Myths and Facts about the National Flood Insurance Program

Who Needs Flood Insurance? Everyone!

Who Needs Flood Insurance? Everyone!

And Almost everyone in a participating community of the National Flood Insurnce Program (NFIP) can buy flood insurance.  Nationwide, more than 20,000 communities have joined the program.  In some instances, people have been told that they cannot buy flood insurance because of where they live.  To clear up this and other misconceptions about National Flood Insurance, the NFIP has complied a list of common myths about the Program, and the real facts behind them, to give you the full story about thisvaluable protection.

MYTH;  You can't buy flood insurance if you ar located in a hgh-flood risk area.

FACT: You can buy National Flood Insurance no matter where you live if your community participates in the NFIP, except in Coastal Barrier Resoures System (CBRS) or other protected areas.  The Program was created in 1968 to make federally backed flood insurance available to property owners who live in eligible communities. Flood insurance was then virtually unavailable from the private insurance industry.  The Flood Diaster Protecrtion Act of 1973, as amended, requires federally regulated lending institutions to make sure that mortgage loans secured by buildings in high-flood risk areas are protected by flood insurance.  Lenders should notify borrowers, prior to closing, that their property is located in a high - flood risk area and that National Flood Insurance is required.

MYTH: You can't buy flood insurance immediately before or during a flood.

FACT:  You can purchase National Flood Insurance at any time.  There is usually a 30-day waiting period after premium payment before the policy is effective, with the following exceptions.

1. If the initial purchse of flood insurance is in connection with the making, increasing, extending or renewing of a loan, there is no waiting period.  Coverage becomes effective at the time of the loan, provided application and payment of premium is made at or prior to loan closing.

2. If the initial purchase of flood insurance is made during the 13-month period following the effective date of a revised flood map for a commnity, there is a 1-day waiting period.  This applies only where the Flood Insurance Rate Map (FIRM) is revised to show the building to be in a Special Flood Hazared Area (SFHA) when it had not been in an SFHA.

The policy does not cover a "Loss in Progress", defined by the NFIP as a loss ocurring as of 12:01 a.m. on the first day of the policy term.  In addition, you cannot increase the amount of insurance coverage you have duirng a loss in progress.

MYTH; Homeowners insurance policies cover flooding.

FACT:  Unfortunately, many home and business owners do not find out until it is too late that their homeowners and business multiperil policies do not cover flooding. The NFIP offers a separate policy that protects the single most important financial assest, which for most people is their home or business.

Homeoners can include contentss coverage in their NFIP policy.  Residential and commercial renters can purchase content coverage.  Business owners can purchase insurance coverage for their buildings and contents/inventory and, by doing so, protect their livelihood.

MYTH: Flood insurance is only available for homeowners.

FACT:  Most people who live in NFIP participating communities, including renters and condo unit owners, are eligible to purchase federally backed flood insurance. A  maximum of $25,000 of building coverage is available for single-family residential buildings; $250,000 per unit for residential condominiums.  The limit for contents coverage on all residential buildings is $100,000, which is also available to renters.
Commercial structures can be insured to a limit of $500,000 for the buiilding and $500,000 for the contents. THe maximum insurance limit may not exceed the insurable value of the property.

MYTH: You can't buy flood insurance if your property has been flooded.

FACT: You are still eligible to purchase flood insurance after your home, apartment, or business has been flooded, provided that your community is participating in the NFIP.

MYTH: Only residents of high-flood risk areas need to insure their property.

FACT: All areas are susceptible to flooding, although to varying degrees.  If you live in a low-to-moderate flood risk area, it is advisable to have flood insurance.  Nearly 20 percent of the NFIP's claims come from outside high-flood risk areas  Residential and commercial property owners located in low-to- moderate risk areas should ask their agents if they are eligible for the Preferred Risk Policy, which provides inexpensive flood insurance protection.

MYTH: National Flood Insurance can only be purchased through the NFIP directly.

FACT:  NFIP flood insurance is sold through private insurance companies and agents, and is backed by the federal government.

MYTH: The NFIP does not offer any type of basement  coverage.

FACT: Yes it does.

MYTH: Federal disaster assistance will pay for flood damage.

FACT:  Before a community is eligible for disaster assistance, it must be declared a federal disaster area.  Federal disaster assistance declarations are issued in less than 50 percent of flooding events.  The premium for the NFIP policy, averaging a little over $500 a year, can be less expensive than the monthly payments on a federal disaster loan.  Furthermore, if you are uninsured and receive federal disaster assistance after a flood, you must purchase flood insurance to remain eligible for future disaster relief.

MYTH: The NFIP does not cover flooding resulting frm hurricanes or the overflow of rivers or tidal waters.

FACT: The NFIP defines covered flooding as a general and temporary condition during which the surface of normally dry land is partially or completely inundated.  Two properties in the area or two or more acrs must be affected.  Flooding can be caused by:

  • Overflow of inland or tidal waters, or 
  • Unusual and rapid accumulation or runoff of surface waters from any source, such as heavy rainfall, or
  • Mudflow,i.e.. a river of liquid and flowing mud on the surfaces of normally dry land areas, or
  • Collapse or subsidence of land along the shore of a lake or othr body of water, resulting from erosion orthe effect of waves, or water currents exceeding normal, cycilical levels. 
  • For more information about the NFIP and flood insurance
  • Call 1-800-427-4661
  • Stay safe.
  • Tune to radio stations 1450 AM or 970 AM for up-to-date flood and emergency information.

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