Get flood insurance before you get soaked

A homeowner in New Jersey thought she was one of the lucky ones. After a freak flood struck hundreds of nearby homes and businesses, her house, on higher ground, went untouched. Then, when a local creek overflowed, her house was spared once more. But as she was organizing flood relief for other local residents, groundwater from saturated soil began seeping into her basement, causing tens of thousands of dollars in damage, which her homeowner’s policy didn’t cover. Since she lives nowhere near a flood area, she never thought to buy flood coverage. It doesn’t take a Katrina-style coastal disaster to bring flood damage a homeowner’s way, according to the editors of Consumer Reports. Snowmelt repelled by frozen ground can cause flooding. New development can leave less soil surface to absorb water, making formerly safe homes suddenly vulnerable. Yet a typical homeowners insurance policy won’t cover those perils. A homeowner will need separate flood insurance says Consumer Reports, which ranges in cost from several hundred to several thousand dollars a year, depending on coverage and risk levels. In recent disasters involving both wind and flood damage, some insurers have tried to pin the blame on flood waters (not covered by their policies) rather than wind (covered) and used that distinction to deny homeowners’ claims. In an average year, a quarter of all flood losses involve homes in areas deemed low to moderate flood risks by the Federal Emergency Management Agency. In part, that’s because many of FEMA’s flood maps are not up-to-date. According to an expert at the Consumer Federation of America, while with most insurance, if there is any doubt consumers are advised not to buy it, in the case of flood insurance they recommend the opposite. COMMON QUESTIONS ABOUT FLOOD INSURANCE Do I have to buy it? If someone is using a federally backed mortgage to buy a home that’s judged to be at high flood risk, the lender may require it. Otherwise, it’s the homeowner’s call. How do I determine my home’s flood risk? For a preliminary assessment, CR suggests that homeowners go to www.floodsmart.gov, click on Your Flood Risk and enter the home’s address. The level of risk is determined by the property’s location on the community’s flood map. Homeowners can see for themselves at their local municipal offices. How do I buy it and how much should I get? Most insurance agents sell national flood insurance. Generally, they recommend replacement-cost coverage for the home and contents; that is, coverage to rebuild the home to its state before the flood and to replace its contents. Unlike some homeowners insurance, CR notes that a national flood policy generally won’t pay more than the policy limit if rebuilding costs run higher than anticipated. Usually, coverage starts 30 days from the date of purchase, although a policy needed to secure a home mortgage is effective immediately. FEMA sells up to $250,000 in coverage for the home and $100,000 for its contents. Homeowners who need more coverage (called ‘excess’) should call insurers such as Chubb and Firemen’s Fund. They also sell a more comprehensive alternative to basic national flood insurance, though the price may be higher. For more details, go to www.floodsmart.gov and click Flood Insurance Policies on the left-hand side. Visit the Consumer Reports Web site at www.consumerreports.org.