Myths and Facts about the NFIP (National Flood Insurance Program)

MYTH: Flood insurance is not available in high risk areas

FACT:Almost anyone in NFIP participating communities can purchase flood insurance. In fact, this program was specifically created to help those in Special Flood Hazard Areas (SFHA) obtain coverage. Federally regulated lenders must require borrowers in SFHAs to buy flood insurance as a condition of their mortgage. One exception: residents of Coastal Barrier Resource System (CBRS) areas are not eligible for flood insurance. These residents make up much less than 1% of the US population.

MYTH: You can wait until the last minute to buy flood coverage.

FACT:Although you can buy coverage just prior to a flood, there is a 30 day waiting period after you have paid the premium before the policy becomes effective. Two exceptions to the waiting period are:

if the flood map for your community was revised in the last year, and

if your initial flood insurance purchase is required to close a loan. Otherwise you must wait for 30 days before coverage begins.

MYTH: My homeowners policy covers flood damage to my home and property.

FACT:Homeowners policies rarely, if ever, cover flooding as a cause of loss. The only way to protect your home from loss due to flood damage is federal flood insurance.

MYTH: Flood insurance is available only to homeowners.

FACT:Coverage is available to protect homes, condominiums, apartments, and commercial - nonresidential buildings.

MYTH: If your property has been flooded even once, you can't get flood insurance.

FACT:As long as your community participates in the NFIP, you are eligible to buy flood insurance, regardless of how many times your property has been flooded.

MYTH: I don't need flood insurance, I'm not in a high risk area.

FACT:Around 25% of NFIP's claims come from outside high risk flood areas. Substantial premium discounts exist for residents who live in low to moderate risk areas.

MYTH: No basement coverage is available on a flood policy.

FACT:Flood Insurance provides coverage for basement clean up and items used to service the building such as boilers, furnaces, hot water heaters, air conditioners, etc. Most contents and improvements to basements are not covered.

MYTH: Federal disaster assistance will pay for flood damage.

FACT:Less than 50% of all flooding incidents are declared federal disaster areas. The $400 average annual flood insurance premium is much less costly than is interest on a federal disaster loan. Furthermore, recipients of federal disaster loans or grants must purchase flood insurance to receive disaster relief in the future.

MYTH: The NFIP encourages coastal development.

FACT:One of NFIP's primary objectives is to guide development away from coastal or flood-prone areas. In addition, the Coastal Barrier Resources Act of 1982 (CBRA) relies on the NFIP to discourage building on fragile coastal areas covered by the CBRA.

MYTH: Federal flood insurance can only be purchased directly through the NFIP.

FACT:Federal flood insurance policies are sold through private insurance agents and companies and are backed by the full faith and credit of the United States of America. Travelers is proud to work with the NFIP in providing this essential form of coverage.

MYTH: NFIP insurance does not cover flooding from hurricanes or the overflow of rivers or tidal waters.

FACT:The NFIP definition of coverage does cover floods caused by hurricanes or overflow of rivers or tidal waters. However, two or more acres or two or more adjacent properties must be affected. The policy defines flooding as a general and temporary condition during which the surface of normally dry land is partially or completely inundated. The cause of flooding can be:

overflow of tidal waters or inland waters

runoff, such as from rainfall

mudflows caused by flooding

collapse of land along a body of water from erosion exceeding normal levels.

MYTH: Wind driven rain is considered flooding.

FACT:Damage by wind driven rain is not covered under the NFIP policies, but is usually covered under homeowners policies such as those offered by Travelers as a windstorm peril.

Information provided courtesy of Sue Richardson, Allen Tate Insurance. Sue.Richardson@allentate.com