Photo by Andrea Booher/FEMA. During a flood event, water soaks into all porous materials, often resulting in thousands of dollars in damage.

Do I need the National Flood Insurance Program?

The National Flood Insurance Program is designed to fill an important gap in homeowner protection. Homeowners often have a false sense of security that their homeowners insurance policy will protect their houses and belongings in the event of a flood. This misinterpretation of policy coverage is understandable: floods often occur after a hurricane or other severe storm. Many people incorrectly assume the flooding that occurs as part of a weather event is covered just like any of the other damage the storm may produce. However, that is not the case. In short, your house may be covered for wind damage, fallen tree mishaps and lightning strikes, but not for water damage caused by flooding. Unfortunately, flood damage also is among the most costly to repair.

What is the National Flood Insurance Program and What Does it Cover?

To protect homeowners, in 1968 Congress passed a law that formed the National Flood Insurance Program, NFIP for short. The program affords property owners across the United States the opportunity to purchase a special policy to protect them, financially, from flood losses. National Flood Insurance Program policies provide homeowners with peace of mind, knowing that they will have the means to repair or replace just about every aspect of their houses, buildings and belongings. Coverage extends not only to the building and its foundation, but also to its electrical and plumbing systems, central heating and air conditioning units, furnaces, water heaters, appliances and carpeting that is permanently installed over unfinished flooring. Contents coverage protects you from losses of items that would cost you tens of thousands of dollars to replace, including clothing, furniture, electronic equipment, removable appliances like microwaves, washing machines and clothes dryers, as well as window treatments and rugs.

Is National Flood Insurance Program Coverage Required or Optional?

All federally regulated and insured mortgage lenders require flood insurance on properties in high-risk flood areas. Before you buy a property, you can determine its risk of flooding by inquiring with the county or city planning office. Properties in high-risk flood areas have a 26 percent chance of sustaining flood damage over the course of a 30-year mortgage than properties in lower risk areas. However, you may consider securing a policy through the National Flood Insurance Program even if you are in a low- to moderate-risk area. Flooding may occur in any area at any time, and more than 20 percent of National Flood Insurance Program claims comes from property owners in low- to moderate-risk areas. In addition, one-third of federal disaster assistance claims for flood damage come from property owners who live in lower-risk areas. Renters may purchase a National Flood Insurance Program policy to cover their personal property within a rental house or apartment.

Who Oversees the National Flood Insurance Program?

The Federal Emergency Management Agency (FEMA) administers the National Flood Insurance Program. However, the federal government does not sell the policies nor pay for claims. FEMA flood insurance works with private insurance companies who provide the policies at consistent rates in each area. There is no need to shop around; the price you will pay through one company is the price you will pay to any other insurance company. Rates do vary, however, to accommodate each property’s unique features and level of risk. If you live in a low- to moderate-risk area, you may qualify for special, lower premiums. The National Flood Insurance Program is available to property owners in each community that has signed up and agreed to enforce sound floodplain management standards that reduce the risk of flooding.

Take the time to learn more about your risk and inquire about the National Flood Insurance Program through a federal flood insurance agent (an agent certified and licensed to sell flood insurance); you may just find it an easy and affordable way to gain additional peace of mind.

Photo by David Valdez/FEMA. Water damage from flooding can cause additional problems, like the formation of mold, that need to be mitigated.

Many Homeowners Ask, “Do I Need Flood Insurance?”

Considering the Federal Emergency Management Agency has made dozens of major disaster declarations associated with flooding in 2011 alone, many homeowners are likely asking, “Do I need flood insurance?”

The best answer is yes.

From Alaska to California, and North Carolina to Massachusetts, flood events in 2011 have stretched across the United States, leaving only few states unscathed.  The fact is that flooding can happen anywhere, even in those zones identified as low- and medium-risk. And, it is often difficult to forecast when and where flooding will occur. Typically, home owners insurance does not cover flood damage, but coverage is available through the National Flood Insurance Program. Homeowners, business owners and renters can purchase it under the program from an insurance agent. More than 19,000 communities across the United States participate in the NFIP.

Why Do I Need Flood Insurance?

When flooding occurs, damage to homes and other structures may be quite substantial. Water permeates every crevice and cranny within a structure up to the water line, and porous materials, like carpeting, wood and drywall, are often damaged beyond repair. Once the water recedes, it may take days or weeks for all materials to completely dry, and in the interim further problems – like mold growth – may arise.  Indeed, flood recovery is a daunting process. The repairs are costly and time-consuming, and homeowners who never investigated the option for flood insurance  may need to apply for federal disaster assistance loans to pay for repairs.

When Do I Need Flood Insurance?

Your decision on whether to purchase flood insurance should be an informed one. The National Flood Insurance Program receives about 25 percent of its claims from low-risk areas, from people who had little reason to expect their property would sustain flood damage.  Certainly, you should determine your flood risk. Property owners can determine whether their property is in a low-, medium- or high-risk area by contacting the city or county government building or planning office, which keeps that information on file. Flood zone designations that begin with the letters A or V are high-risk areas, and areas in zones designated by the letters B, C or X are in lower-risk areas. Property owners in the lower-risk areas may be eligible for the preferred, or lower, premium rates. Residents should consider not only damage to the structure but also to the furniture, appliances, electronics, clothing, rugs, home décor and other personal contents a flood insurance policy protects. Renters may secure a contents policy, too. Some mortgage companies will require flood insurance on properties in high-risk areas.  Otherwise the coverage is voluntary, and each property owner should carefully assess the risk. The time to seek flood protection is before a flooding event occurs. A policy doesn’t becomes effective until after the 30 day waiting period, unless required by a mortgage company for refinancing or a new purchase.  Flood events in progress are not covered. Learn more about your flood insurance options and secure a flood insurance quote from a certified flood insurance agent today so you can make an informed decision.

Thus, to fully protect yourself from losses, you may consider changing the question, “Do I need flood insurance,” to the declaration, “I have flood insurance.”