Residential Flood Insurance For Your Owned Home

Baton Rouge, LA, March 4, 2006 - (L-R) Karl Sm...

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Residential Flood Insurance For Your Owned Home

Buying your own home is an expensive business, so once you’ve managed even the first step on the ladder it’s really important that you protect your property. That’s where insurance comes in. . . . you need to insure your home and the contents of your home against flooding . . . just in case.

Residential flood insurance premiums do vary, largely depending on where your home is located. If you buy a house in a high risk area then you can certainly expect to pay a bit more for flood insurance than if your home is located in an area of moderate to low risk.  So what’s the difference? – in the premiums, not the risk dumbo! Don’t think that just because your home is in a low risk area then you’re “home and dry” (sorry, couldn’t resist). According to the NFIP (National Flood Insurance Program) more than 20% of flood claims come from people who live outside the high risk areas, so you’ve still got a better than 20% chance of being affected. That’s 1 in 5, I’m not keen on those odds . . . are you?

Residential Flood Insurance in High Risk Areas is compulsory if you have a mortgage with a federally insured or regulated lender, so that really leaves you no choice in the matter does it?  The types of insurance for these high risk areas offer separate building and contents cover.  The actual cost of the premiums depends on various factors:

  • the flood zone / flood risk rating
  • the amount of cover you choose, taking into account the amount of deductibles (a bit like car insurance)
  • how the building is occupied (number of dwellings etc)
  • year that the building was constructed
  • how many floors are in the building
  • where the valuables are located
  • height of the lowest floor of the building in relation to the flood map elevation – this is a new requirement for new buildings, they’re supposed to be of a certain height, understandably so.

Residential Flood Insurance in Moderate or Low Risk Areas gives the home owner a few more options. Prices start at only $129 per year if you qualify for a Preferred Risk Policy, and even if you don’t live in the right area for a PRP then you can still have a standard policy. If you live in these areas it is not compulsory to purchase residential flood insurance, but it’s still a very good idea indeed.

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