Flood Insurance – Wise purchase or a waste of money?

flooded streetOnce again, hurricane season has arrived.  Hopefully, we will have another calm year like 2009 and not another year like 2008 when Hurricane IKE came barreling through the Spring Texas area.  If your house is located in the 100-year flood plain and you have a mortgage, your lender requires you to have flood insurance.  But what if you own your Spring Texas house or your house is not located in the 100-year flood zone should you buy flood insurance?  Or is flood insurance just a waste of your money?

I think to some degree we all hate insurance. It doesn’t matter whether it is homeowners or auto or health insurance, we still hate paying for something that provides us with no immediate benefit.  But now when we need insurance, then we are very glad we have it.  If only we could perfectly time our insurance needs. We would buy insurance just before we needed it and not a day before.  But since you are not going to be able to time your insurance needs, you need to decide “Is flood insurance a wise purchase or a waste of money?”

The statistics:

  • Only 20% of the households in Harris County have flood insurance
  • During Tropical Storm Allison, 65% of the areas that flooded were outside the 100-year flood plain.
  • During the torrential downpour in April of 2009, 70% of the 2,300 flood damaged homes were outside the 100-year flood plain.

Why is the percentage of flood damaged homes located outside the 100-year flood plain so high? It’s because of what the flood plain maps DO NOT depict.  The flood plain maps show flooding risks from bayous and streams going over their banks during certain theoretical floods.  The maps DO NOT show flooding risks from street flooding caused by storm sewers exceeding their capacity.  Nor do they show what’s referred to as “sheet flow” which is water traveling over land to reach the bayous.  Nor do they show flooding risks from extreme flooding events as we experienced with Tropical Storm Allison.

If all those statistics aren’t enough to convince you that buying flood insurance for your Spring Texas house is a wise decision, let me give you one more statistic.  Over 50% of the flooding that occurs in Harris County is caused by flooding scenerios NOT depicted on flood plain maps.  With flood insurance on an average Spring Texas house located outside the 100-year flood plain being around $250 a year, it is a wise purchase.

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