Insurance is an important part of your financial safety net—and late winter is a pretty good time to make sure your coverage is watertight. Why?
“Hurricanes get the headlines, but flooding is the No. 1 disaster risk,” says Lynne McChristian, a spokeswoman for the Insurance Information Institute.
Climate change has heightened that danger, as has construction and city development that changes the way water runs off, she says.
Here are some numbers that help put the potential for flooding risks in perspective:
- 4 in 10: Share of annual auto insurance claims related to flash floods and rising water that occur between March and May.
- $10,819: Damage just an inch of water can generate in home and possession losses for a small one-story property of 1,000 square feet.
- 1 in 5: Portion of flood insurance claims paid out to policyholders that aren’t in high-risk areas.
- 15 percent: Homeowners nationwide with flood insurance.
Here’s how to make sure your home and auto are protected:
Homeowners and renters insurance policies specifically exclude flooding. So if you want flood insurance—or need it, if your mortgage lender requires it—that’s a separate purchase either from the government’s National Flood Insurance Program or on the private market.
The average annual cost for flood insurance is $700, according to Insurance.com. But prices can range widely depending on where you live and the construction of your home, as well as how much coverage you want. In a low-risk area, $20,000 worth of coverage could run just $150 per year, the site estimates.
Shop around for coverage, says McChristian, who is also a professor of risk management and insurance at the University of Illinois Urbana-Champaign. That can help with prices, and you may be able to get better terms, too, she says. Federal NFIP policies have a 30-day waiting period, but private policies may have a shorter wait—or none.
Making sure your car is protected from floods is easier. “If you have comprehensive insurance, that flood risk is covered,” says McChristian. (About 8 in 10 drivers have such coverage.)
Reviewing your coverage can provide peace of mind.
“Insurance is a way to be financially prepared for whatever the weather brings,” she says.
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