Everything You Need to Know About Flood Insurance in Alabama

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If you live in a FEMA risk zone that starts with A or V and have a mortgage from a nationally approved lender, you will need to purchase flood insurance in Alabama
Homeowners insurance policies typically do not cover flood damage because insurance providers view flooding as too big of a threat—90% of claims from natural disasters involve flooding. To protect your home, you will need to purchase flood insurance through the National Flood Insurance Program (NFIP) or from a private provider.
The NFIP is the most popular choice for flood insurance, however, you should read the details of the policy and compare it with some private company options. Often, if you have a large or high-value home, the NFIP coverage will not have high enough maximum coverage.
Unfortunately, less than 30% of Americans, and only about 4% of Alabamians, have flood insurance. That’s why car and home insurance app Jerry has put together this flood insurance guide to help you better understand your coverage needs.
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What is flood insurance?

Flood insurance is a type of insurance that covers water damage to your property or contents caused by flooding.
Flood insurance is purchased separately from your normal homeowners insurance policy. While your homeowners insurance likely covers water damage from some sources, like burst frozen pipes, or overflowing bathtubs, it will usually exclude damage from floods caused by natural events.

What does flood insurance cover?

There are two types of flood insurance, dwelling coverage and contents coverage.
  • Dwelling coverage will protect the structure of your home and built-in contents like water heaters and HVAC systems. It will usually also cover more permanent appliances like fridges and ovens.
  • Content coverage covers your personal property–things like furniture, art, jewelry, and electronics. 
There are some important exceptions to note here. First, personal items stored in basements are usually not covered. Flood damage in your basement is unfortunately one of the most complicated insurance claims a homeowner can be faced with. Know the details of your policy before you have to make a claim, and speak with your insurance provider if you have any specific questions.
Second, flood insurance will not cover the flooding caused by backed-up sewage systems. This is often also excluded from standard homeowners insurance policies but can be added as an endorsement.
As well, not all property is covered by contents coverage. High valued goods, like art, will tend to have a cap of $2500 under the standard NFIP policy. Other things like money, cars, and expenses incurred as a result of floods (like relocation costs) are not covered, and a separate policy may be required for secondary structures like detached garages.
Key Takeaway Make sure you have a clear understanding of your specific flood and homeowners insurance policies well before you have to make a claim. Certain things, like personal property stored in a basement, may not be covered. 

Do you need flood insurance in Alabama?

Depends where you live.
If you live in a high-risk flood zone and do not own your home outright, then your lender probably requires flood coverage.
Even if you live in a low-risk zone, it is a good idea to purchase flood insurance. About 25% of flood damage claims are made by homeowners that live in low to moderate flood risk areas. Homeowners in low-risk zones can qualify for FEMA's preferred risk policy, available for as low as $129 per year for dwelling and content coverage.

What flood zones require flood insurance in Alabama?

Flood insurance requirements are based on FEMA flood risk zones. Homes in zones starting with A or V are required to have flood insurance. In these high-risk zones, there is a 26% chance of flooding over a 30 year period.
You can use FEMA’s Flood Map Service Center or Flood Factor® to determine your home’s level of risk.

How much does flood insurance cost in Alabama?

The average cost of flood insurance in Alabama is $699 per year or $58 per month.
However, FEMA is introducing the Risk Rating 2.0 system that will take full effect in April 2022. As a result, Flood coverage prices are expected to change for many Americans. FEMA estimates that the average flood insurance policy in America will increase by $8 per month. That said, FEMA also expects immediate price decreases for 26% of covered Americans.
The exact cost of your flood insurance policy will depend on a number of factors like location, the value of the building, deductibles, and more. The standard coverage limits for residential customers are $250,000 for building coverage and $100,000 for contents coverage.

How to save money on flood and homeowners insurance?

We get it. Insurance can be expensive, and adding flood insurance is not always an affordable option. To help with the cost, consider these strategies for reducing your flood insurance premiums:
There are steps you can take to reduce the cost of your homeowner's insurance as well, without sacrificing coverage. The best ways are to compare as many policies as possible and to bundle your home and auto insurance. Jerry can help here.
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