I’m buying a house that is next to a creek. Do I need flood insurance?
UPDATED: May 7, 2012
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Asked May 7, 2012
Having the stream is good indication that flooding is possible, regardless of whether the area had ever suffered flooding. A good rule of thumb is that any watercourse can overflow its boundaries, and living in a home with one in close proximity may even cause you to pay higher rates for flood insurance. Keep in mind, too, that if the stream is on your property, you could also be responsible for homeowners liability claims caused by the stream as well.
With or without a stream, you may be required to have flood insurance. Many mortgage lenders require flood insurance as a condition of the loan, or if the home is located within known 100-year flood levels. The idea is a simple one: if your home was built in a location where flooding is known to have occurred in recent history, it needs to be insured the possibility of a flood happening again.
With a stream, something could happen farther downstream, such as a tree falling that would cause the water level to rise and flood your home. Similarly, a levee could break upstream from the home which caused a sudden deluge of water. In both these cases, flood insurance would be the only thing between devastation and untold out of pocket costs. In this circumstance, not having flood insurance would be far more expensive than having it for 20 years and never filing a claim. Without flood coverage, you are risking everything you have, and the only replacement options if for you to start over at the beginning.
Flood insurance is not part of a standard homeowners policy, and may require the use of high risk insurance or even government-monitored solutions such as the FAIR plan. To find out more about flood risks in your specific area, contact your state department of insurance. They can also help you find insurance companies licensed to sell flood insurance in your state.
Answered May 7, 2012 by Anonymous