Do you have insurance that would cover or help offset some of your losses in the event of a flood?

Look at your policy. Most standard homeowners and renters insurance policies specifically do not provide financial protection in the event of a flood. If you live in a high risk area for flooding, your mortgage lender may have required you to purchase protection against flooding. But if you own your home outright or you rent, you are almost certainly not required to have protection, even if you live in an area at high risk for flooding. Should you consider purchasing flood insurance? Let's take a look at what type of flood insurance protection is available and how to think about, and evaluate, your need for coverage.

What Standard Homeowners Insurance and the Government Offer

If your home is damaged or destroyed due to a flood, your loss will almost certainly not be covered under standard homeowners insurance. Think about that carefully. If your home is damaged or destroyed due to a flood, your loss will almost certainly NOT be covered under standard homeowners insurance. And only if your area is formally declared a federal disaster area due to a flood will you be eligible for a loan from the Federal Emergency Management Agency (FEMA) to help make repairs your home or obtain temporary housing. You may also be eligible for a low-interest Small Business Administration (SBA) loan for up to $200,000 for rebuilding your home. Both of those are government loans that must be repaid. Unless your mortgage company grants you forbearance (meaning that the bank or mortgage company holding your home loan allows you to postpone your mortgage payment for a certain period of time), you are still required to pay your mortgage even if you are unable to live in your home. So you will need to pay your mortgage loan in addition to repaying your new loan(s).

Flood insurance can provide you with some protection against financial losses in the event that your home is damaged or destroyed by a flood. That includes damage created by flood-related conditions such as storm surges, waves, and tidal waves.