Consumer Reports Warns: Ensure Home Insurance Covers Flood Damage

US homeowners are being warned to ensure their home insurance policy covers damage induced by floods, as the recent Hurricane Katrina disaster in the New Orleans region of the country has meant many insurance companies have removed their anti flood cover from their offers.

However, it does not necessarily involve a large-scale hurricane and coastal hazard to bring flood damage to American homes. Snowmelt repelled by frozen ground can cause flooding, which means many of America’s states which see snowfalls every winter are at risk. New development can leave less soil surface to absorb water, making formerly safe homes suddenly vulnerable.

Yet a typical homeowners insurance policy these days will not 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. This is a difficult fact to accept for most homeowners, but it needs to be appropriately acknowledge because the money that you set yourself out to lose if you don’t properly insure your home could be much more than these extortionate prices.

In recent disasters involving both wind and flood damage, some insurers have tried to pin the blame on floodwaters (not covered by their policies) rather than wind (covered) and used that distinction to deny homeowners' claims. This is another reason why it is imperative that when buying home insurance you must ensure it covers against floodwater damage – remember wind damage does not cover you against water caused damage.

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. Remember to be cynical when looking at FEMA’s and other similar statistics regarding the probability of your area being affected by floods. Even with today’s modern technology climate prediction is a very delicate and unpredictable science which is constantly needing updating. Overconfidence could lead you to losing thousands in an attempt to save a mere few pennies.

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. Take this advice and purchase some flood insurance to protect yourself against any future risks.

Some common questions asked include:

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. For more details, go to www.floodsmart.gov and click Flood Insurance Policies on the lefthand side.

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