Should You Purchase Flood Insurance When Moving to a New Home?

Owning a home comes with its fair share of responsibilities. From making necessary repairs and changing the locks to testing smoke detectors and forwarding your mail, there are many to-dos that must be completed when moving into a new house. One of the most important of these obligations is to shop and assess your insurance options. If purchasing a home with a mortgage, your lender will likely require you to obtain homeowners insurance. However, the lender may not require you to have flood insurance unless you live in a designated “high risk” flood area. In this case, the decision over whether or not to purchase flood insurance is up to you.

So should you purchase flood insurance even if you don’t live in a high risk area? This is the question weighing on many Americans’ minds – and for good reason. According to the Federal Emergency Management Agency (FEMA), “Floods are the most common and costly natural disaster in the United States.” The agency reports that “a single inch of water in an average home can cost more than $26,000 in damage.” Unfortunately, this damage doesn’t just occur in coastal states. In the last several years, floods have occurred in all 50 states, according to FEMA.

While flood insurance can certainly come in handy in the case of an unexpected natural disaster (read: hurricane, snow thaws, excessive rainfall and other extreme weather conditions), it also tends to be quite expensive. Oftentimes, the decision over whether or not to purchase flood insurance simply comes down to cost and your budget. For more information on flood insurance basics, keep reading.

What is flood insurance?

Investopedia defines flood insurance as “a type of property insurance that covers a dwelling for losses sustained by water damage, as it specifically relates to flooding.” This type of insurance policy is backed by the National Flood Insurance Program (NFIP). Homeowners and renters can purchase an NFIP flood insurance policy through an insurance agent.

What constitutes a “flood”?

According to FEMA, a flood is considered:

“A general and temporary condition of partial or complete inundation of 2 or more acres of normally dry land area or of 2 or more properties (at least 1 of which is the policyholder’s property) from:
–Overflow of inland or tidal waters; or
–Unusual and rapid accumulation or runoff of surface waters from any source; or
–Mudflow
Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.”

What does flood insurance cover?

The NFIP provides general guidelines to flood insurance coverage in the organization’s Summary of Coverage. In the summary, the organization recommends purchasing coverage for both Building Property and Personal Property. Here’s what’s insured under these two plans.

Building Property Coverage – The insured building and foundation; electrical and plumbing systems; central air-conditioning equipment, furnaces and water heaters; refrigerators, cooking stoves and built-in appliances; permanently installed carpeting; permanently installed paneling, wallboard, bookcases and cabinets; window blinds; detached garages; and debris removal.
Personal Property Coverage – Personal belongings; curtains; portable and window air conditioners; portable microwave ovens and dishwashers; carpets; washers and dryers; food freezers and the food inside; and certain valuable items.

What is not covered by flood insurance?

Items not covered by either Building Property Coverage or Personal Property Coverage include: damage caused by moisture, mildew or mold that could have been avoided by the property owner; currency, precious metals and valuable papers; property and belongings outside of a building; living expenses such as temporary housing; financial losses caused by business interruption or loss of use of insured property; and most self-propelled vehicles such as cars.

For more specific guidance on what is and what is not covered by flood insurance, check here.

Does homeowners insurance cover flood damage?

No. Flood damage isn’t usually covered by homeowners insurance. So if you wish to have flood insurance, you will need to purchase a separate flood insurance policy.

Who should consider purchasing flood insurance?

Given that floods are the most common natural disaster in the U.S., we recommend that any homeowner or renter concerned about potential flood damage consider purchasing flood insurance. Those living in high risk areas, such as coastal cities or low-lying towns, will most likely be required by their lender to purchase flood insurance. If you live outside of a high risk area, you should still consider purchasing a separate flood insurance policy – particularly if the area is prone to heavy rainfall or snowfall and/or is located near a river, beach or dam. According to Floodsmart.gov, “more than 20 percent of flood claims come from properties outside high risk flood zones.”

How do I go about purchasing flood insurance?

If you’re interested in purchasing a flood insurance policy, we recommend first reaching out to your homeowners, renters or business insurance agent for guidance. The agent should be able to provide you with pricing information and options that fit your needs. For additional help, you can also contact the NFIP Help Center at 800-427-4661.

Are there any additional tips to purchasing and obtaining flood insurance?

Yes. The NFIP recommends reviewing the Declarations Page in your flood insurance policy for amounts of coverage and deductibles. You should discuss your options for either raising or lowering deductibles with an insurance agent, company representative or lender. In addition, the NFIP strongly recommends keeping all receipts for electronic equipment, wall-to-wall carpeting, major appliances and other high-cost items. This will help the adjuster process your claim more quickly.

Moving to a new home?

Purchasing a new home means having to make tough decisions (like whether or not to buy flood insurance). Fortunately, choosing a mover doesn’t have to be one of them. For help finding the best moving company to handle your relocation, check Moving.com’s extensive network of reputable and reliable movers. All relocation companies in our network are licensed and insured, so you can rest assured that your move will be in good hands. For customizable moving checklists, personal tasks list, email reminders and coupons to help you stay organized during a move, we recommend also checking out our move planner tool. Best of luck and happy moving!