Flood Insurance

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CaptainMarvel
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Flood Insurance

Post by CaptainMarvel » Tue May 01, 2018 9:55 am

I'd like to get some opinions on whether flood insurance is useful or worth purchasing for a house in a non-flood zone. We live in the Dallas-Ft. Worth, TX area and we are not located in a flood zone. Flood insurance is not required by our lender. We bought the house and moved in a year ago. The house is valued at about $340,000. We get all of our insurance, including home-owners' insurance, through USAA, who I am quite happy with.

I was thinking about getting flood insurance anyway, in an abundance of caution. I'm considering getting in just to have some protection in the worst case scenario. USAA quoted an annual premium for $450 but coverage only up to $250,000. It's sort of a basic policy for a home that's not in a flood zone and that's the maximum coverage USAA itself will provide. For any coverage beyond that, I'd have to go through another insurer, which USAA would coordinate.

If I were to purchase anything, it'd probably just be the $250,000 policy for $450. I'd like to get some Boglehead thoughts on whether it's really worth it considering there's not that much risk of flood damage around here.

sasquatch12
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Re: Flood Insurance

Post by sasquatch12 » Tue May 01, 2018 10:00 am

Totally worth the piece of mind I had a friend not in a flood zone in Texas flood 3 times in 10 years. Luckily they have flood insurance. I have flood insurance as well even though my house has never flooded just in case.

magicrat
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Re: Flood Insurance

Post by magicrat » Tue May 01, 2018 10:03 am

It depends on how "not in a flood zone" you are. If you are 1 foot outside the FEMA line for the 1% annual chance flood, then worth it. If you are on top of a mountain, probably not.

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rustymutt
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Re: Flood Insurance

Post by rustymutt » Tue May 01, 2018 10:05 am

Contact your local county extension office, or city, and ask them about the flood maps for your area. 1000 year flood field would shed light on your needs for this insurance. This is how developers go about starting a development. This way you learn more information about your neighborhood, and weather of not it's prone to flooding, ever.
I'm amazed at the wealth of Knowledge others gather, and share over a lifetime of learning. The mind is truly unique. It's nice when we use it!

Rupert
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Re: Flood Insurance

Post by Rupert » Tue May 01, 2018 10:06 am

$250,000 is the maximum coverage you can get under the federal flood insurance program. That's why USAA caps coverage at that amount. Any insurance you buy above that amount is going to be very expensive. As for whether you need it, consider your local storm drainage infrastructure. Do you experience frequent flash floods? Does water pool on streets because the storm water drainage system is inadequate in your area? Have FEMA flood maps in your area been updated recently, and, if so, was there any controversy surrounding those updates? Sometimes developers/real estate folks are successful in keeping neighborhoods out of flood zones that really should be in flood zones. Flood mapping is a very political process, unfortunately.

HMPlac
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Re: Flood Insurance

Post by HMPlac » Tue May 01, 2018 10:06 am

We live outside of the 500 year flood zone in Houston and happily pay the 450. It helped our peace of mind during hurricane Harvey last year, although we did not flood and the water came nowhere close to our home. I just renewed the policy this morning so that it will take effect at the start of next hurricane season on June 1st. (keep in mind there is a 30 day waiting period for the policy to take effect from the date you have made payment)

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deanbrew
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Re: Flood Insurance

Post by deanbrew » Tue May 01, 2018 10:54 am

magicrat wrote:
Tue May 01, 2018 10:03 am
It depends on how "not in a flood zone" you are. If you are 1 foot outside the FEMA line for the 1% annual chance flood, then worth it. If you are on top of a mountain, probably not.
There's more to it than that. You should evaluate all of the land around your property, with an eye toward how everything will drain during a monumental rain event. And how high your main living area is in comparison to grade level. My BIL lives at the high end of a town, well outside of any flood hazard area. But he has an open farmers field nearby and above his elevation. One spring during a snow thaw and rain period, runoff from the large field came down to his property. It went into his basement, which wasn't a huge problem, but it did cause damage. If he had an on-grade "patio" home, it would have caused significant damage.

From my understanding, a large part of the problem during last year's Houston hurricane was where lakes and general runoff water was directed, much of it outside of flood hazard areas.
"The course of history shows that as the government grows, liberty decreases." Thomas Jefferson

Miriam2
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Re: Flood Insurance

Post by Miriam2 » Tue May 01, 2018 4:21 pm


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Blueskies123
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Re: Flood Insurance

Post by Blueskies123 » Tue May 01, 2018 5:19 pm

sasquatch12 wrote:
Tue May 01, 2018 10:00 am
Totally worth the piece of mind I had a friend not in a flood zone in Texas flood 3 times in 10 years. Luckily they have flood insurance. I have flood insurance as well even though my house has never flooded just in case.

