Five things to know about flood insurance

Years ago, I covered the topic of flood insurance, and considering recent weather events, now is probably a good time to revisit it. According to the government, floods are the most common and most costly natural disaster. Here are five things you should understand about flood insurance as you look to protect your wallet and property:
It’s not part of regular homeowner’s coverage. You may be able to buy coverage (a separate policy) through your insurance company or another company that has an arrangement with the federal National Flood Insurance Program (NFIP). Some private companies offer coverage outside the NFIP, and you may need to go that route if the coverage offered through the government program is not adequate or the price is not competitive.
It’s not too expensive. According to the feds, the average premium is about $650 per year. Compare that figure to the potential losses stemming from flood damage and you have a case study on insurance and risk management.
You don’t have to be in the flood plain to be vulnerable. According to the Federal Emergency Management Agency (FEMA), a surprising 25 percent of flood claims come from low- to moderate-risk areas. These are the types of areas where lenders do not require you to purchase flood insurance – and where most of us live.
There are limits. As far as insurance goes, the NFIP is pretty straightforward. You can cover your residence up to $250,000 and contents up to $100,000. For additional coverage, talk to your insurer.
You can’t wait until flooding is in the forecast. Typically, there’s a 30-day waiting period before the policy is effective.
Don’t count on luck to keep you out of trouble. Explore your risk and options for flood insurance.

J.J. Montanaro is a certified financial planner with USAA, The American Legion’s preferred provider of financial services. Submit questions for him online.