There are two types of insurance to consider when you are financing your home: flood insurance and homeowner’s insurance. If you have never owned a home before, you should know that the distinction of these two types of insurance could mean the total replacement of your home in the event of a catastrophic hurricane, tropical storm, or flood, or the total loss of your home. I have briefly described the two types of insurances below. Again, just as I recommend with your choice of Lender or Title Company, you are going to want to do your research on the best insurance companies, as some rates will be much higher than others.
Homeowner’s insurance has two components – structure and contents. Structural insurance covers the actual home itself, the walls, framework, insulation, windows, doors, etc. You notice that I did not mention the roof. This is because one of the things that people in Southeast Louisiana have to consider is that some insurance companies require a separate and additional wind and hail “rider” or policy added to the insurance to cover damage from catastrophic wind events such as hurricanes and tornadoes. Be Sure to ask any agency their requirement on this.
The contents portion of the insurance insures the contents of your home. This can include all of the items that you move into your home – furniture, pictures, clothing, electronic components, books, BlueRay discs, etc. It can also include your dishwasher, washing machine, dryer, oven, etc. Basically everything that can be removed from the house is part of its contents.
Finally, outside your home, you may have sheds, storage structures, and even possibly fencing that may be covered under your homeowner’s insurance policy. Be sure to ask the agency how they handle the outdoor components of your home to make sure that everything that may have to be rebuilt or bought after a catastrophic weather event can be replaced.
Flood insurance covers water. Water inside your home which floods your home. If you don’t have flood insurance, and your home is flooded, your homeowner’s insurance WILL NOT cover it. Consider the last two water events which just occurred in 2016 in Louisiana. The Baton Rouge area was flooded where it had NEVER flooded before. Parts of Washington Parish and Tangipahoa Parish as far south as Hammond flooded during this storm. In St. Tammany Parish, parts of Covington went under feet of water when it had NEVER flooded before. Also, during the Covington storm, the water flooded all the way out to Robert, Louisiana, as well. If there is ANY chance that any part of your property may be affected by a nearby creek, stream, or river, consider the possibility of purchasing flood insurance.
Obviously, there are well-defined areas of Southeast Louisiana which are located in a flood zone. These areas have been identified by FEMA on the new FEMA Flood Maps which have just been finalized. A lender would require flood insurance for any home built or purchased in these areas. If you are building a home in a flood zone, you will also have to meet certain height criteria for your new home, according to FEMA guidelines. If you are outside of the flood zone but still at possible risk of flooding, purchasing a flood insurance policy may not be a bad idea, and the price of the policy is greatly reduced when flood insurance is not required.