When to Buy Flood Insurance

Answer:

Even if the creek in your backyard were to dry up tomorrow, you should seriously consider purchasing flood insurance. According to the Federal Emergency Management Agency (FEMA), approximately 25 percent of all flood insurance claims come from areas that are at low to moderate risk for floods. Flooding doesn't happen only along the banks of rivers, creeks, or other bodies of water. It can also occur in low-lying areas or can result from heavy rains, melting snow, inadequate drainage, and hurricanes.

If you're obtaining a federally backed mortgage, your lender will require you to purchase flood insurance if your home is located in a flood zone. To find out if this is the case, your lender will order a flood hazard search that will access FEMA flood zone maps. If your home is found to be in a minimal risk area, you won't be required to purchase flood insurance. However, you will still have the option to purchase it (often at preferred risk rates) if your community participates in the National Flood Insurance Program (NFIP).

You can't purchase flood insurance as an endorsement to your homeowners policy. Instead, you must purchase a separate flood insurance policy through a company that participates in the NFIP. But many companies that issue homeowners policies also issue flood insurance policies, so start by calling your own insurance agent or company.

If your company doesn't write flood insurance policies, call the National Flood Insurance Program at 1-800-638-6620 to get a list of insurers that do. And don't delay. Once you've applied and paid your premium, a 30-day waiting period generally applies before the policy is effective (unless the initial policy is issued in connection with a loan or because a flood map has been revised).