Today's CBS morning show had a report on how claims are only paid at 50% of the true cost to repair. Flood insurance pays more to lawyers to avoid paying the claim than the claim was for. If I recall correctly they showed where $184K was paid to lawyers to avoid paying a $40K flood claim.
While I currently have flood insurance there stories are troubling. You need to expect the policy to only pay for half the damage.

https://www.cbsnews.com/news/national-f ... ng-claims/

https://www.cbsnews.com/news/fema-natio ... im-claims/

save-early-often
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Re: Flood Insurance

Post by save-early-often » Tue May 01, 2018 6:55 pm

Blueskies123 wrote:
Tue May 01, 2018 5:19 pm
sasquatch12 wrote:
Tue May 01, 2018 10:00 am
Totally worth the piece of mind I had a friend not in a flood zone in Texas flood 3 times in 10 years. Luckily they have flood insurance. I have flood insurance as well even though my house has never flooded just in case.

Today's CBS morning show had a report on how claims are only paid at 50% of the true cost to repair. Flood insurance pays more to lawyers to avoid paying the claim than the claim was for. If I recall correctly they showed where $184K was paid to lawyers to avoid paying a $40K flood claim.
While I currently have flood insurance there stories are troubling. You need to expect the policy to only pay for half the damage.

https://www.cbsnews.com/news/national-f ... ng-claims/

https://www.cbsnews.com/news/fema-natio ... im-claims/
I live outside a floodzone in Houston but have carried flood insurance since I've been a homeowner. It's not expensive and provides piece of mind.

I know people in H-town that have it and those that don't. It's better to have it even with the issues mentioned above.

Another good expose on the dark side of flood insurance.

https://www.pbs.org/wgbh/frontline/film ... -disaster/

ResearchMed
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Re: Flood Insurance

Post by ResearchMed » Tue May 01, 2018 7:11 pm

magicrat wrote:
Tue May 01, 2018 10:03 am
It depends on how "not in a flood zone" you are. If you are 1 foot outside the FEMA line for the 1% annual chance flood, then worth it. If you are on top of a mountain, probably not.
Regarding "top of a mountain", it might not "flood" as in "water rising up around your house and seeping inside", but...
[This and subsequent wording may not be precise, but is intended to be representative... I am neither an attorney nor an insurance agent!]

Flood insurance covers any water entering from ground level, which homeowners' coverage typically will *not* cover (although there could be some policies or riders that might).

Also, it seems to be "flood insurance" that would cover mudslides, either something sliding into your house, or even something below that carries the ground away from under your house...perhaps including your house riding along.
(Think LA/Santa Barbara mudslides with the rains, after the fires not long ago.)

Double check whatever possibilities *might* occur at the location...

RM
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talzara
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Re: Flood Insurance

Post by talzara » Tue May 01, 2018 7:19 pm

Blueskies123 wrote:
Tue May 01, 2018 5:19 pm
Today's CBS morning show had a report on how claims are only paid at 50% of the true cost to repair. Flood insurance pays more to lawyers to avoid paying the claim than the claim was for. If I recall correctly they showed where $184K was paid to lawyers to avoid paying a $40K flood claim.
While I currently have flood insurance there stories are troubling. You need to expect the policy to only pay for half the damage.
From 1978-2016, the NFIP collected $56.4 billion of earned premium and paid $56.4 billion. That is a loss ratio of 100%.
They only achieved this 100% loss ratio by holding down the claims payments. If they didn't do that, the loss ratio might be 150% or even 200%. For the average policyholder, though, it's a great deal on insurance. Where else can you buy a dollar of insurance for a dollar of premium? The American taxpayer is paying the administration costs.

Just divide the face value of the policy by 2. If you buy a $250k policy, then you're paying a fair premium for $125k of insurance.

If you live outside a flood zone, then the NFIP is a very bad deal on insurance. You don't get enough of a discount for living outside a flood zone. You will be subsidizing the other policyholders.

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3CT_Paddler
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Re: Flood Insurance

Post by 3CT_Paddler » Tue May 01, 2018 7:53 pm

Rupert wrote:
Tue May 01, 2018 10:06 am
Sometimes developers/real estate folks are successful in keeping neighborhoods out of flood zones that really should be in flood zones. Flood mapping is a very political process, unfortunately.
As a civil engineer who has worked on flood studies, I have never seen politics at play when it comes to floodplain determination. It's a pretty straightforward process that isn't prone to much politics. The engineer calculates what the 100 year flow is at a specific point along a stream/channel/conveyance and then uses a hydraulic model to simulate what kind of water surface corresponds with that flow. Coastal areas are slightly different, but the same idea applies. FEMA approves those studies and it is purely a technical review by engineers that are far removed from local politics.

