Wednesday, September 21, 2016

Do You Really Need Flood Insurance?

As you may know, my family and I live on the May River. It is truly exquisite, and it gives my family the true Lowcountry experience. We can catch crabs off of the dock, go out on our boat to spend precious family time, and enjoy incredible views that can wipe away the stress of any day being a realtor and a mom.

But what living on a river also brings is flooding.  This year, especially, we have experienced several tropical storms and several rounds of King Tides, which bring the rivers up and can potentially threaten homes. We have been blessed, but we are also protected by flood insurance to cover whatever might happen when Mother Nature decides to throw us a curveball. 

Why Flood Insurance?

I have worked with a number of clients who think that, because Bluffton is not in a flood plain, they don't need flood insurance. They may be right--mortgage companies don't require flood insurance for properties not designated as a risk.  But we also live in the Lowcountry, miles from the coast, in an increasingly unusual time for weather events.  Just last year, Columbia flooded and destroyed businesses and homes throughout the region. Did you see that one coming? I sure didn't.  Even our sweet rural neighbors in Ridgeland experienced flooding over the past few seasons.

It happens--and flood insurance is both affordable and a huge weight off of any homeowner's mind.  Most homeowners insurance will not cover flooding claims, so you may actually be out of luck if you do not have flood insurance.  In the past 5 years alone, ALL FIFTY STATES have experienced flooding of some kind. Baton Rouge, Louisiana is the latest and they didn't have a levee break or a river breach its banks--they had a really extreme set of rainstorms and they had a 500 year flood that destroyed an entire community.

I talked to my friend Cynthia Woodhall, one of the area's best insurance experts and one that I highly recommend, about flood insurance.  She gave me some serious food for thought!

The current estimate for 1 inch of water covering 2000 square feet is priced at $21,000, while 1 foot of water increases that bill to $52,000. In the low risk zone, the maximum coverage amount could cost less than $600---you could say that flood coverage is relatively cheap.
So, if you chose not to purchase a $450 policy, for example, to cover your home, you may see 5 figure bills just for ONE claim--and you'd be paying that out of pocket.  Most of us can come up with a few hundred dollars, but can you pay $20,000 in one check? Few of us can--and that's the peace of mind that comes from flood insurance.

How Flood Insurance Works

Unlike your homeowners insurance, which you likely pay in monthly installments as a part of the escrow in your mortgage, floor insurance is paid in one lump sum to cover you for the entire year. It is entirely separate from the homeowners insurance that is paid through your mortgage company.  So let's say that your home is in a preferred flood zone (like Bluffton) and you buy the maximum amount of coverage to cover a $250,000 home and $100,000 for all of the things inside of your home.  Flood coverage will pay only as much as your maximum coverage, regardless of how much the cost of replacing your home actually is.  You'll spend $450, including all FEMA fees, and a policy must be in place for 30 days before it goes into effect--so no running out the day before a hurricane hits to purchase coverage! You also cannot cancel your policy mid-year to simply cover storm season alone.

You'll have two deductibles, one for the building and one for the contents, which is different than how homeowners claims traditionally work.  However, remember what you're avoiding: a $20,000 bill.  And remember also that this coverage is for the worst case scenario!

If you're interested in learning more about how your home might benefit from flood insurance, I strongly encourage you to give Cynthia a call or fill out her contact form. She'll chat with you about your needs and your home and give you fantastic advice.

Now--to enjoy these King Tides while they last!

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