Flood Insurance Facts

Nov 4, 2020 | Property Damage

According to the Federal Emergency Management Agency (FEMA) floods including inland flooding, flash floods, and flooding from seasonal storms occur in every region of the United States. In fact, 90 percent of all natural disasters in the U.S. involve some type of flooding.

Flood Insurance Basics

  • Homeowners and renters insurance does not typically cover flood damage.
  • More than 20 percent of flood claims come from properties outside high-risk flood zones.
  • Flood insurance can pay regardless of whether or not there is a Presidential Disaster Declaration.
  • Disaster assistance comes in two forms: a U.S. Small Business Administration loan, which must be paid back with interest, or a FEMA disaster grant, which is about $5,000 on average per household.  By comparison, the average flood insurance claim is nearly $30,000 and does not have to be repaid.

National Flood Insurance Program

The National Flood Insurance Program was established by Congress in 1968 for two reasons: to share the risk of flood losses through insurance and to reduce flood damages by restricting floodplain development. The program enables property owners in participating communities to purchase insurance protection from the government against losses from flooding.

For more information on how to buy or renew flood insurance, understanding your risk, how to reduce your cost, or how to file a claim, visit floodsmart.gov.

Myths vs. Facts

MYTH: I receive flood insurance through my homeowner’s insurance.
FACT: Homeowner insurance policies do not normally cover flood damage. You can purchase flood insurance through an insurance agent or company.

MYTH: My homeowner’s insurance agent knows whether I need flood insurance.
FACT: Not necessarily. Not all insurance agents are familiar with communities that participate in NFIP or floodplain hazards. Better to check with an agent who is knowledgeable about NFIP and can explain the benefits so your home and property will be covered should a flood occur.

MYTH: Only those who live in a Special Flood Hazard Area (SFHA) can buy flood insurance.
FACT: Anyone can buy flood insurance if you live in a participating community, which must enforce floodplain ordinances and building requirements that meet or exceed FEMA guidelines. If your community does not participate in the NFIP, you can make a request for it to do so through your mayor, city council, or county commissioner’s office.

MYTH: It doesn’t make sense to pay for flood insurance if you are in a low-risk flood zone.
FACT: People outside of high-risk flood zones file more than 20 percent of all NFIP claims and receive one-third of federal disaster assistance for flooding. Flooding can occur anywhere. In fact, it is the number one natural disaster in the United States.

MYTH: Even if my property did flood, it wouldn’t be by much.
FACT: Just five inches of water can cause at least $11,000 worth of damage.

MYTH: You can’t buy flood insurance right before or during a flood.
FACT: You can purchase flood insurance at any time, however, there is usually a 30-day waiting period after the premium payment before the policy becomes effective.

MYTH: Flood insurance is only available for homeowners.
FACT: Most people who live in NFIP participating communities, including renters, condo owners, and businesses, are eligible to purchase flood insurance.

Beware of Predatory Contractors

It happens after every disaster: Scammers swing into action to try to make a quick buck off storm victims when they’re the most vulnerable.

It’s important to recognize predatory behavior after a natural disaster. Be wary of non-local contractors who practice high-pressure sales tactics such as unannounced visits and pushing you to sign a contract before a damage inspection with a formal estimate. If someone does show up at your door uninvited after your home has sustained damage, be prepared to ask for an office number and address. Also, check to see if they belong to your local chamber of commerce.

For a complete list of tips to help you carefully select a contractor, visit this article by the Better Business Bureau.

Disclaimer: This material is provided for informational purposes only. The provision of this material does not create an attorney-client relationship between the firm and the reader and does not constitute legal advice. Legal advice must be tailored to the specific circumstances of each case, and the contents of this newsletter are not a substitute for legal counsel. Do not take action in reliance on the contents of this material without seeking the advice of counsel.

The information contained in this blog may or may not reflect the most current legal developments. Accordingly, information in this blog is not promised or guaranteed to be correct or complete, and should not be relied upon as such. Readers should conduct their own appropriate legal research.


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