In the aftermath of Hurricane Harvey many people may be asking themselves, "Should I buy flood insurance"?
Some may have the view point, "I made it with over 40 inches of rain and didn’t flood, so why buy now?" While others say – that was too close for comfort, sign me up… A couple of things to remember: every single structure or piece of property is IN a flood zone. There is no definitive fact suggesting that a certain location could NEVER flood... Harvey proved that!
The only difference – some are greater than others. Not to mention, flood coverage is absolutely excluded under a home insurance policy. You must have a separate flood insurance policy in place to cover the event of a flood which is defined as, "A general and temporary condition where two or more acres of normally dry land or two or more properties are inundated by water or mudflow”. However, the coverage itself is defined as "rising water".
Yes, Hurricane Harvey brought wind, but the majority of the damage was due to flooding. As many are discovering, their home owner insurance offers no protection against rising water.
Did you know:
· You have a 1 in 4 chance of flooding
· You are 5 times more likely to experience flooding than fire
In our opinion, if you DO NOT have flood insurance, GET IT and GET IT NOW. Here’s why… It is estimated that over 80% of homes affected by Hurricane Harvey, did NOT have flood insurance. This is a staggering number if you think about it… In our opinion, it is just a matter of time before EVERYONE with a mortgage will be required to purchase flood insurance.
Flood zones: Preferred Risk / Standard / Grandfathered Preferred
Example: Let us assume you are in Zone X ( the least likely to flood), you are eligible to purchase flood insurance in a package… such as $250,000 on structure and $100,000 on contents for $504 a year. In this zone, you are NOT required to purchase flood, regardless if you have a mortgage or not.
However, our area will soon see a rapid re-zoning effort from the government due to the unprecedented area of flooding from Harvey. Should you NOT have a flood policy in effect when that re-zoning takes place, and you are then placed in a Standard zone, you will be forced to pay “standard” rates… could be as high as $3500+ a year. But wait… there’s more… should you purchase a “preferred risk” policy NOW and THEN get rezoned, you are considered “grandfathered preferred” and can go in at a much lower rate once an elevation certificate is done.
Basically, it is just a matter of time before we will all be required to purchase flood insurance. It is totally up to you as to when you choose to purchase it. Wait for the standard rates or get in on the preferred rate now to lock in grandfathered rates for later. We experience several cases where consumers decline to purchase flood insurance and later find out they have been re-zoned into a (more probable) flood plain.
Some have mentioned, "Why buy flood insurance when FEMA offers disaster assistance?"..... Well, the difference is MAJOR... The FEMA assistance is in most cases loans which must be repaid... An Insurance policy is a legally binding contract which provides protection in this instance that DOES NOT have to be paid back.
Not to mention the peace of mind in knowing you are grandfathered should your area be re-mapped (which it will)..... AND when waters rise you can rest assured that your property will be covered. You more than likely spend a couple hundred dollars EACH MONTH on your auto insurance...... Why not spend a fraction of that on flood insurance for your property? Isn't a flood loss much more damaging?
Most consumers are unaware of the ACTUAL threat of water.... Many are also unaware of the (re-zoning) process done by FEMA... We hope you have found this blog informative... Don't hesitate to post your questions in the comments section.
Sincerely,
The CMI of Texas Team!