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Flooding is a well-known problem in Louisiana. Flood damage can be widespread and devastating, and in a state as risky as Louisiana, homeowners should know what steps to take to protect themselves from the financial fallout of floods. Standard home insurance policies don’t cover flooding, which means that Louisiana homeowners may want to consider purchasing a flood insurance policy. Bankrate explains how flood insurance works for Louisiana homeowners and how you can find the right policy for you.
Why Louisiana homeowners need flood insurance
According to data from the Federal Emergency Management Agency (FEMA), 2,510 flood events occurred in Louisiana between 1996 and 2019. FEMA defines a flood as a “general and temporary condition of partial or complete inundation of 2 or more acres of normally dry land area or of 2 or more properties,” one of which is your property, from any of four scenarios. Flood damage can be extensive and devastating.
Louisiana has spent billions of dollars in the last 20 years to rectify damage from hurricanes, yet many residents do not have flood insurance, possibly because they incorrectly assume their home insurance policy will pay for the damages caused by floods. This is a common misconception, and it can be a costly one. Although flooding is a common natural disaster in Louisiana (and any coastal state), it is specifically not covered by homeowners insurance policies. You’ll need a flood insurance policy to cover these damages.
Cost of flood insurance in Louisiana
While FEMA reports that the average cost of flood insurance is $700 per year, the cost of your own flood insurance will depend on several factors. First, and perhaps most impactful, is your flood zone. Flood zones help determine how likely a flood is in your area; the more highly-rated your flood zone, the more likely you are to experience a flood and the water damage that comes with it. Your premium will typically be lower if you are in a less-risky area and higher if you are in an area more prone to flooding.
Additionally, the coverage you purchase will affect how much you pay. Flood policies sold by the National Flood Insurance Program (NFIP) only have two coverage options: dwelling coverage and personal property coverage. Dwelling coverage is the backbone of a flood insurance policy and covers the structure of your home, while personal property coverage (also called contents coverage) covers your belongings. A dwelling-only policy will probably be cheaper than buying both coverage types. Also, the more coverage you purchase, the more your policy will likely cost.
Your premium is also based on any flood mitigation features that you may have. Certain home features can decrease the risk of water damage from floods, like installing openings for the water to drain out and elevating your home. These features may help lower the cost of your policy.
Finally, it’s important to know that some private insurers do offer their own flood insurance now, outside of NFIP government-backed policies. Rates will vary between carriers, so comparing flood insurance quotes could be a helpful shopping tactic.
When to purchase flood insurance
Whether you purchase from the NFIP or a private insurance company, most flood insurance has a 30-day waiting period. This means your policy won’t go into effect until 30 days after you’ve purchased the policy. There are some exceptions to this rule, such as for a loan closing.
Generally, you should give yourself plenty of time to shop for and buy a flood insurance policy.
Additionally, most insurance carriers will not allow flood insurance to be purchased when a major storm is in the forecast. This is called a moratorium and it halts the sale of new policies. Insurance companies know that, ahead of bad storms, many people may attempt to purchase coverage and could mean that the insurance company wouldn’t be financially able to pay out all the claims after the storm. If you know your home is at risk for flooding, you should consider getting a policy before any kind of damage is imminent. You should also be aware that flood insurance isn’t always optional. If you have a mortgage or other type of home loan and live in a flood zone, a flood insurance policy will likely be mandatory. It is also important to note that, typically, flood insurance policies require full upfront payment of the premium.
How to purchase flood insurance in Louisiana
The NFIP offers federally-supported flood insurance to homeowners and covers up to $250,000 for a building and $100,000 for building contents. Policies are available to anyone living in one of 23,000 participating NFIP communities. There are policies available through private insurance carriers for properties valued above the coverage limits and for anyone wanting to compare prices. A few homeowners insurance providers offer flood insurance policies for an additional cost, or can help you facilitate the purchase of an NFIP policy.
Frequently asked questions
No, flood damage is a common home insurance exclusion. To obtain flood coverage, you will likely need to buy a flood insurance policy. The U.S. government provides federally-underwritten flood insurance through the NFIP, or you can get a policy from a private insurance company that underwrites its own coverage.
It might be. Flood insurance isn’t legally mandated, but if your home is in a flood zone and you have a mortgage, your lender will probably require you to purchase a flood insurance policy as a condition of the loan. Even if you fully own your home, flood insurance might be a good purchase. FEMA reports that 99% of all counties in the country experienced a flood event between 1996 and 2019, so even homeowners in historically low-risk areas might benefit from a policy.
Unfortunately, you’ll be responsible for the damage out of pocket; your home insurance policy is not likely to cover it unless you have a flood endorsement, which only a few companies offer. If a flood damages your home and you don’t have a policy, you may be able to get help from your city, county or state, as well as from local nonprofits. FEMA provides a repository of ways to get assistance after a natural disaster.
The best home insurance company for you will depend on your specific needs and wants. Getting quotes from several carriers to compare prices, coverage offerings and features could help you find the right fit. Just remember that home insurance doesn’t cover flood damage. If you also need a flood insurance policy, you’ll need to request separate flood insurance quotes.