As extreme weather events become more common, many householders are beginning to think more carefully about the insurance that they carry. In certain high-risk areas, flood insurance is mandatory in some circumstances. It’s smart to be well-informed about your options, as well as your obligations.
If you have paid off your mortgage loan and own your property outright, no one can compel you to purchase any sort of insurance for it. You need no longer carry a homeowners policy or flood insurance under the National Flood Insurance Program.
Your property must not be held as collateral for a home equity loan or other line of credit, or subject to a lien. If it is, you will be required to purchase flood insurance if you are in a federally defined flood zone. You can consult a map available from the National Flood Insurance Program’s website to determine what type of zone you live in.
If you live in a high-risk zone and you have previously received disaster aid in the wake of a flood, you do not have to get flood insurance if you don’t carry a mortgage, but you should seriously consider it. If you do not carry the coverage, and your property floods a second time, you will be denied federal disaster assistance.
Even if you are not forced to carry coverage and you have not been flooded before, it’s worth considering paying up for a policy if you live in a high-risk zone. Because they are provided by the federal government, flood policies can be reasonably priced, and cleaning up after a flood can be extremely costly.
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