The thing to remember about floodplains is that your actual flood risk and being in or out of a floodplain are two totally different things. Floodplains are typically on larger streams and rivers (greater than a square mile drainage area), You can be in a neighborhood where a ten year storm might cause localized flooding and there is no official floodplain in sight.

Rupert
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Re: Flood Insurance

Post by Rupert » Wed May 02, 2018 6:48 am

3CT_Paddler wrote:
Tue May 01, 2018 7:53 pm
Rupert wrote:
Tue May 01, 2018 10:06 am
Sometimes developers/real estate folks are successful in keeping neighborhoods out of flood zones that really should be in flood zones. Flood mapping is a very political process, unfortunately.
As a civil engineer who has worked on flood studies, I have never seen politics at play when it comes to floodplain determination. It's a pretty straightforward process that isn't prone to much politics. The engineer calculates what the 100 year flow is at a specific point along a stream/channel/conveyance and then uses a hydraulic model to simulate what kind of water surface corresponds with that flow. Coastal areas are slightly different, but the same idea applies. FEMA approves those studies and it is purely a technical review by engineers that are far removed from local politics.

The thing to remember about floodplains is that your actual flood risk and being in or out of a floodplain are two totally different things. Floodplains are typically on larger streams and rivers (greater than a square mile drainage area), You can be in a neighborhood where a ten year storm might cause localized flooding and there is no official floodplain in sight.
That's not what the engineers at the Corps of Engineers in my town tell me. (I happen to live in a town where the Corps has a huge presence). Local government fights them tooth and nail at every stage of the process, and that opposition absolutely seeps into the Corps' internal decision making. Read this article and scroll down to the section captioned "Opposition Leads to Delays" for more info: https://www.bloomberg.com/graphics/2017 ... lood-maps/

wilshuer
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Re: Flood Insurance

Post by wilshuer » Wed May 02, 2018 7:03 am

Rupert wrote:
Tue May 01, 2018 10:06 am
Sometimes developers/real estate folks are successful in keeping neighborhoods out of flood zones that really should be in flood zones. Flood mapping is a very political process, unfortunately.
It's not so much politics, it's when the developers haul in tons of dirt and raise the ground level of a new development, pushing the flooding to the surrounding area. Problem is maps not being updated with the development, very real problem seen many places in Houston during Harvey.

Myself, still on the fence to buy. We did not even come close to flooding during Harvey, however the Tax Day event caused rain to come up our driveway, still would have had to rise 2-3 ft to get into our house, drained out of the street within an hour - flash flood event. Looking at the topography near my house, there are quite a few places for water to go first and likely we would have much bigger problems.

Now, what makes me cautious is the planned development nearby, and what effects it will have on the drainage.

Grasshopper
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Re: Flood Insurance

Post by Grasshopper » Wed May 02, 2018 9:12 am

I never thought I would need it in the mountains of SE Arizona. Well luckily I had it at a free add on on my homeowners policy. Hurricane Odile changed that, what was normally a 20 ft wide wash in the monsoon season, became a 200 ft wide wash. Caused about $20K worth of damage to a sunroom.

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3CT_Paddler
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Re: Flood Insurance

Post by 3CT_Paddler » Wed May 02, 2018 10:20 am

wilshuer wrote:
Wed May 02, 2018 7:03 am
Rupert wrote:
Tue May 01, 2018 10:06 am
Sometimes developers/real estate folks are successful in keeping neighborhoods out of flood zones that really should be in flood zones. Flood mapping is a very political process, unfortunately.
It's not so much politics, it's when the developers haul in tons of dirt and raise the ground level of a new development, pushing the flooding to the surrounding area. Problem is maps not being updated with the development, very real problem seen many places in Houston during Harvey.

Myself, still on the fence to buy. We did not even come close to flooding during Harvey, however the Tax Day event caused rain to come up our driveway, still would have had to rise 2-3 ft to get into our house, drained out of the street within an hour - flash flood event. Looking at the topography near my house, there are quite a few places for water to go first and likely we would have much bigger problems.

