Flood insurance?

[indysteel]

A good portion of Central Indiana is in a flood plain, some areas worse than others. Granted, my current house may be at greater risk, but how much greater than my house in Indianapolis, I don't know. To suggest people are foolish for living in a flood plain ignores how much of the United States developed, i.e., along rivers and major waterways. You'd have to resettle a big chunk of people presumably to arid land--which presents its own problems. Plus, according to FEMA, one quarter of all claims are made by people in low to moderate risk. And these are just from people who carry the insurance.

My hestitation relates to sinking a serious chunk of change annually for something that may or may not happen. I am a Federal employee but have limited faith in some of what we do. I've heard and read too many stories about failed and delayed disaster relief so I think my question about whether it's a well run program is pretty valid.

Keep in mind that my house did not flood in the Flood of 2008, which most people agreed was THE 100-year Flood. So, while I will likely do it, I was trying to get my head around the risk versus cost. If we stay here 10 years, it's likely to be at least $16,000. That's not pocket change, nor obviously is losing our house and all of its contents either. So, yes, we're likely to get it. Thanks for everyone's input and information.

[PamNY]

My hesitation relates to sinking a serious chunk of change annually for something that may or may not happen. I am a Federal employee but have limited faith in some of what we do. I've heard and read too many stories about failed and delayed disaster relief so I think my question about whether it's a well run program is pretty valid.

Are you concerned about a claim being denied completely, or about delays/confusion as seems to happen (perhaps understandably at times) with FEMA?

I wonder if there's a way to find out something about how good the performance is.

[Biciclista]

if i lived where water could flow that high, i'd get flood insurance. So what if it takes a little longer than you like to get them to pay you? the alternative is to lose your house.

[Koronin]

Where we used to live (I did own the home) we were in a 500 year flood plain. The 100 year flood plain was on part of our property, but not where the structure was, so we choose to not carry flood insurance. If it was in the 100 yr flood plain my mortgage lender (Bank of America) actually would have required it. We are currently in the process of purchasing a home with a VA loan and they are not requiring flood insurance either. The home we are purchasing is not in a 100 year flood plain and is about 30 or so miles inland from the ocean. Now due to location (coastal county) the VA and the lender both require wind and hail insurance.

[bmccasland]

If your house and contents are damaged by rising water (a flood), then your homeowner's insurance will NOT pay. You do not need a federally backed loan (VA or FHA) to buy flood insurance. Whoever told you that didn't know what they're talking about. Flood is based on your risk area. Unless you happen to live on the high bank and know your home really is out of the 100 year flood plain, then you should get it. Also depending on your risk area, it may not be that much, or it can be as high as your homeowner's policy (which is what I paid living at -3.5 ft in the New Orleans area). Also 100-yr flood risk means that on average that bubbly creek will flood once every 100 years - but it could actually flood this year and the next year and the next year. Then not flood again for 200 years.

If you want to bear the complete recovery cost of a rising water / flood event, including loosing everything you own, then skip the insurance. Otherwise, buy flood insurance. It is a common misconception that homeowner's will cover flooding - it doesn't.

As to high-wind events, including those living in tornado alley - many homeowner's policies are requiring riders for high-wind or hail damage, an addition to your normal homeowner's policy. If you opt out of the rider, then have a high-wind event (tornado, hurricane), you may discover you're also out in the cold. Insurance companies exist to make money it seems.

[Koronin]

It's also the coastal areas for hurricanes, hence the reason we are required to have wind and hail coverage while we have a mortgage even though this area is extremely unlikely to be hit by a hurricane. Also being in a coastal county we cannot get a low deductable insurance plan like we had near Charlotte. Our deductible will be 3 times what it was there (lowest we can get here) plus an additional deductable for any named storm (done by percentage). Actually both our Realtor and insurance agent pulled checked to see if the property we're buying is in a flood zone, and it is not listed as being in one.
As bmccasland stated flood damage is not covered by regular home owner's insurance policies. Now if you live in a coastal county and buy a home on the beach, good luck find a private insurance company to issue wind and hail as well as flood, esp if it's a rental property. If it's a primary residence you might be able to get it depending on which insurance company you're dealing with.

