Flood Insurance Fact Sheet OVERVIEW Flooding is the nation's number one natural disaster. While floods occur in every area of the country, many property owners remain unprepared. The National Flood Insurance Program (NFIP) is a Federal program enabling property owners in participating communities to purchase insurance as a protection against flood losses. Participating in the NFIP is based on an agreement between communities and the Federal Government. The program is administered by the Federal Emergency Management Agency (FEMA) and provides flood insurance protection to property owners, renters, and business owners in communities that participate in the program.
HOW FLOOD INSURANCE WORKS Flood insurance policy will take effect 30 days after it is purchased, it's important to buy insurance before the storm approaches and the floodwaters start to rise. However, if you buy a house in a designated high-risk area and receive a mortgage loan from a Federally regulated lender, by law, the lender must require the borrower to purchase and regularly renew flood insurance. In this case, the policy will take effect immediately and the borrower does not have to wait 30 days.
FLOOD INSURANCE COVERAGE In general, coverage is provided for direct physical loss to the property from a flood which is described as:
A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from:
Overflow of inland or tidal waters
Unusual and rapid accumulation or runoff of surface waters from any source
Mudflow - defined as a river of liquid and flowing mud on the surfaces of normally dry land areas such as when earth is carried by a current of water. Landslide, slope failures, or saturated soil moving down a slope are not mudflows.
In general, the policy excludes losses caused by:
Earth movement, even if the earth movement is caused by flood. Examples of excluded earth movement include:
Destabilization or movement of land resulting from accumulation of water;
The maximum limits available are:
Residential - $250,000 for the structure and $100,000 for the personal property
Commercial- $500,000 for the structure and $500,000 for the contents.
More Flood Facts
In the past 5 years, all 50 states have experienced floods or flash floods.
Everyone lives in a flood zone.
Homeowners' insurance does not cover flood damage.
If you live in a Special Flood Hazard Area (SFHA) or high-risk area and have a Federally backed mortgage, your mortgage lender requires you to have flood insurance. (To find your flood risk, fill out the Flood Risk Profile.)
Just a few inches of water from a flood can cause tens of thousands of dollars in damage.
Flash floods often bring walls of water 10 to 15 feet high.
A car can easily be carried away by just two feet of rushing water.
Hurricanes, winter storms and snowmelt are common (but often overlooked) causes of flooding.
New land development can increase flood risk, especially if the construction changes natural runoff paths.
Federal disaster assistance is usually a loan that must be paid back with interest. For a $50,000 loan at 4% interest, your monthly payment would be around $240 a month ($2,880 a year) for 30 years. Compare that to a $100,000 flood insurance premium, which is about $400 a year ($33 a month).
A Preferred Risk Policy provides both building and contents coverage for properties in moderate- to low-risk areas for one low-price.
You are eligible to purchase flood insurance as long as your community participates in the National Flood Insurance Program. Check the Community Status Book to see if your community is already an NFIP partner.
In most cases, it takes 30 days after purchase for a policy to take effect, so it's important to buy insurance before the storm approaches and the floodwaters start to rise.
In a high-risk area, your home is more likely to be damaged by flood than by fire.
Even though flood insurance isn't federally required, anyone can be financially vulnerable to floods. In fact, people outside of mapped high-risk flood areas file over 20-percent of all National Flood Insurance Program flood insurance claims and receive one-third of Federal Disaster Assistance for flooding.
From 2005 to 2014, total flood insurance claims averaged more than $3.5 billion per year.
When your community participates in the Community Rating System (CRS), you can qualify for an insurance premium reduction discount of up to 45% if you live in a high-risk area and up to 10% in moderate- to low-risk areas.
Since 1978, The NFIP has paid nearly $50 billion for flood insurance claims and related costs (as of 2/17/15).
There are currently more than 5.3 million flood policies in force across more than 22,000 communities in the U.S.
The two most common reimbursement methods for flood claims are: Replacement Cost Value (RCV) and Actual Cash Value (ACV). The RCV is the cost to replace damaged property. It is reimbursable to owners of single-family, primary residences insured to at least 80% of the building's replacement cost.