Flood insurance questions

Tuesday, March 6th, 2012

Flood insurance questions - Image 1

There are many of us that do not really understand flood insurance and have questions we would like to ask about the topic. What happens when we are not prepared for possible flooding? We have assembled some of the more common questions that FEMA gets asked, off of their website, and give you some answers.

Question: Do I have to live in a high risk flood zone to be eligible for flood insurance?

Answer: No. Anyone can purchase a policy as long as the local community participates in the National Flood Insurance Program (NFIP). Property owners and renters can visit to see if their community participates in the NFIP.

Question: Is flood insurance expensive?

Answer: No. Flood insurance is affordable. The problem may be widespread, but the solution is simple. About 100 private insurance companies nationally can provide flood insurance backed by the federal government. Policies are available to homeowners, condo owners, apartment owners, renters and business owners alike. If you live in a low or moderate-risk area, a flood policy can cost just over $100 a year. In the most high-risk areas, the cost of flood insurance is around $500 a year.

Question: Don't flooded areas always get federal assistance?

Answer: Disaster aid is not often available. Before a community is eligible for federal disaster assistance, it must be declared a federal disaster area. This happens in less than 50 percent of flooding incidents. The main form of federal assistance after a federally declared disaster is a loan. Many people don't think they need flood insurance because they believe federal disaster assistance will bail them out. But that thinking is not safe. Even when disasters are declared, aid is usually in the form of a loan which must be paid back with interest. Flood insurance, on the other hand, pays for all covered losses, and unlike loans, that money doesn't have to be paid back. You can cover your home's structure for up to $250,000, and its contents for up to $100,000. For businesses, structural coverage is available up to $500,000, and up to $500,000 for contents.

Question: Is there a waiting period for flood insurance?

Answer:Yes. There is typically a 30-day waiting period from date of purchase before a new flood policy goes into effect. Here are the only exceptions:

  • If your lender requires flood insurance in connection with the making, increasing, extending, or renewing of your loan
  • If an additional amount of insurance is required as a result of a map revision.
  • If flood insurance is required as a result of a lender determining that a loan that does not have flood insurance coverage should be protected by flood insurance.


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