Flood: Are You Protected from the Next
Devastating floods occur throughout the
U.S. every year. Changing weather patterns, coupled with
over-development and leveling of forests that reduce the
land's natural ability to absorb water, are increasing the
flood risk for many...even those who don't live near water.
Flooding causes more than $2 billion in
property damage each year, and losses due to flooding are not
covered under most homeowners or business policies.
However, flood insurance is available to protect homes and
businesses and their contents in communities that participate
in the National Flood Insurance Program (NFIP).
Flooding is a National Problem
Until the late 1960s, most property owners
were unable to get insurance coverage against flood
damage. Private insurance firms, aware of the potential
for catastrophic losses, were unwilling to assume the
financial risk alone. This put the burden on taxpayers to
provide costly disaster relief to a growing number of flood
In 1968, Congress addressed this issue by
creating the NFIP. This Federal program provides flood
insurance at a reasonable cost in exchange for the careful
management of flood-prone areas by local communities.
Today, the NFIP insures more than 4 million
policyholders in more than 19,000 communities across the U.S.
It is administered by the Federal Emergency Management Agency
Facts You Should Know
1. There is a 26% chance of experiencing a
flood during the life of a 30-year mortgage compared to a 4%
chance of fire.
2. Find out if you are located in a
floodplain, which is considered a Special Flood Hazard Area.
If you are, you are still eligible for flood insurance.
In fact, in some cases, you may be required by law to have
flood insurance. Your city or county government (start
with the Building or Planning Department) has Flood Insurance
Rate Maps, published by FEMA, which are available for public
inspection. If your building is located in a flood zone that
begins with the letter A or V, you are in a Special Flood
3. The average premium is a little more
than $300 per year for an average of $100,000 in coverage.
4. In low -to moderate -risk areas,
coverage can be purchased for just over $100 a year.
5. Buy as much flood coverage as you
can. Primary residences insured for 80% of their
value, or the maximum amounts available, get replacement cost
coverage. It pays the amount needed to repair or replace
most of the building elements up to the policy limits, without
deduction for depreciation, once repairs are made.
6. There is a 30-day waiting period from
the time a policy is purchased until you are covered, with the
There is no waiting period if you have
an existing flood insurance policy and an additional
amount of flood insurance is required with the making,
increasing, extending or renewing of a loan, such as a
second mortgage, home equity loan, or refinancing.
Coverage is effective immediately, as long as the premium
is presented at or prior to loan closing.
There is no waiting period when flood
insurance is required as a result of a lender determining
that a loan which does not have flood insurance should be
protected by flood insurance. Coverage is effective
immediately, as long as the premium is presented at the
completion of a loan application.
There is a one-day waiting period when
an additional amount of insurance is required as a result
of a map revision. This applies when the map
revision is from a non-Special Flood Hazard Area to a
Special Flood Hazard Area and only if the endorsement is
received within 13-months following the map
revision. The increased amount of coverage will be
available 24-hours after the amount of coverage is applied
for and the additional premium is made.
7. Flood insurance is required by law in
some instances. To get Federally secured financing to buy,
refinance, build, repair, reconstruct or improve structures in
Special Flood Hazard Areas you may be required to purchase
flood insurance. This includes most types of mortgage
loans, as well as FHA and VA loans.
8. A flood insurance policy also reimburses
you for actions you take to prevent flood damage. For
example, costs for moving insured contents, in imminent danger
of flooding, to a safe location are reimbursed up to $500 with
no deductible. Other costs, such as for sandbags,
plastic sheeting and lumber, pumps, fill for temporary levees,
and wood to save the building can be reimbursed up to a limit
of $750 with no deductible.
For more information about the NFIP and
flood insurance, contact your insurance company or agent, or
call the NFIP at 1-888-FLOOD29, TDD# 1-800-427-5593.