Beach House Dreams Can Still Be Realities

There's just something about living close to water. Whether you love the gently reflecting light, the smell of the air, or the milder weather, something always draws you in. Living by water can, however, be risky. In fact, 7 of the 10 costliest flood events in U.S. history have occurred within the last 10 years. These events have altered coastlines and perceptions about the safety of building in flood zones.

Changes in the Federal Emergency Management Act's flood zone maps and revisions to the Biggert-Waters Act of 2012 (which reformed the agency's flood-insurance program, eliminating subsidies for coverage and allowing premiums to rise to meet the actual cost of policies) have sparked debate and uncertainty surrounding coastal homes and the cost of flood insurance. While the largest increases have been put off for three years, there remains uncertainty over where flood insurance premiums will land.

Despite all that, your dream home by the water can still turn into a reality if you take the proper precautions now and offset the cost of flood insurance – now and in the future.

What you can do

Purchase flood insurance: Standard homeowners insurance policies exclude flood damage from coverage, so to repair or rebuild your home after a flood, you'll need to have a flood insurance policy in place. The National Flood Insurance Program offers policies with up to $250,000 in structural coverage and $100,000 in personal property.

The average flood claim in 2012 cost $64,232, according to the Insurance Information Institute. Although coverage on the coast might come at a significant price, it can be worth it to avoid seeing your possessions swept away.

Offset flood insurance costs: Due to the redrawing of many flood maps by FEMA last year, some homeowners who previously didn't need it now do, and premiums for some properties have increased despite the delay in full implementation of reforms.

With some smart shopping, however, you could lessen the impact of higher flood insurance premiums with discounts to your standard homeowners insurance policies. Even though most price breaks are small, they could add up.

Here are some common ways you can save:

• Bundle your home and auto coverage: By purchasing your home and auto insurance policies through the same carrier, you could typically save up to 20% on your monthly premiums.
• Look for a new home: Homes built within the last 10 years can typically withstand storm damage better than those that have experienced time's wear and tear. Insurance carriers typically offer lower rates for younger homes.
• Be more fire safe: Sprinklers and smoke detectors can prevent house fires from spreading and destroying your home, so insurance carriers usually assign lower rates for homeowners who install these features. Non-smokers can also typically earn price breaks as well.
• Search for updated systems or features: New roofs and updated electrical, plumbing, or HVAC systems could lower your homeowners insurance rates because they tend to malfunction less frequently.

Prepare your home to mitigate risks: Even for houses located in floodplains, you can take certain steps to reduce the risk of flood damage. You can find more information about floods and other disasters in the disaster guide by HomeownersInsurance.com. But here are some steps that will help:

• Raise it onto stilts: Make no mistake, raising a house above the potential storm surge is a labor-intensive and expensive process. With changes in FEMA's flood maps and in the National Flood Insurance Program, however, it could be worthwhile. Houses raised above the potential floodplain can typically qualify for lower flood insurance premiums. They also mean less risk for you as a homeowner.
• Move all valuables: If your home isn't raised, move all valuable furniture, possessions, and documents to areas above base flood elevation (usually above the basement level).
• Secure your storage: For items that are still kept in the basement or lower levels, make sure everything is kept in sealed, waterproof containers.

Buying a home in or near a floodplain involves a significant amount of risk, so make sure you're properly informed. Sometimes, however, the risk is worth it. You can take certain steps to lower your monthly premiums and keep your important possessions safe. These steps are a small price to pay when you can live your dreams.