Floods are the most prevalent and financially devastating natural disasters in the United States. For property owners in communities that participate in the National Flood Insurance Program (NFIP), affordable flood insurance is available to protect against these losses. However, numerous misconceptions persist regarding flood insurance. Let's clarify some of the most common myths and provide accurate information based on the NFIP guidelines.
Myth 1: You Can’t Buy Flood Insurance in High-Risk Areas
Fact: Flood insurance is available to anyone living in a community that participates in the NFIP, regardless of the flood risk. Established in 1968, the NFIP offers insurance to properties in Special Flood Hazard Areas (SFHAs), often referred to as 100-year floodplains. Lenders must require borrowers with properties in SFHAs to purchase flood insurance if they have a federally backed loan. While insurance in SFHAs may be more expensive, coverage for properties outside these areas is typically very affordable.
Myth 2: You Can’t Purchase Flood Insurance During a Flood
Fact: Flood insurance can be purchased at any time, but there is usually a 30-day waiting period before the policy becomes effective. Exceptions to this waiting period include policies purchased in connection with a loan or within a year following the adoption of a revised Flood Insurance Rate Map for a community, where the waiting period can be as short as one day. However, the policy will not cover losses already in progress when the coverage starts.
Myth 3: Homeowners’ Insurance Covers Flooding
Fact: Standard homeowners’ insurance policies do not cover flood damage. Many homeowners discover this only after experiencing a flood.
Myth 4: Only Homeowners Can Buy Flood Insurance
Fact: Flood insurance is available for homes, condominiums, apartments, and non-residential buildings, including commercial properties. Single-family homes can be insured up to $250,000 for the building, with additional coverage available for contents. Renters can also insure their belongings up to $100,000. For commercial properties, both building and content coverage are available up to $500,000 each.
Myth 5: Properties with Previous Flood Damage Are Ineligible for Flood Insurance
Fact: Regardless of how many times a property has flooded, flood insurance remains available if the community participates in the NFIP.
Myth 6: Only High-Risk Areas Need Flood Insurance
Fact: Flood insurance is advisable even for those in low- to moderate-risk areas. Over 25% of NFIP claims come from outside high-risk zones, and these areas receive a third of disaster assistance for flooding. The NFIP offers preferred risk policies for properties in these lower-risk areas.
Myth 7: The NFIP Does Not Cover Basements
Fact: The NFIP provides basement coverage, which includes cleanup costs and items necessary for building services, such as furnaces, water heaters, washers and dryers, and utility connections. However, it does not cover finished basement contents or improvements like finished walls and floors.
Myth 8: Federal Disaster Assistance Will Cover Flood Damage
Fact: Federal disaster assistance is only available if an area is declared a federal disaster zone, which occurs in less than half of flooding incidents. This assistance usually comes in the form of loans that must be repaid with interest. By comparison, the average NFIP policy costs about $700 annually, often less than the interest on disaster loans. Moreover, if you receive federal disaster assistance for a flood, you must buy flood insurance to qualify for future relief.
Myth 9: Federal Flood Insurance Must Be Bought Directly from the NFIP
Fact: Most NFIP policies are sold and serviced by Write Your Own (WYO) companies through arrangements with the Federal Insurance Administration, making it easy to purchase from numerous participating insurers.
Myth 10: Flooding from River Overflow Is Not Covered
Fact: The NFIP covers flooding resulting from river overflow, rapid accumulation of surface waters, mudflows, and land collapse along water bodies due to erosion or wave effects. Flooding must affect at least two properties or cover two or more acres.
Myth 11: Wind-Driven Rain Is Considered Flooding
Fact: Damage from rain entering through wind-damaged openings is considered windstorm damage, not flooding. Flood insurance covers only damage from general flooding conditions. Most homeowners’ policies cover wind and hail damage, but not flood damage.
For more detailed information, visit the NFIP website or consult with your insurance provider.
Source: Fact Sheet: Myths and Facts About Flood Insurance, FEMA, Release Date: June 11, 2019
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