Sample Scenario: The home you bought because of the location and because it wasn’t in a high-risk flood zone, is suddenly deluged with 5+ feet of water. What would you do?
That is exactly what happened to homeowners and renters in Baton Rouge, Louisiana earlier this year. Homeowners were left scratching their heads on how this could happen. Apparently, Mother Nature doesn’t recognize “low and moderate flood risk” zones that realtors & insurance companies use.
For those of our readers in hurricane-prone areas like South Carolina, North Carolina or Texas, read closely.
What lessons can you learn from what happened to Baton Rouge residents? Try to answer these few TRUE/FALSE questions:
1. Your homeowner’s insurance will cover you for flood damage from hurricanes.
FALSE.
Your standard home insurance will not protect you from flood damage. The only place to get flood insurance is from the federal government. The facts are that if you don’t have federal flood insurance, then you will be left fending for yourself.
That is exactly what happened to the folks in Louisiana.
2. You don’t need a flood policy unless you live in a high-risk flood zone.
FALSE.
There are 3 different types of labeling for your home’s location risk.
- High risk
- Medium risk
- Low risk
Wisdom dictates that if you live in a high-risk flood zone that you should get government-backed flood insurance policy. In fact, if you own a home that has a federally backed loan, then you would be forced to get flood coverage if you live in this risk area.
However, here is the lesson for all of us: Many of the homeowners that got caught in the flood were not in a “high flood risk zone.” In fact, many were in a “medium flood risk zone.”
Are you living in a low or medium flood risk area?
What would happen if you were hit with a 5-foot surge of water? If you didn’t have flood coverage, then you would be up a creek right now. Literally. In Louisiana, while an estimated 42 percent of homes in high-risk areas have flood insurance, only 12.5 percent of homeowners in low and moderate-risk zones have coverage.
Can you see the potential problem for homeowners like yourself that are in the same situation? What other lessons can we learn from this tragedy?
3. FEMA gives you money to repair your home if you don’t have flood insurance.
TRUE.
So, what hope is there for those that didn’t have flood insurance? Those homeowners without flood insurance are eligible for up to $33,000 in FEMA individual disaster assistance funds. Now $33,000 may sound like a lot of money at first. However, think about this: what if it costs more than $33,000 to repair and restore your home? You would be stuck with the remaining bill.
What is more, you can’t rely on receiving the whole $33,000. The odds are that based on past natural disasters, it will be much less. For example, after Hurricane Katrina, homeowners in Louisiana, Mississippi and Alabama, received an average of only about $6,000 according to FEMA.
If your home is destroyed by flood waters, what could $6,000 do to help you? Not much. That means the purpose of this FEMA aid is not for rebuilding your home, but to help you with short-term relief for immediate needs. In simple terms, that means that many homes and neighborhoods may never be rebuilt again in Baton Rouge.
One Final Lesson From This Tragedy
FEMA suggests that ALL homeowners obtain flood insurance regardless of the risk in their area. This seems to be the only way to protect yourself 100% from flood damage.
Contact your InsuranceHub home insurance professionals today. Talk to them about your situation and they will help to point you in the right direction.