What is flood insurance used for?
Flood insurance is often used to protect their properties and belongings from the financial losses associated with flooding.
Standard homeowners’ insurance policies typically do not cover flood damage.
While they may provide coverage for certain water-related incidents like burst pipes or roof leaks, they exclude coverage for natural flooding caused by heavy rainfall, hurricanes, storm surges, or overflowing rivers.
Therefore, to safeguard against flood-related losses, individuals often buy separate flood insurance coverage.
Flood damage can be extremely costly to repair, as it can cause structural damage, destroy personal belongings, and lead to significant restoration expenses. Flood insurance helps policyholders recover financially by providing funds to repair or rebuild damaged properties and replace damaged belongings.
In some cases, flood insurance may be mandatory, also in Louisiana.
Why is the cost for flood insurance in Louisiana rising?
As mentioned, in certain areas of Louisiana, flood insurance may be mandatory. The requirement for flood insurance depends on various factors, including the property’s location within a designated flood zone and whether the property has a mortgage from a federally regulated or insured lender.
Louisiana is prone to flooding due to its proximity to water bodies such as the Mississippi River, coastal areas, and frequent heavy rainfall events. As a result, many parts of the state are considered high-risk flood zones.
Due to the climate changing, these floodings are occurring more often and more heavily, which is causing more homeowners to take out flood insurances.
The National Flood Insurance Program (NFIP), which is administered by the Federal Emergency Management Agency (FEMA), is the primary provider of flood insurance in the United States. If a property is located within a Special Flood Hazard Area (SFHA) and has a mortgage from a federally regulated or insured lender, the property owner is typically required to purchase flood insurance through the NFIP.
Because of this regulation, the cost for flood insurance can be changed from one time to the next, which is what is currently happening in Louisiana. This even goes as far as to tenfold the cost of last year, but not in all cases.
What to do if this happens to your homeowners’ insurance?
In all cases, climate change is having a major impact on the price of premiums on homeowners’ insurance, with or without flood insurance.
However, the more additional insurance in your policy, the more chance there is of increases in your annual cost.
The most important thing to do is be on time. Policies can change yearly but will be announced beforehand and you can act upon the changes that are being proposed.
Because one insurer raises the cost, does not mean that other insurers have done the same. So, looking around for other insurers is the first step to take when your premiums go up.
Another thing is assessing whether you need the certain policy. Of course, if a flood insurance is mandatory, you must, but perhaps in a less covering way.
Or perhaps you opt to not have a flood insurance at all and take the odds that any damage caused by a potential flood does not outweigh the costs of the premium for your insurance. That is all a calculation away.