Are my husband and I required to buy flood insurance?

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Asked April 23, 2012

1 Answer


Flood insurance is not part of a standard homeowners policy, and is usually only available through high risk insurance companies, or from your state's equivalent of the FAIR plan. The reason for this is that when flooding does happen, it has a tendency to affect large numbers of homes, and could potentially bankrupt standard home insurance companies.

If you are still making mortgage payments, your contract probably requires you to be insured against flooding. Because flooding can happen in any state, most lenders make flood insurance part of the mortgage to protect their own investments. In this case, failure to maintain your flood insurance could legally jeopardize your mortgage, and you could lose your home for not upholding your legal obligations.

If your home is paid for, you have the option of deciding whether you want flood insurance or not, it might be important for you to give that some serious consideration before you drop the coverage. If you do not have flood insurance and your home is destroyed or damaged by rising waters, you would be liable for the costs of repairs or replacing the entire home out of pocket. Since most homeowners do not have the available cash flow to rebuild their homes because of a freak weather event, having flood insurance is the safest plan of action.

Flood insurance is not cheap, but it is generally thought of as a necessary expense. As an example, you could pay for flood insurance for 25 years without a claim, but when a flood destroys your home in the 26th year of the mortgage, the amount of money you have paid in over the years would instantly become minuscule when compared to the cost of the home you have to replace.

Answered April 23, 2012 by Anonymous

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