Who needs flood insurance? Everyone!
Almost everyone in a participating community of the National Flood Insurance 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 this valuable protection.
MYTH: You can't buy flood insurance if you are located in a high-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 Resources System (CBRS) 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 Disaster Protection 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: 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 multi-peril policies do not cover flooding. The NFIP offers a separate policy that protects the single most important financial asset, which for most people is their home or business. Homeowners can include contents coverage in their NFIP policy. Residential and commercial renters can purchase contents coverage. Business owners can purchase flood 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 $250,000 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 building and $500,000 for the contents. The maximum insurance limit may not exceed the insurable value of the property.
MYTH: The NFIP does not offer any type of basement coverage.
FACT: Yes it does. The NFIP defines a basement as any area of a building with a floor that is below ground level on all sides. While flood insurance does not cover basement improvements (such as finished walls, floors, or ceilings), or personal belongings kept in a basement (such as furniture and other contents), it does cover structural elements and essential equipment.
The following items are covered under building coverage, as long as they are connected to a power source, if required, and installed in their functioning location:
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Sump pumps
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Well water tanks and pumps, cisterns, and the water in them
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Oil tanks and the oil in them, natural gas tanks and the gas in them
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Pumps and/or tanks used in conjunction with solar energy
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 a NFIP policy, averaging a little over $400 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.
