My wife and I were chatting the other night about the horrific experiences some of our friends in the New York tristate area are facing. One of our very good friends had their basement inundated with water. Aside from the fact that contractors are in short supply, she knows that once she finds one, she’ll have to cough up whatever he asks. And, at the end of the day, none of it is insured. Some folks (though not all) know flood insurance isn’t included as part homeowner’s insurance. 100% of that damage, they’ll pay out of pocket, even with a top-tier homeowner’s policy.
So few people buy flood insurance (us included for now) that it can be mind boggling. Some argue that the chance of a flood actually happening is so small, that it isn’t worth it. But then again, some policies folks buy insure against falling objects such as aircraft. After all, that is the point of insurance–it isn’t supposed to happen–it is insurance in case it happens. I’m not sure there is more likelihood to be hit by a falling airplane than a flood.
In our case, it just isn’t something we focused on for ourselves. Perhaps this is a case of the cobbler going without shoes.
Many people start with homeowner’s insurance when their lender requires it at closing. Since flood insurance is underwritten by the National Flood Insurance Program (aka, Federal Government), it requires an extra purchase from a broker. Therefore, it usually isn’t purchased unless one buys a house in a defined flood area, where lenders will require it. But what about those areas that aren’t required? That is, after all, what happened to our friends in New Jersey. And, for anyone that dares say “it won’t happen here”, we only need look back to 2006 when torrential rains led to significant flooding in areas of El Paso that previously couldn’t be imagined.
That is the point of insurance. It protects you against the unexpected. In areas where it shouldn’t flood, it makes even more sense because it is so cheap compared to the damage a flood might cause.
After a good, heartfelt conversation, my wife and I decided that in addition to stocking up on a few emergency sandbags, our budget could afford the couple of bucks a month that would help us rebuild our house (and lives) if it ever started flooding again–yes, even in a place like El Paso.