Experts outline myths, purposes of flood insurance


It's a scary number. According to a Consumer Reports survey, one out of three homes damaged by floods during last year's Hurricane Sandy were not covered by insurance, and those that were didn't have enough coverage.

"There was an L-shaped, nice white leather couch here. Every piece of furniture had to be removed from the house because of the risk of mold. It was heartbreaking. It was heartbreaking," flood victim Charles Farris said.

Farris' waterfront home took in more than two feet of water during Superstorm Sandy last year. His insurance came nowhere near covering the cost of replacing everything he lost.

Consumer Reports Money Adviser says there are many misconceptions about flood damage and insurance.

"Homeowners insurance doesn't cover flood damage for either your home or your belongings. For that, you need flood insurance. And we recommend coverage both for your home and its contents," Consumer Reports' Tobie Stanger said.

Be aware: Even with contents coverage, you'll only get the value of your belongings when the flood hit, not what it will cost to buy everything new.

"If you're a homeowner, getting enough coverage for the structure itself is also really important. Our advice? Get as much coverage as you can," Stanger said.

The website can help you determine the amount of available coverage and the estimated cost. Most residential flood insurance comes through the Federal Emergency Management Agency, so the terms and costs are standard.

"A warning: Just because you don't live near a body of water doesn't mean you don't need flood insurance. Heavy rains could cause flooding. In fact, one in five flood claims comes from an area that's not considered high risk," Stanger said.

Farris regrets not having adequate flood coverage. It's a mistake that's costing him plenty out of pocket.

"To bring it back the way it was, I think I'm looking at $80,000," Farris said.

One way to keep reduce flood insurance premiums down is to raise your deductibles.

Another tip: Check to see if you can pay a lower premium if you locate your central air-conditioning unit and other home systems above the flood line.

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