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Colorado Flood
I recently asked a client, "How do you know that you don't need flood insurance?"  He told me that his loan officer told him that he was not in a flood plain.  Because he is not in a flood plain his mortgage company determined that he did not need flood insurance to qualify for the loan.  I accepted his answer at the time, but since our conversation I kept thinking about how I should have responded.  Something like:  Based on our recent experience with mortgage companies and the government, are you really ready to risk your home based on advice from a loan officer who based his opinion on a federal program?  The thing that most people don't understand about the federal flood program is that it does not say that you will not have a flood unless you live in a flood plain.  It only says that you are more likely to have a flood if you do. 
I have been watching the tragedy unfold in Colorado and I wonder how many of those homeowners up in the mountains live in a flood zone or even considered the possibility of a flood damaging their homes?  I am not sure if people just trust that their homes will not be damaged by flood because they trust the mortgage company or if they just like to use that as an excuse to save a few bucks.  The thing that most homeowners don't want to hear is that we are all potential flood victims.  If a water main breaks outside your home causing thousands of gallons per minute of city water to come flowing down your street and into your living room, you have a flood.  If we have 20 inches of rain in a day and the ground is saturated to the point that it cannot absorb the water as fast as it is falling, you could have a flood.  The point is that we really don't know what the future holds and choosing not to carry flood insurance is taking a huge risk.  Ironically, for most people who are not in flood zones, the cost of flood insurance is less than $400 per year.  For some it is much less.  So, why risk your house for an expense that is less than your cable TV bill?

Here is a copy of the what FEMA puts on their web site to help people understand flood insurance.  I have highlighted some of the more important areas and I have also included a link to their page at the bottom:

 Flood Insurance Explained:

Whether or not you live in an area prone to flooding, flood insurance is a smart option to consider -- especially since homeowners insurance does not cover flood damage. Yes, floods occur in areas marked by heavy rainfall and other natural phenomena. But development patterns and drainage systems also play a major role in floods nationwide.

The only flood policy available to property owners in the U.S.A. is provided through the National Flood Insurance Program (NFIP). This program is administered by the Federal Emergency Management Agency (FEMA), and insurance coverage is sold through licensed agents, such as FloodBuddy Insurance.

Your flood risk is determined by your flood zone rating. This rating can change without your knowledge, which can affect the cost of flood insurance. FloodBuddy Insurance was launched to provide you with the most up-to-date information on your flood zone rating -- and insurance costs -- quickly, easily, and free of charge. The sample FloodBuddy report below illustrates the information available to you.

All NFIP flood insurance premiums rates are standardized and set by FEMA and the federal government, but exact flood zone determination is not. It is largely the local government interpretation of FEMA's instructions on flood zones at the county and city planning level.

There are 21,000 individual jurisdictions called "member communities" that interpret these instructions, some doing better than others. Let FloodBuddy double check your flood insurance costs. Order your FloodBuddy quote today:  http://floodbuddy.com//explain.html
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