Now, what makes me cautious is the planned development nearby, and what effects it will have on the drainage.
Just to clarify, developers are not allowed to cause a rise in the 100yr floodplain that would impact other people's houses. What could happen is they could worsen flooding conditions for say the 500yr storm. Some local floodplain regs are more restrictive than the national FEMA standards. A tricky thing with floodplain regulation is that because development is typically only regulated based on the 100yr storm, it can actually make outcomes worse by encouraging development right up to the 100yr storm. So when Houston was hit with Harvey, which in most areas was greater than a 100yr event, a lot of FEMA approved development was hard hit. It's tough for regulators because if you ratchet standards too high, it puts a prohibitive burden on development and businesses.

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3CT_Paddler
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Re: Flood Insurance

Post by 3CT_Paddler » Wed May 02, 2018 10:33 am

Rupert wrote:
Wed May 02, 2018 6:48 am
3CT_Paddler wrote:
Tue May 01, 2018 7:53 pm
Rupert wrote:
Tue May 01, 2018 10:06 am
Sometimes developers/real estate folks are successful in keeping neighborhoods out of flood zones that really should be in flood zones. Flood mapping is a very political process, unfortunately.
As a civil engineer who has worked on flood studies, I have never seen politics at play when it comes to floodplain determination. It's a pretty straightforward process that isn't prone to much politics. The engineer calculates what the 100 year flow is at a specific point along a stream/channel/conveyance and then uses a hydraulic model to simulate what kind of water surface corresponds with that flow. Coastal areas are slightly different, but the same idea applies. FEMA approves those studies and it is purely a technical review by engineers that are far removed from local politics.

The thing to remember about floodplains is that your actual flood risk and being in or out of a floodplain are two totally different things. Floodplains are typically on larger streams and rivers (greater than a square mile drainage area), You can be in a neighborhood where a ten year storm might cause localized flooding and there is no official floodplain in sight.
That's not what the engineers at the Corps of Engineers in my town tell me. (I happen to live in a town where the Corps has a huge presence). Local government fights them tooth and nail at every stage of the process, and that opposition absolutely seeps into the Corps' internal decision making. Read this article and scroll down to the section captioned "Opposition Leads to Delays" for more info: https://www.bloomberg.com/graphics/2017 ... lood-maps/
If levees are involved, I could see politics coming into play. The calculation of the floodplain itself is not necessarily political in your case, but making it effective could be. Post Katrina, FEMA took an extreme stance on requirements for levees after being very loose on what was considered protected from a levee. They took a long time to get their ducks in a row to address what you do with levees and how you assess their level of protection.

rotorhead
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Re: Flood Insurance

Post by rotorhead » Wed May 02, 2018 10:46 am

OP, there was a thread about flood insurance on the forum in 2016. Here is link:

viewtopic.php?f=2&t=197979

Here were my comments at the time.
Re: Homeowners should consider flood insurance
Post by rotorhead » Fri Aug 26, 2016 9:30 pm

True story. In 1995, we had been in our newly built home in Palm Beach County, FL, for 3 months. Hurricane Roxanne was going round in circles in the Gulf of Mexico at the time, and feeding moisture into a low pressure trough across South Florida that centered over our area. We received 27 inches of rain in one week, with 20 inches in one day! Some areas got flooded quite badly;and water came up to the back lanai of our house, and actually made it into the garage in front - did not actually make to the front door. After the rain stopped that day, the water quickly receded; so all was ok. But it was a pretty harrowing experience.

Next day I got on the phone to our insurance company, and asked about flood insurance. The nice lady I spoke to said, "Oh sir, you live in a low risk zone, so you qualify for a very good premium". I thanked her for that, and signed up for flood insurance. Have had it ever since. Haven't even come close to that experience again; but one never knows. Premium for this year is $450. I figure it's part of the cost of living with finished floor elevation 10 feet about sea level.
We will continue to have flood insurance on our home as long as we live

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N1CKV
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Re: Flood Insurance

Post by N1CKV » Wed May 02, 2018 10:47 am

magicrat wrote:
Tue May 01, 2018 10:03 am
It depends on how "not in a flood zone" you are. If you are 1 foot outside the FEMA line for the 1% annual chance flood, then worth it. If you are on top of a mountain, probably not.
What would your opinion be for a house 2 feet above the FEMA line?

