seeking advice on flood insurance

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LearningAlot
Posts: 45
Joined: Thu Aug 02, 2018 8:43 am

seeking advice on flood insurance

Post by LearningAlot »

When I retired a few years ago, I decided to purchase flood insurance for my residence, for the unlikely event of a
historic flood seriously damaging my house It is up for renewal and I am trying to think through how to evaluate
whether or not it is worth the premium.

I live in Ohio, not in a flood zone, but close, a river is about 2 miles away, which ultimately empties into lake Erie.
A creek, which flows into that river, is about a 1/2 mile away from my house. In the 15 years I have lived in this residence,
there has never been close to a problem, even in the heaviest rains. To impact my house, I think it would need to be
a historic rainfall.

The value of my house is around $250,000. The cost of the policy is $491 per year. The coverage is $250,000 for
building and $100,000 for contents. $5,000 deductible for building and $5,000 deductible for contents.

My initial thought process, since I was no longer bringing bringing in an income, was peace of mind. The $471 annual premium
is not a big hardship for my annual budget but enough of an amount that I want to revisit it and see if it still made sense.

Would appreciate any advice.
Thanks in advance!
lakpr
Posts: 6207
Joined: Fri Mar 18, 2011 9:59 am

Re: seeking advice on flood insurance

Post by lakpr »

I would suggest keeping it. $500 for essentially $400k coverage (more or less) is about 0.12% annual premium.
RoadRat
Posts: 43
Joined: Mon Jan 13, 2014 8:12 pm

Re: seeking advice on flood insurance

Post by RoadRat »

LearningAlot wrote: Tue Aug 11, 2020 11:37 am When I retired a few years ago, I decided to purchase flood insurance for my residence, for the unlikely event of a
historic flood seriously damaging my house It is up for renewal and I am trying to think through how to evaluate
whether or not it is worth the premium.

I live in Ohio, not in a flood zone, but close, a river is about 2 miles away, which ultimately empties into lake Erie.
A creek, which flows into that river, is about a 1/2 mile away from my house. In the 15 years I have lived in this residence,
there has never been close to a problem, even in the heaviest rains. To impact my house, I think it would need to be
a historic rainfall.

The value of my house is around $250,000. The cost of the policy is $491 per year. The coverage is $250,000 for
building and $100,000 for contents. $5,000 deductible for building and $5,000 deductible for contents.

My initial thought process, since I was no longer bringing bringing in an income, was peace of mind. The $471 annual premium
is not a big hardship for my annual budget but enough of an amount that I want to revisit it and see if it still made sense.

Would appreciate any advice.
Thanks in advance!
Given the cost of flood insurance, I highly recommend it. I don't live in a flood zone, but we had two flood events in one year that did NOT touch the house. But both events caused me concern as the water was closer/higher than ever before. A new neighborhood adjacent to mine and some work done at a golf course on the other side of my neighborhood put my neighborhood in a "bowl." I got flood insurance. It kicked in 3 days before my house had a small water intrusion due to a hurricane. Paid off multiple times over.
livesoft
Posts: 73496
Joined: Thu Mar 01, 2007 8:00 pm

Re: seeking advice on flood insurance

Post by livesoft »

I live with people who are experts in land development and hydrology. You did not present enough information to make a judgement. The reason is that sometimes flood zones are political. A developer can sometimes get land either not designated as being in a flood zone or get its designation changed simply by knowing the right people.

We do not have flood insurance and are not in a designated flood zone. However, our house cul-de-sac is on a ridge that is about 50 ft higher than all the surrounding streets. It is pretty clear to me how water will rise and miss our house while flooding everything around us for miles and miles.
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runner3081
Posts: 3658
Joined: Mon Aug 22, 2016 3:22 pm

Re: seeking advice on flood insurance

Post by runner3081 »

I would keep it as well.

We were pulled out of a flood zone a few years back and kept the policy.

After seeing so many houses flooded each year, not in a flood zone, it is worth the $260 we pay per year.
LittleMaggieMae
Posts: 435
Joined: Mon Aug 12, 2019 9:06 pm

Re: seeking advice on flood insurance

Post by LittleMaggieMae »

I would only advise to actually 'know' what your flood insurance covers and how "flood" is defined and if any of the 'foreseeable' flooding events that you might be subjected to fits within that definition. You want to make sure that the product you are buying is right for your house/possible circumstances.
runner3081
Posts: 3658
Joined: Mon Aug 22, 2016 3:22 pm

Re: seeking advice on flood insurance

Post by runner3081 »

LittleMaggieMae wrote: Tue Aug 11, 2020 12:52 pm I would only advise to actually 'know' what your flood insurance covers and how "flood" is defined and if any of the 'foreseeable' flooding events that you might be subjected to fits within that definition. You want to make sure that the product you are buying is right for your house/possible circumstances.
FEMA policies are all standard. Private products could vary.
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gr7070
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Joined: Fri Oct 28, 2011 10:39 am

Re: seeking advice on flood insurance

Post by gr7070 »

I have a huge problem with over-insurance. Especially on Boglehead's.

However, flood insurance is generally inexpensive, and far from the biggest waste of money.

I'm a civil engineer and have long, long worked closely with many civil engineers who are also Certified Flood Plain Managers - their work directly affects mine. That's to say I have a slightly better understanding of flood plain issues than most.

