Seven Myths About Flood Insurance

Floods happen with great regularity in the United States. In recent years, we have witnessed entire cities underwater in the spring floods along the Mississippi River. However, floods can happen in unexpected areas and for unexpected reasons. Congress created the National Flood Insurance Program (NFIP) to provide insurance protection for the hazard of flood.

The standard homeowner policy (HO-3) defines flood as follows:

“…A general and temporary condition of partial or complete inundation of normally dry land areas due to:
1. The overflow of inland or tidal waters;
2. The unusual or rapid accumulation or runoff of surface waters from any source; or
3. Mudslides.

Remember Hurricane Katrina? The hurricane winds blew flood waters into areas that had never had floods before. The insurance industry denied thousands of claims, attributing the damages to flood. Thousands of property owners who were nowhere near a flood plain had their claims denied because they did not have flood insurance.

So, here are seven common myths about Flood Insurance.

Myth #1: Homeowners, renters, and business property insurance policies cover flood damage.

No, homeowners, renters, and business property insurance policies do not cover floods. The NFIP policy is a separate policy that does cover flood damage to a home or business. Contents coverage can also be added to the flood policy. Policies are available to property owners as well as property renters, whether home or business.

Myth #2: Only homeowners and business owners can buy flood policies.

Fact is that most homeowners, renters, condo owners, and businesses in NFIP participating communities can buy flood policies. Policy limits are:

o Home and Condo Owners – $250,000 in structural coverage, $100,000 in contents coverage
o Renters – $100,000 in contents coverage
o Business owners and renters – $500,000 in structural coverage, $500,000 in contents coverage

Myth #3: You can’t buy flood insurance if you are in a high-risk zone.

Fact is that you can buy NFIP coverage no matter where you live, as long as your community participates in the NFIP.

Myth #4: You can’t buy flood coverage if you’ve been flooded before.

Fact is that as long as your community participates in NFIP, you can buy flood insurance.

Myth #5: You can’t buy flood insurance immediately before or during a flood.

Fact is that you can buy NFIP insurance any time. There is usually a 30-day waiting period before the effective date of the policy. Also, the policy does not cover a loss in progress, which is defined in the policy as a loss occurring at midnight on the date your policy goes into effect. So, the new policy won’t cover past or current losses, only losses after the policy goes into effect.

Myth #6: If you live in an area that is not a flood zone, you don’t need flood insurance.

Fact is that floods occur regularly in places that are not mapped flood zones. 25% of NFIP’s claims come from low-to-medium risk zones. On the other hand, if you live in a flood zone, you likely cannot finance a home loan without buying flood insurance.

Myth #7: FEMA disaster assistance will pay for flood damage.

Fact is that unless your area is declared a disaster area, there is no FEMA assistance. Fewer than 50% of floods are declared a disaster area. And, if you don’t have flood insurance when the flood occurs, you will have to buy and keep flood coverage to be eligible for future benefits.

Don’t allow your property to be damaged by flood without having the proper insurance coverage. Get the coverage you need, and don’t wait any longer.

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