In 2016 my house took on 3 feet of water, it is 2 feet higher than the magical FEMA flood line. Yes, the record was shattered by 5 feet.
I did not have flood insurance.
In some ways it was easier to rebuild paying out of pocket, those with insurance had to wait for insurance companies to drag out the process of inspections and fight over if a contractor is required (not required in my state), etc.
I have met a lot of people that claim to love money, but they also seem to be the same people that are in the biggest hurry to get rid of it.

magicrat
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Re: Flood Insurance

Post by magicrat » Wed May 02, 2018 10:53 am

N1CKV wrote:
Wed May 02, 2018 10:47 am
magicrat wrote:
Tue May 01, 2018 10:03 am
It depends on how "not in a flood zone" you are. If you are 1 foot outside the FEMA line for the 1% annual chance flood, then worth it. If you are on top of a mountain, probably not.
What would your opinion be for a house 2 feet above the FEMA line?

In 2016 my house took on 3 feet of water, it is 2 feet higher than the magical FEMA flood line. Yes, the record was shattered by 5 feet.
I did not have flood insurance.
In some ways it was easier to rebuild paying out of pocket, those with insurance had to wait for insurance companies to drag out the process of inspections and fight over if a contractor is required (not required in my state), etc.
The FEMA flood line is not magical (and does not define a "record" flood), it marks the line for the 1% annual chance flood (commonly referred to as the 100-year flood). More extreme floods can and do happen. My opinion: If I was 2 feet from the line, I'd get insurance if it only cost a few hundred per year.

Glockenspiel
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Re: Flood Insurance

Post by Glockenspiel » Wed May 02, 2018 10:56 am

CaptainMarvel wrote:
Tue May 01, 2018 9:55 am
I'd like to get some opinions on whether flood insurance is useful or worth purchasing for a house in a non-flood zone. We live in the Dallas-Ft. Worth, TX area and we are not located in a flood zone. Flood insurance is not required by our lender. We bought the house and moved in a year ago. The house is valued at about $340,000. We get all of our insurance, including home-owners' insurance, through USAA, who I am quite happy with.

I was thinking about getting flood insurance anyway, in an abundance of caution. I'm considering getting in just to have some protection in the worst case scenario. USAA quoted an annual premium for $450 but coverage only up to $250,000. It's sort of a basic policy for a home that's not in a flood zone and that's the maximum coverage USAA itself will provide. For any coverage beyond that, I'd have to go through another insurer, which USAA would coordinate.

If I were to purchase anything, it'd probably just be the $250,000 policy for $450. I'd like to get some Boglehead thoughts on whether it's really worth it considering there's not that much risk of flood damage around here.
I'm a water resources engineer who frequently works with the FEMA flood maps in my professional job. I would definitely look up the FEMA flood maps for your location and figure out how close (elevation-wise) you are to being in a FEMA 100-year flood zone. Why are you concerned about flooding? Do you live in a river valley? If so, do you know the elevation of your lowest floor (basement or first floor)? For example, you could buy the flood insurance for $450, but if you live on the top of the tallest hill in the city, it's a waste of money.

Glockenspiel
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Re: Flood Insurance

Post by Glockenspiel » Wed May 02, 2018 11:01 am

wilshuer wrote:
Wed May 02, 2018 7:03 am
Rupert wrote:
Tue May 01, 2018 10:06 am
Sometimes developers/real estate folks are successful in keeping neighborhoods out of flood zones that really should be in flood zones. Flood mapping is a very political process, unfortunately.
It's not so much politics, it's when the developers haul in tons of dirt and raise the ground level of a new development, pushing the flooding to the surrounding area. Problem is maps not being updated with the development, very real problem seen many places in Houston during Harvey.
By federal regulation, developers have to ensure they don't encroach on the 100-year floodplain. This can cause them to build right up to the 100-year floodplain, making things worse when you have a 200-year or 500-year flood, though. Unfortunately for the City of Houston, they have very few local zoning regulations, allowing development where it should not occur.

orlandoman
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Re: Flood Insurance

Post by orlandoman » Wed May 02, 2018 12:02 pm

Be aware of the definition of 'flood'.

Looking at the actual insurance policy definitions, in part says: Flood means "A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) ... "

The point I want to make is that flood insurance is not like a homeowner's insurance policy where if you have damage to your house it pays ... flood insurance requires it requires two or more acres or properties have flood damage for coverage. This normally may not be an issue for coverage, but depending on your property it may.
"Not everything you read on the Internet is true", Abraham Lincoln

HIinvestor
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Re: Flood Insurance

Post by HIinvestor » Wed May 02, 2018 12:11 pm

We had to buy hurricane and flood insurance when we had a mortgage. Since we paid it off, for a few years, we went without and then decided we ought to buy coverage again, especially with all the crazy weather worldwide. The premium price for the peace of mind is worth it to us, especially as many neighbors recently have had flood damage to their homes, even one street over from our home (our backyard neighbors).

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