Flood Insurance Myths

I already have homeowners insurance.

Most homeowners insurance does not cover floods.
It does, however, cover fires.
In a high-risk area, your home is more likely to be damaged by a flood than by fire.

Floods. That’s what disaster assistance is for.

FEMA disaster assistance is available only when the President declares a disaster. Another form of disaster assistance is offered through the Small Business Administration, which comes in the form of a loan that you must pay back with interest.

For a $50,000 loan at 4 percent interest, your monthly payment would be around $240 a month ($2,880 per year) for 30 years. And that’s in addition to the mortgage loan that you still owe on the damaged property.

The average premium for flood insurance coverage is about $650 a year (and less outside of high-risk zones). When you submit a flood insurance claim, you are compensated for all covered losses even if a Federal disaster has not been declared—and you do not have to pay it back.

Flood Insurance is too expensive.

The average flood insurance premium is about $650 a year (about $54 per month). Even a few inches of water can cause tens of thousands of dollars in damage. The annual flood insurance premium is well worth the financial protection it affords from floods.

If you live in a moderate- to low-risk area, you may qualify for a Preferred Risk Policy (PRP) with a premium starting at $129 per year.

I live on a hill and not at risk.

If you live on a hill or in an area that has never been flooded, your flood risk may be reduced, but it is not eliminated. Aside from major storms, flooding can be caused by heavy rains, melting snow, inadequate or clogged drainage systems, and failed protective devices such as levees and dams.

I do not live in a flood zone.

Everyone lives in a flood zone. The question is whether it’s a high-risk or a moderate- to low-risk zone. While flood insurance is required in high-risk zones, more than 20 percent of NFIP claims come from people outside of high-risk areas and account for nearly one third of disaster assistance.

My area has never been flooded.

The fact that a flood has not occurred recently doesn’t mean one has not happened in the past or that one will not happen in the future. Flood history is just one element used in determining flood risk. Other flood risk factors include your community’s rainfall and river flow data, topography, wind velocity, and building development (both existing and planned).

I have already experienced a flood so it won’t happen again in my lifetime.

You may have heard of the “100-year flood” and may be thinking that it only happens once every 100 years. However, this term is misleading and actually refers to the flood elevation that has a 1 percent chance of being equaled or exceeded each year. It has nothing to do with the number of floods that may happen over the course of a lifetime. Thus, the 100-year flood could occur more than once in a relatively short period of time. Here are some additional thoughts to consider:

 Many areas of the country have experienced more than one major flood in a lifetime.

If you experience a flood and receive Federal disaster assistance, or if your building is located in an SFHA and you choose not to purchase and maintain flood insurance, you may become ineligible for Federal disaster assistance if a flood occurs again.

I cannot purchase flood insurance because I live in a floodplain

Most property owners are eligible to purchase flood insurance as long as the community in which they live participates in the NFIP. So whether you are in a high-risk or moderate- to low-risk area, flood insurance from the NFIP usually is available.

Flood Insurance does not cover contents in my basement.

Most property owners are eligible to purchase flood insurance as long as the community in which they live participates in the NFIP. So whether you are in a high-risk or moderate- to low-risk area, flood insurance from the NFIP usually is available.

Flood insurance does not cover common issues such as seepage or leaks.

Generally, neither homeowners nor flood insurance policies cover damage caused by seepage, dry rot, or animal pests, since they are considered to be preventable. However, flood insurance will cover damage caused by sewer or drain backup, or overflows from a sump pump or related equipment, if the event is a direct result of flooding.

I cannot buy flood insurance right before or during a flood.

Unlike some other lines of insurance, an approaching storm does not trigger a moratorium on flood insurance purchases. However, once you have applied and paid the flood insurance premium, there usually is a 30-day waiting period before the policy takes effect.

Though it cannot cover a “flood in progress,” your newly effective flood insurance policy will provide coverage for any future flooding. The bottom line? Do not wait until after the storm warnings to buy flood insurance!

For more information contact Page Insurance at (203) 453-5258 or send us an email to [email protected].

www.pageins.com