4 Things to Know About Flood Insurance
With the down payment, appraisal fee, closing costs, home insurance, and moving expenses, buying your first home can be both an exciting time and an expensive one. So when you find out your home is located in a flood zone, the thought of buying flood insurance may make you want to scream. But slow down! Getting flood insurance isn't just another expense – it is a way to protect what probably is the biggest financial transaction you will ever make. So here are four things you should know about flood insurance to ease your mind:
Flood insurance covers different events from your regular home owner's insurance. For example, flood insurance may cover electrical and plumbing systems, and installing carpet over an unfinished floor.
You may be required to buy flood insurance. This happens if you live in an area that has been designated as a flood zone by the National Flood Insurance Program (NFIP). If you live in a flood-prone area that is not designated as such by the NFIP, then it is only recommended that you get flood insurance.
Make sure you budget for flood insurance. You may think that flood insurance costs about the same as your home owner's insurance. But instead of making assumptions, you should call several insurance companies who offer flood insurance. That way, you have an accurate account of how much you will need to budget for. And you will be aware of what is, and is not, covered.
Better safe than sorry: Flood insurance - it's just one more expense, right? Wrong. Just think what could happen if you are located in a low risk area, and your home gets flooded anyway. Not only will you lose valuable possessions and treasured heirlooms, but you and your family will be temporarily displaced for who knows how long. Having flood insurance helps mitigate both the financial and emotional impact that comes with the tragedy of being subjected to a flood. And remember, even a small amount of water can create more damage than you realize.
It's understandable that no one wants to incur more monthly costs if they don't have to. But when it comes to flood insurance, you may be taking a gamble that you could lose. Take care of your property, for the present and the future.