Home Insurance Articles

Why Flood Protection Isn't Included In Most Home Insurance Plans

2010-01-25

At one point, flood insurance wasn't available for most consumers. These days, government insurance law (and specifically the establishment of the National Flood Insurance Program) has made flood insurance both available and affordable as a part of a homeowner's insurance policy in many communities throughout the United States. However, this special type of coverage is not automatic; it's not a regular part of your home insurance, and if you haven't ever signed a contract that adds flood insurance to your home insurance policy, it's simply not on there. Many consumers wonder why this is--why don't insurance companies automatically include flood insurance as part of a typical policy?

The short answer is that it's simply too expensive. Major floods cause a massive amount of damage to a community, resulting in millions of dollars worth of claims. For many insurers, simply offering the insurance as part of a regular policy results in a loss. That's why the government stepped in--the National Flood Insurance Program puts some of the burden on the communities (and even a bit on the state and Federal level) to help prevent flooding and limit the extent of damage caused by sudden rises in water levels in rivers, lakes, and even the ocean. However, flood insurance is still expensive, so purchasing it causes a rise in the home insurance rate of consumers.

With this in mind, it's sometimes a very good idea to add flood insurance to a homeowner's insurance policy, particularly if you live in an area that's near a major body of water. Regardless of how likely you think that a flood would be, flood insurance can provide tremendous peace of mind in a natural disaster and could save homeowners thousands of dollars. Without any sort of insurance, homeowners are basically forced to depend on government disaster relief money, which may never come (and may come in very small portions if it ever does arrive). Some insurance companies don't even offer flood insurance, if the community of the house in question doesn't participate in the National Flood Insurance Program.

If you're interested in flood protection, the best step to take is to call your insurance company and ask whether it's available, and how adding the coverage would affect your home insurance rate. The increase might be fairly small, and well worth the money for many consumers. If you buy the coverage, you'll be financially safe from both natural floods and any rapid accumulation of waters that causes damage to your property. Nobody likes a higher home insurance rate, but flood coverage may be well worth the cost.