Flood insurance is important for many reasons. First, home and property insurance policies do not provide coverage for damage due to floods. If you want coverage for flooding, flood insurance is available from the national Flood Insurance Program (NFIP). The NFIP is a program created by Congress in 1968 to help property owners protect themselves from the financial devastation that results from flooding.
Everyone knows that flooding can be very dangerous and costly, but you still might be saying, “It won’t happen to us. We’ve never flooded before.” Here are some facts from the NFIP that might make you think again.
- Floods are the most common and most costly natural disaster. In the past 5 years, all 50 states have experienced floods or flash floods.
- While risk levels vary, everyone lives in a flood zone.
- In recent history, about 60% of all declared disasters involved flooding.
- Floods are becoming more prevalent and more severe in the U.S. because new development has replaced forests and meadows in many areas.
- In high-risk flood areas, a building has a 26% chance of being flooded during a 30-year period.
- Just a few inches of water from a flood can cause tens of thousands of dollars in damage to your home.
- Flash floods can bring walls of water 10 – 20 feet high.
- A car can easily be carried away by just two feet of floodwater.
- Approximately 25% of all flood insurance claims paid by the NFIP are for property outside of high-risk areas.
So maybe your risk is higher than you think. But you still might argue that flood insurance is too expensive, or that you can always receive federal assistance if a disaster strikes. The facts don’t necessarily support this line of thinking, either.
- The President must declare a disaster in order for federal disaster assistance to be offered.
- Federal disaster assistance is usually in the form of a loan, which must be paid back with interest. The recipient of a $50,000 residential disaster loan must pay back about $240 per month at 4% interest.
- The average premium for federally-backed flood insurance is about $500 per year.
- The average federal Individuals and Households Program award is around $4,000.
- To qualify for federal Home Repair Assistance, your home must have relatively minor damage that can be repaired quickly
- You will not qualify for federal Rental Assistance unless your home has been heavily damaged or destroyed.
With flood insurance, you don’t have to wait in line to apply for federal assistance. And you don’t have to rely on a disaster declaration from the President in order to receive benefits. Flood insurance claims are paid whether or not a disaster is declared.
Homeowners, business owners, and renters can purchase flood insurance as long as their community participates in the NFIP. Homeowners can purchase up to $250,000 of coverage for their property, and will be reimbursed for all covered losses. Renters can purchase contents only coverage.
Are you interested in learning more about flood insurance? We can help you apply for and purchase coverage from the NFIP (in fact, you cannot buy it directly from the NFIP, you must work with your insurance agent). Would you like to know the flood risk for your home?
