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Ask Dave

Should I Keep My Flood Insurance?

Trudy calls in from Tampa, FL, to ask Dave if she should keep her flood insurance policy. She's on course to become completely debt-free in a few months, and is wondering if she'll need the insurance at that point.

QUESTION: Trudy in Tampa, FL, is a long-time listener of Dave’s show. She’s debt-free except for her home, is currently making $60,000 a year, and she’ll have her house paid off in 12 months. Trudy lives in an area that is a designated flood plain. She pays $1,070 per year for flood insurance, and her house is worth $325,000. Water has come halfway into the yard a couple of times in 26 years from a river behind her house that empties into Tampa Bay, so she asks Dave if she should continue to maintain flood insurance.

ANSWER: It sounds like your biggest issue might be if a hurricane caused a backwash in your area. Insurance is already pretty tough in Florida when it comes to hurricanes and that kind of thing, but you don’t want to run the risk of the house getting mowed down and losing the whole thing. I think I would go ahead and stick with the flood coverage if I were in your shoes. What you’re paying for it is such a small percentage of your world, compared to the value of your house and your income. Keep it!