• Flood insurance: What your home policy won't cover

    By: Clark Howard

    Updated:

    Hurricane Harvey is expected to be have devastating impacts in Texas and possibly beyond, and with many Americans facing heavy rains and potential flooding, now is a good time to make sure you are financially protected and prepared for any possible damage.

    Why do you need flood insurance?

    Too often, homeowners think their regular insurance policy will cover them in the event of a flood. They are stunned when they find out it doesn’t. When severe floods damaged many areas of South Carolina in 2015, only roughly 1 in 10 people had flood insurance.

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    Today, the average federal flood insurance premium is somewhere around $650 to $750 annually, and the policy covers damage for up to $250,000. You can shop for a policy through FloodSmart.gov.

    Regardless of what causes global warming, the reality is we are seeing increased storm activity making people more vulnerable in coastal areas. That’s a fact. You can argue about we’re seeing global warming — whether it’s man-made or just the result of larger cyclical weather patters and all the rest — but you can’t dispute the fact. Let’s leave that discussion to the political talk shows!

    Many people who own home do so mortgage-debt free. So insurance is optional for them. But if you have a policy when you own a home free and clear, and you live in a low-lying area that historically hasn’t flooded, it’s still a good idea to buy a flood policy.

    For a buyer, if you’re looking at a home in flood plain, make sure you properly budget for the more expensive policy. Many times the deal you can get will more than make up the cost of the policy. But go in with your eyes open and know what it will cost.

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    Want more money-saving tips for your wallet? See our Homes & Real Estate section.

    Watch: Don’t overpay for your homeowner’s insurance

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