Have you seen good flood (FEMA) maps of your area? Any idea how close you are to the 100-year flood plain? 100-year is typically considered a flooding property - it usually requires flood insurance by a lender.

Do you know what rough flood frequency is needed to flood your house? 150-year flood? 200-year? 500-year?

Don't misconstrue that year-designation. Practically speaking it might not truly mean one flood that big every 100 or 500 years, even though verbally that's the connotation.

Regardless, statistically speaking one can absolutely encounter multiple 500-year floods in a far, far shorter period of time. In fact statistically that is guaranteed to happen, ... eventually; whether it happens during your 6-years of ownership is the concern.

Ultimately, how close you are to the 100-year flood plain is what should inform your decision. Were you at 1000-year I doubt I'd bother. 200-year? Sure, why not.

If you don't have this info you're making an incredibly uninformed decision. Getting this info might be a simple Google search or even extensive Google searching, or some modest amount more???
BoomerM3
Posts: 31
Joined: Tue Aug 27, 2019 7:34 am

Re: seeking advice on flood insurance

Post by BoomerM3 »

If your only concern is the cost, it is possible to increase your deductible. You need to ask you agent, as the info is generally published.

I wouldn't be without it!
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Watty
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Joined: Wed Oct 10, 2007 3:55 pm

Re: seeking advice on flood insurance

Post by Watty »

One thing to keep in mind is that if you live in an area which is a 200 year flood zone(which is very misleading) and you live there for 20 years then you have about a 10% chance of being flooded.

Figuring out the flood risk is very difficult because;
1) If you are not in the middle of a city many areas don't really have good flood records going back more than 100 years.

2) There can be long weather cycles and the last 100 year may not have been typical in your area.

3) Climate change may be changing weather patterns.

4) This one is huge. Development upstream can make a huge difference in how fast water runs off and causes flooding. Think of every roof and road upstream from you. This may make the flood patterns a lot different than even 25 years ago.

My personal story is that my first house was on top of a ridge that was about 20 feet above a seasonal pond so it had a great view. That was about a quarter of a mile from a sluggish small river that was normally about 20 feet wide and less than 6 feet deep at most places. I had gone canoeing on that riven and in most places you could stand up in it. When I bought the house I checked and it was outside the zone were flood insurance was required and I thought there was no risk of flooding. When I refinanced a few years later the flood maps had been redrawn and flood insurance was required. A few years later there was an odd series of events that were something like this;

1) A weeklong cold spell that froze the ground hard.
2) 3 to 10 inches of snow accumulate, more at higher elevations.
3) A warm front came through that caused heavy rain. This melted the snow but the ground was still frozen so all the water from the rain and the melted snow quickly ran off.

This was in a fast growing suburban area which has had a lot of development which also caused the water to run off faster.

This caused flooding and the 20 foot wide river became over a mile wide at places. We had our house sandbagged but that does not do all that much since the water came up through the ground anyway. Our crawl space flooded and the water was within about six inches of the floor.

That cause about $20K in flood damage but the flood insurance covered most of that since the flood mitigation work that was done, including our labor, counted towards the deductible.

If the water had been six inches higher the damage would have been an order of magnitude more expensive.

In your situation it sounds like you should get it.

I have moved since then and when I was house hunting one of my criteria was that there was no risk of it flooding so I do not have flood insurance now.
willyd123
Posts: 185
Joined: Mon Feb 19, 2018 7:23 am

Re: seeking advice on flood insurance

Post by willyd123 »

I think gr7070 makes a whole lot of sense.

And I agree that many people rationalize buying insurance because "it's so cheap". That's a limited rationale. Umbrella insurance is another example where some people buy millions of dollars of coverage because it's cheap when they may not need that level of coverage. I worked in the benefits department of a Fortune 500 company and we offered umbrella insurance to executives. In the 20 years that we had offered it roughly 300 executives maintained policies at any given time and in those 20 years, we had ZERO claims. Not saying this means you should never buy umbrella insurance, I'm just saying be thoughtful about it and have a rationale.
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TexasPE
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Location: Southeast Texas

Re: seeking advice on flood insurance

Post by TexasPE »

It's important to understand what a "100-year flood'" means. One can (and we have) experienced two 100-year floods 2 years apart.

In the '70s my FIL experienced a 100-year flood, and dropped his insurance the next year, reasoning "It would be 99 years before another one, right"? Wrong. Had a second 100-year flood the following year, and he was flooded (again), this time with no insurance.

See https://www.usgs.gov/special-topic/wate ... er_objects

for an explanation of flood recurrence intervals.

Since we experienced Tropical Storm Imelda (2019) AND Hurricane Harvey (2017) first-hand, flood insurance brings peace of mind. Especially since our local flood-plain maps are 50 years out of date...
At 20: I cared what everyone thought about me | At 40: I didn't give a damn what anyone thought of me | Now that I'm 60: I realize that no one was really thinking about me at all | Winston Churchill (?)
furwut
Posts: 1687
Joined: Tue Jun 05, 2012 8:54 pm

Re: seeking advice on flood insurance

Post by furwut »

I once worked on a system to use flood maps to help banks identify at-risk properties. I concur that flood maps have a political tilt as developers find it hard to sell houses in flood zones and the government, which heavily subsidizes the insurance, doesn’t want any more exposure.

We buy insurance for events, even if unlikely, that would be beyond our means to absorb. You have fire insurance right? Even consider how likely your house is to burn versus flood?
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