Why Flood Insurance Is a Wise Homeowner Bet

THE FEDERAL GOVERNMENT considers floods the nation’s most common natural disaster. They strike every state and leave homeowners with huge repair costs. But most homeowners insurance policies don’t protect from those losses.

Why? Because typical homeowners’ insurance doesn’t cover flood damage.

Those policies may provide protection for water damage when it comes through a hole in the roof and/or from wind-driven rain. But coverage doesn’t extend to damage caused by water from a storm-swollen river, torrential rainfall or other flood-inducing conditions.

Homeowners are required to purchase flood insurance if they have a federally backed mortgage and live in a high-risk flood area as identified by the National Flood Insurance Program.

For others, though, it’s optional.

With premiums starting as low as $162 a year for a home and its contents, it’s coverage homeowners may want to consider.1

“Floods can occur anywhere,” says Corise Morrison, executive director of residual markets for USAA. “Low risk does not mean no risk.”

The Federal Emergency Management Agency establishes flood-risk ratings for areas based on hydrologic studies and other data. In high-risk areas, a one-in-four chance of flooding exists over a 30-year mortgage. In moderate-to-low-risk zones, the chance of flooding is reduced but still present.

Nearly 25% of the National Flood Insurance Program’s claims come from people with property outside of high-risk areas, according to federal estimates.

“Lower risk can mean lower premiums,” says Shameka Robinson, product management director for USAA. “We do our best to help our members understand the value that flood insurance provides.”

USAA sells and services coverage under the National Flood Insurance Program. The program’s maximum coverage is $250,000 for a home and $100,000 for its contents, but USAA can refer members to a broker if additional coverage is needed. The program also provides coverage to condo owners and renters.

Homeowners can assess their risk for natural disasters plus get tips on how to minimize them and protect their personal property with USAA’s Property Risk Assessment Tool.2 Additional information on risk ratings is also available through the National Flood Insurance Program.

But don’t wait until an extreme storm is approaching to act. Normally, flood coverage won’t begin until 30 days after purchase.

Make sure you’re protected against the high cost of repairs. Coverage starts at $14 a month.3

Get a quote for flood insurance.


¹ $162 will purchase minimum coverage which includes limits of $20,000 dwelling and $8,000 contents.

²The USAA Property Risk Assessment Tool has been developed to provide you information regarding selected risks at a specific property location from third-party data available to USAA. It may help you to identify risks and possible mitigation measures. No opinion regarding the market value or marketability of the property is intended or expressed. No opinion or guarantee of insurability, or premium amount is intended or expressed.

³Rate based on an annualized premium of $162 for a qualifying primary residence with no basement or enclosure and is based on a preferred risk policy with $20,000 coverage and $8,000 contents in a low-to moderate-risk area. Premium includes a federal policy fee of $20.00, a Homeowners Flood Insurance Affordability Act surcharge of $25.00, a 10% Reserve Fund Assessment and an Increased Cost Compliance (ICC) premium fee of $5.00. Rates vary due to location and by coverage amount. Rates quoted effective March 2015 and are subject to change.

Membership eligibility and product restrictions apply and are subject to change.

The typical homeowners policy doesn’t include flood coverage, and in some locations, you may also need to obtain a wind-only insurance policy. Flood insurance can be purchased separately through the National Flood Insurance Program. The maximum limits of coverage available on the federal flood policy for residences are $250,000 on the building and $100,000 on contents. If you need additional flood insurance coverage beyond these amounts, you can contact USAA Insurance Agency which works with other insurance companies that provide excess flood coverage.

Flood insurance is not underwritten by USAA or its affiliates, and is provided by USAA General Indemnity Company, through an arrangement with the Federal Emergency Management Agency. The Federal government has financial responsibility for underwriting losses.

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