7 ways you're being foolish with insurance
If you live in a designated flood zone, your mortgage company probably will require you to buy flood insurance. But if you're not quite in harm's way, don't fool yourself into thinking you don't need a flood policy, because 25 percent of all floods occur in low-to-moderate risk areas, says Tim Dodge, director of research for the Independent Insurance Agents & Brokers of New York in Syracuse. Even if you don't live near a body of water, flood damage can be caused by snowmelt or a hurricane.
"Flood insurance is relatively inexpensive if you live in an area with little risk of a flood, but the damage caused by even a small flood can be costly," he says. "You should consider the cost of flood insurance versus the likelihood of a flood, versus the cost of a repair."
Ron Moore, senior product manager for MetLife Auto & Home in Minneapolis, says homeowners also should purchase coverage against sewer or drain backups because if a backup turns your finished basement into a smelly swamp, the damage can be expensive.
If you have a sump pump, you should purchase an insurance rider that covers damage if it fails, notes Tom Bigoski, owner of the Thomas Bigoski Insurance Agency in Gainesville, Va.