[OakLeaf]

even though this area is extremely unlikely to be hit by a hurricane

Yeah, so is our area. Everyone told us the way the Gulf Stream runs, hurricanes don't hit here. We got three in '04, the year after we bought the house.

We lost roof and carpet that needed to be replaced anyway, and the insurance got to pay for it (as well as new paint in the bedroom that I hated the color).

[Cataboo]

I think with climate change, a lot of predictions of when flooding or storms will happen won't be too accurate.

[frostflakes]

So helpful to read everyone's comments in this threads - thanks for sharing all! I'll also add in my two cents, read an excellent article on flood insurance - http://www.gettingmoneywise.com/2011...insurance.html about when you actually need it and when it's not all that necessary. Hope that helps anyone else out who's still looking for info

[Biciclista]

if your house and contents are damaged by rising water (a flood), then your homeowner's insurance will not pay. You do not need a federally backed loan (va or fha) to buy flood insurance. Whoever told you that didn't know what they're talking about. Flood is based on your risk area. Unless you happen to live on the high bank and know your home really is out of the 100 year flood plain, then you should get it. Also depending on your risk area, it may not be that much, or it can be as high as your homeowner's policy (which is what i paid living at -3.5 ft in the new orleans area). Also 100-yr flood risk means that on average that bubbly creek will flood once every 100 years - but it could actually flood this year and the next year and the next year. Then not flood again for 200 years.

If you want to bear the complete recovery cost of a rising water / flood event, including loosing everything you own, then skip the insurance. Otherwise, buy flood insurance. it is a common misconception that homeowner's will cover flooding - it doesn't.

As to high-wind events, including those living in tornado alley - many homeowner's policies are requiring riders for high-wind or hail damage, an addition to your normal homeowner's policy. If you opt out of the rider, then have a high-wind event (tornado, hurricane), you may discover you're also out in the cold. Insurance companies exist to make money it seems.

read this one

[indysteel]

read this one

Thanks, I did. To answer the points made in that post:

I do appreciate that my homeowner's insurance will not cover a flood. I've long known and understood that since first becoming a homeowner in 2002.

If my homeowner's insurer is requiring a rider for high wind or hail, I am unaware of it. We certainly haven't declined a request to carry such a rider.

As for the connection between flood insurance and FHA and VA loans, I'm merely trying to intepret FEMA's own website to the extent that it says that flood insurance is required for federally insured lenders. It was not clear from the website whether this meant that it was required on any loan issued by federally insured lender or whether it merely applied to federally backed loans. FEMA's own website offers conflicting statements in this regard. I was merely trying to understand why we were not required to get flood insurance when we took out or mortgage given that FEMA states that we live in a high risk area. It seemed to me that one of two things could explain that: either our loan was not subject to forced flood insurance or our property was not subject to the requirement.

I welcome you to look at FEMA's Floodsmart website. Perhaps youi'll better appreciate that they make all of this clear as mud. Maybe it is readily understandable, and I'm just stupid.

But I doubt it.

[indysteel]

Are you concerned about a claim being denied completely, or about delays/confusion as seems to happen (perhaps understandably at times) with FEMA?

I wonder if there's a way to find out something about how good the performance is.

I'm worried about a significant delay or so much red tape that it becomes a full-time job. When you can't live in your home becasue it's covered in mold and all systems have been fried, then a significant delay could prove problematic.

[Catrin]

Good luck with your research and your decision making process. I wish I could add something constructive, I've always rented, but I am sure you and Mr. IndySteel will make the right decision.

[Biciclista]

I'm worried about a significant delay or so much red tape that it becomes a full-time job. When you can't live in your home because it's covered in mold and all systems have been fried, then a significant delay could prove problematic.

That's true but if you DON'T have that flood insurance it will be much worse.

[PamNY]

I'm worried about a significant delay or so much red tape that it becomes a full-time job. When you can't live in your home becasue it's covered in mold and all systems have been fried, then a significant delay could prove problematic.

If your home is wiped out by a flood, "problematic" will describe your whole life. If you have flood insurance, at least you will get money at the end of the delay.

After 9/11, everything took time. The government didn't even acknowledge that the dust was toxic until months after the event. Insurance issues dragged on for years.

Even so, getting something eventually was better than getting nothing ever.