By Paul Palmer - The Advocates
Ok, you might be shocked when I tell you that I have never owned flood insurance and I am a financial planner, now for over 30 years. I live in Cypress, Texas and very close to Little Cypress Creek which has flooded on several occasions since I have lived there for over 20 years. Even last year on April 15th (Tax Day), the creek flooded and water rose almost to the bottom of my slab. As I sat with my neighbors that day watching the water slowly rise, I discovered that many of them too did not have flood insurance. The water receded and I swore that day that I would not take the chance again and that I would buy flood insurance but never took action.
Over a year later and while on a summer vacation in Colorado, we began hearing about Harvey as it made its way toward Houston and I had a bad feeling this time; that our house might really not survive the flood. We were not able to get to our house but our dear neighbors made their way to it and moved valuables upstairs and did all they could to protect what they could not move. Fortunately, our house was spared as were many adjacent to ours, but around the corner, several homes were flooded and some of those homeowners did not have flood insurance.
When I thought about how much it would cost to repair a flooded home and replace all of the personal contents, I came to my senses and bought the coverage. Apparently only 10% of the homes in Houston are insured for flooding and I was told by many that they did not have coverage nor did people they knew who sustained damage. Having coverage doesn’t help with the headache of ripping out sheetrock and flooring, or losing sentimental things, but it does give you peace of mind knowing that you will only have to pay a deductible toward thousands of dollars of expenses.
Though I am not an expert in property & casualty insurance, I did learn a lot about it when I applied for mine, so I thought I would share what a learned with you:
- The limits are $250k for structure and $100k for contents. If you want lower limits, you will not be eligible for full replacement and both structure and contents will be insured and reimbursed for their depreciated value.
- You must pay for the coverage when you buy it but it will not go into effect for 30 days.
- You cannot cancel the policy during the year or get a refund unless you sell your house.
- The policy is not transferrable unless the property you buy or sell is in the floodplain.
- There is no paperless option for the policy which will be mailed nor can you access the policy online but you can pay the renewal premium online. Renewal premium notices are mailed 30-45 days in advance of the policy date.
- The premium is based on whether the property is on the floodplain map and is the $450-600 range if not in a floodplain, but can be 4 times this cost if your house is in a floodplain.
Will I recommend flood insurance to all of my clients? Absolutely yes, and now I can say that I have it too!