay a depreciated amount and not the amount needed to reconstruct the home.

Even with the downfalls, purchasing flood insurance is a wise investment for people that live near water or any kind or in areas protected by levees.

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Bill also writes for Low.com. This website offers low cost health, life, homeowners and car insurance. Click the underlined link to learn more about consumer rights, credit cards and tips on saving money.

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