While flooding is a serious risk for many homes, with the potential for financially crippling damage, average insurance policies for Worcester homeowners may exclude coverage for flood-related damage. This can leave homeowners at increased risk of relying on state and federal assistance in an emergency. National and state legislation brings rights and responsibilities relating to floods and flood damage to protect homeowners.
Flood Laws Affecting Insurance and Worcester Residents
National Flood Insurance Act
If you take out a mortgage from a federally regulated or insured lender, you may be legally required to have flood insurance. This requirement applies if your home is in a high-risk flood zone, defined as an area where the estimated risk of flooding during a standard 30-year mortgage term is at least one in four. You can check whether your property falls into such a zone through maps on the FEMA website.
National Flood Insurance Program
The flip side of the flood law is that FEMA subsidizes the cost of flood insurance in some high-risk flood zones. The cost is determined solely by certain factors about your home's size, age and construction type, not on the insurer providing the coverage. This program is available only in specific communities that have agreed to carry out designated actions to reduce the risk of flooding in the area. You can check availability for your address at the Floodsmart website. In some cases, you may be able to get insurance for flooding through the program even if your specific Worcester address is not in a high-risk zone.
Insurance Exceptions in Massachusetts
In 2014, Massachusetts changed its laws on flood insurance in a move to reduce the financial burden on homeowners in designated flood zones. Previously, mortgage lenders could insist borrowers have insurance policies to cover the full cost of rebuilding homes after a flood. The law now says mortgage lenders can only insist on insurance with a payout limit sufficient to cover the outstanding balance of the mortgage.
Such policies must also have a deductible of no less than $5,000. The new laws mean mortgage lenders can't insist on homeowners in flood zones having contents coverage.
The Bottom Line for Flood Insurance in Worcester
Massachusetts exemptions only affect the requirements a mortgage lender can impose. Failing to have adequate insurance for flooding can still be a significant financial risk, so think carefully before cutting corners on coverage on your Worcester property.