Forced Flood Insurance

Posted October 15th, 2010
by HomeownersInsurance.org Staff (no comments)

Until hurricane Katrina, the Federal Emergency Management Agency (FEMA) flood insurance program was fully self-funded through private flood insurance contributions for decades. But Katrina caused so much damage from flooding that FEMA is now billions of dollars in debt. It has recently sought to protect itself from disproportionate payouts by reevaluating the nation’s flood zones, and the new maps are forcing many to buy flood insurance who never have before.

Flood insurance is not like homeowners insurance. For one thing, it doesn’t cover all of your valuables in the event of a loss. By law, any home that resides in a Special Flood Hazard Area must have flood insurance to protect against financial losses. The price tag will depend on where you live, the level of risk that flooding will occur, and the value of the home itself.

  • Your lender can force you to purchase flood insurance. In fact, depending on where you live, your lender may not have a choice but to require it.
  • FEMA has undertaken a massive effort to modernize flood zone maps. This has resulted in many homeowners who’ve lived in the same place for years suddenly finding themselves in a flood zone.
  • Flood insurance may cost several hundred up to a few thousand dollars per year, depending on your risk and the value of your property.
  • Just because your home hasn’t flooded since you’ve lived there, or even in the past 20 years or more doesn’t mean it can’t flood in the future. Consider how long New Orleans was thriving before floods washed away major chunks of the city.
  • FEMA has a process in place that allows you to dispute the decision which placed your home in a flood zone.
  • You can also hire an independent surveyor to determine the likelihood of flooding on your property. The service may cost you several hundred dollars, but it could save you more in flood insurance premiums over the years if you are proved correct.

No one is perfect, and mistakes are sometimes made. After all, keeping track of every river, lake, stream, and pond across the United States is no small job. Land and water features change over the years, and maps can easily become out of date. If you believe you’re being forced into buying flood insurance when you shouldn’t need it, with a little bit of research you may be able to refute their assessment.

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