In some instances, people have been told that they cannot get flood insurance because of where they live. To clear up this and other misconceptions about National Flood Insurance, the NFIP has compiled the following list of common myths about the Program, and the real facts behind them, to give the full story about this valuable protection.
MYTH: You can’t get flood insurance if you are located in a high-flood-risk area.
FACT: You can get 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: You can’t get flood insurance immediately before or during a flood.
FACT: You can get 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 purchase 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 community, 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 Hazard 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 occurring 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 during 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 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: 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 buy flood insurance.
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. Between 20 and 25 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 very inexpensive flood insurance protection.
Know the Risk
According to the Federal Emergency Management Agency ( FEMA ), flooding occurs in all 50 states in every season. Whether you live by a river or stream, or reside many miles from a body of water, FEMA reminds you that everyone lives in a flood zone.
That’s because floods happen for many different reasons and can be caused by storms, melting snow, hurricanes, water backup due to poor or overloaded drainage as well as broken water mains.
Floods also develop at different rates of speed. Some happen over the course of several days, from things like slow moving storms and spring snow melt. Others develop very quickly, sometimes in a matter of hours or even minutes, in the case of flash floods caused by sudden downpours and water unexpectedly breaching dams, streams or spillways.
Whatever the reason, floods can be deadly and cause enormous amounts of property damage. You should be insured and prepared.
Franklin Flood, LLC - 120 East Uwchlan Avenue, Suite 101 - Exton, PA 19341 - Toll Free 888-567-9600 - Fax 610-524-0900
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