In Massachusetts, flood insurance is among the most misunderstood of all major insurance policies. For instance, many policy-holders assume their homeowners insurance will cover them if their home is flooded. Not so. Flood damage is not typically covered by a homeowners insurance policy, and federal disaster assistance often comes in the form of a low interest loan to help cover flood damage, not compensation for your losses. Those loans are only available if the president formally declares a disaster.
Another common misconception about flood insurance is who needs it. The answer: Everyone, even if you live in an area that is low-risk for flooding.
Almost 25% of all flood insurance claims come from areas with low-to-moderate flood risk, which means flooding often occurs where you least expect it. And Mother Nature isn’t always to blame. Sure, rapid accumulation of rainfall or a ton of melted snow can cause flooding. But so can broken water mains and poor drainage systems. Just because you’ve never seen your neighborhood on the nightly news during a flood doesn’t mean it won’t happen to you.
This is Massachusetts, after all. Flood insurance is a necessity. Homes located in high-risk flood areas have a real chance – 26% – of suffering flood damage during the term of a 30-year mortgage. A home mapped in a high-risk area is 5 times more likely to suffer damage from a flood than a fire in the lifetime of a typical mortgage.
Finally, federal law requires the purchase of flood insurance for all federal or federally related financial assistance for the acquisition and/or construction of buildings in high-risk flood areas
Flooding can happen anywhere, but certain areas are especially prone to serious flooding. To help communities understand their risk, flood maps (Flood Insurance Rate Maps, or FIRMs) have been created to show the locations of high-risk, moderate-to-low risk and undetermined-risk areas. The Federal Emergency Management Agency has a convenient flood map on their web site here.
As a rule of thumb, flood insurance policies cover physical damage to your property and possessions. They typically DO NOT cover currency, precious metals and valuable papers such as stock certificates, property and belongings outside of an insured building such as trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs and swimming pools, living expenses such as temporary housing, and most self-propelled vehicles such as cars.
Massachusetts Flood insurance can be complicated. Knowing how much you need and why isn’t as straightforward as other insurance products. It’s important to know what your policy covers. We’re here to help.