Flood Insurance Misconceptions



Flooding is the United States #1 natural hazard. The National Flood Insurance Program wants consumers to know that while homeowner's insurance won't cover them against flooding, they can protect their home and property by purchasing a flood insurance policy separately through their local insurance agent.

Many people are under the misconception that they are ineligible for flood insurance because of where they live, or their mortgage status. But the truth is, as long as your hometown is an NFIP community, most homeowners, business owners and renters can get flood insurance. The NFIP urges consumers to remember the flood insurance basics:

  • You CAN get flood insurance nationwide.
  • You CAN get flood insurance if you live in a floodplain or high-flood-risk area.
  • You CAN get flood insurance if you live outside a floodplain, or a low-to-moderate flood-risk area, - and at lower cost.
  • You CAN get flood insurance if your property has been flooded before.
  • You CAN get flood insurance from insurance agents in your area.
  • You CAN buy flood insurance even if your mortgage broker doesn't require it.

Armed with the proper information about their flood risk and protection options, consumers can make more informed decisions to protect their financial investments.

Flood Facts

  • Floods and flash floods happen in all 50 states.
  • Everyone lives in a flood zone.
  • Most homeowners and business 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.
  • Just an inch of water can cause costly damage to your property.
  • Flash floods often bring walls of water 10 to 20 feet high.
  • A car can easily be carried away by just two feet of floodwater.
  • 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).
  • When coverage is written through the National Flood Insurance Program (NFIP), it takes 30 days after purchase for a policy to take effect, so it's important to buy insurance before the floodwaters start to rise.
  • If you live in a moderate-to-low risk area and are eligible for the NFIP Preferred Risk Policy, your flood insurance premium may be as low as $129 a year, including coverage for your property's contents.
  • You are eligible to purchase flood insurance as long as your community participates in the National Flood Insurance Program.
  • In a high-risk area, your home is more than twice as likely to be damaged by flood than by fire.
  • Last year, about 25% of all claims paid by the NFIP were for policies in moderate-to-low risk communities.
  • Since 1978, the NFIP has paid over $36 billion for flood insurance claims and related costs (as of 3/22/10).
  • Over 5.5 million people currently hold flood insurance policies in more than 20,500 communities across the U.S.

Flood resources: