Dumb Move. Here’s Why You’re About To Screw Yourself For YEARS.
Why Filing A Small Flood Insurance Claim Could Be The Costliest Financial Mistake You’ll Ever Make (Read This Before You Burn Thousands Of Dollars)
Alright, America, time to pay attention. It’s Your Flood Nerd here, and I’m about to hit you with some cold, hard truth about flood insurance—and honestly, all insurance. If you’re even thinking about filing a flood insurance claim, you NEED to read this first.
Because if you don’t? You might as well toss your money into a bonfire and watch it burn.
Now, this isn’t some fluffy public service announcement. This is me waving a big, red warning flag right in your face. You deserve to know the truth before you make a mistake that could cost you tens of thousands of dollars. This is for adults who want to make smart decisions.
So, grab a pen. Write this down. Because what I’m about to say could save your financial life.
Insurance Is NOT Your Personal ATM (It’s A Tool For Risk Transfer)
Let’s get something straight: Insurance—whether it’s flood, wildfire, earthquake, or anything else—is NOT a cash machine. It’s not designed to pay out every time you’ve got a little damage.
Insurance exists for one reason: To transfer massive, financially devastating risks to someone else.
And this isn’t just my opinion. Even the Insurance For Dummies Cheat Sheet says it clearly:
👉 “You pay a small, predictable amount of money to transfer a large, unpredictable financial risk to an insurance company.”
You’re paying a little now, so when a REAL disaster hits—the kind that would wreck you financially—you’ve got someone else stepping in to take the hit.
Think about it: Hurricane Katrina. California wildfires. Earthquakes turning entire neighborhoods to rubble. Floods so bad people are being rescued off rooftops. THAT is what insurance is for. Not because your carpet’s wet or your basement smells like a swamp.
But here’s where people go wrong: They think, “I pay for insurance, so I should use it whenever something goes wrong.” It sounds logical. It even feels smart. But it’s a huge mistake. And here’s why…
Insurance Exists For CATASTROPHIC Losses (Not Petty Claims)
The whole point of insurance is to protect you from something so financially crushing, you’d be toast without it.
Flood insurance is there to save your butt when a wall of water turns your house into a swimming pool. It’s for the disasters that leave entire neighborhoods wrecked. It’s for the times when you couldn’t possibly afford the loss on your own.
And guess what? The underwriters aren’t the bad guys. They’re the ones making sure the money is there when everything goes to hell. They’re your safety net for when life throws you a knockout punch.
But if you start filing claims for every tiny bit of water damage, you’re proving you don’t understand the deal. You’re breaking the system that’s supposed to protect you when the real disaster hits. And the underwriters? They’re not punishing you. They’re simply doing their job and making sure they’re ready for the big stuff.
If you misuse insurance, you end up paying the price. And it’s a steep one.
Mike’s Big Mistake: $1,500 Turned Into $16,000 (Yep, It Happened)
Let’s talk about Mike. Good guy. Veteran. Fixed income. Just trying to do the right thing.
In 2021, his basement got a little wet. Nothing catastrophic. But Mike figured, “Hey, I pay for insurance, so why shouldn’t I use it when something goes wrong?”
So, he filed a claim. Got a check for $1,500. And for a minute, he probably felt pretty smart.
Until renewal time rolled around.
The policy that should’ve cost him $936 a year? The cheapest policy he could find was now $4,130 a year. That’s an extra $3,194 EVERY YEAR.
Let’s break that down:
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$3,194 x 5 years = $15,970.
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All because of a $1,500 claim.
Here’s the truth: Mike thought he was being smart by using his insurance. But the reality is, he was treating insurance like some kind of rebate program. He didn’t understand it was meant to protect him from a financial disaster—not pay him for every little mishap.
Kristen & Steve’s $2K Disaster (And Why You Should Learn From Their Screw-Up)
Now, let’s talk about Kristen & Steve. Decent folks. Thought they were doing the right thing.
They had some minor flood damage and figured, “We’re paying for insurance, so why not use it?”
But here’s the problem: They didn’t call me first. They called me after they’d already filed the claim with their underwriter. Damage done.
I pick up the phone, and Steve’s fuming. Why? Because they got $2,000 from the claim, but then came the “we’re done with you” letter.
Non-renewed. As in, “Good luck finding someone else to cover your house.”
Their old policy? $1,800 a year.
Their only option now? NFIP coverage for $4,000 a year.
So, I asked him, calmly and honestly: “Steve, can I ask you something? What do you believe flood insurance is really for?”
I wanted him to really think about it. Because the truth is, most people have never been told what flood insurance is actually meant to protect them from. And it’s not their fault. But understanding this can make all the difference.
Because here’s the truth: Flood insurance is meant to protect you from complete and total devastation. The kind that wipes out entire communities. It’s not for minor inconveniences or quick payouts. And the underwriter wasn’t the bad guy here. They were just doing their job.
7 Questions To Answer BEFORE You File A Claim (Write This Down)
You want to avoid getting screwed? Answer these questions before you do anything:
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Is This Really Catastrophic? – Are you dealing with $10,000+ in damage, or something you could handle yourself?
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What’s The Payout vs. The Cost? – Is a $2,000 check worth paying an extra $2,000 a year for the next five years?
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Can I Handle Years Of Rate Hikes? – Are you ready to fork over thousands more every year?
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Can I Cover It Myself? – Paying out-of-pocket might sting, but it keeps your insurance clean.
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Will This Risk My House? – Lose coverage and you’re risking your mortgage.
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Will I Regret This Later? – Is a quick payout now worth years of financial pain?
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Am I Using Insurance Right? – Insurance is for big risks, not small payouts. Are you using it the way it’s meant to be used?
The Bottom Line
Here’s the reality: Insurance is your safety net when everything goes to hell. The underwriter is your ally when the world falls apart. Don’t mess that up by filing claims for minor issues that you could handle yourself.
So, before you rush to file that small claim, take a breath and ask yourself the questions I laid out. Get clear on your decision. If you’ve looked at the facts and it truly is a catastrophe—then trust your judgment and file that claim. That’s what insurance is there for.
But if it’s not? Save yourself the headache, the money, and the frustration. Because once you file that claim, there’s no turning back.
