The National Flood Insurance Program (NFIP) is a federal program designed to provide affordable flood insurance to homeowners. The program was instituted because standard homeowners insurance does not cover damages from flooding. However, there are a number of myths about flood insurance that can cause confusion for homeowners. Here is a look at some of the myths about flood insurance you should avoid.
Myth #1: My insurance already covers flooding.
While many homeowners insurance plans will cover water damage, flood damage is different.Water damage includes things like a busted pipe that damages your property, but flood damage is defined as water filling at least 2 acres of normally dry land that causes damage to structural integrity from erosion. For example, standard homeowners insurance may cover a backed up pipe that leads to inches of water in your home, but it will not cover the local river rising and causing the same amount of water damage. If there is flood damage to your property then your insurance will not cover the damages and you will need flood insurance.
Myth #2: I don’t live on a floodplain, so I don’t need flood insurance.
Living on a floodplain may require you to purchase flood insurance, but it is not the only place homeowners will need it. The NFIP publishes an official map called the Flood Insurance Rate Map that shows zones of flood danger. Your area, while not a floodplain, may have experienced flooding in the past. This means it is wise to purchase flood insurance anyway, especially since rates are federally managed based on the Rate Map and you will most likely get lower rates.
Myth #3: Flood insurance will replace damaged possessions.
The federal government dictates that you are able to purchase up to $250,000 of flood insurance. However, this $250,000 will only cover the structural damage. You will need to purchase additional insurance for your possessions. This insurance will be capped at $100,000 and will not cover any possessions held within a basement or similar below-ground room.
Myth #4: Flood insurance provides accommodations during a flood.
While flood insurance is helpful for repairing or rebuilding structures damaged by flooding, do not expect the insurance to do too much. The insurance will pay for your structure, but it will not provide money for accommodations during the flooding or even pay to replace possessions if you did not purchase possession protection. Be aware of what your flood insurance covers and have some money set aside for emergencies when you may need a place to stay.
Myth #5: My zone shows little flood danger so I don’t need flood insurance.
Floods happen in all fifty states and, even if you live in an area with little risk of flood, they can cause great damage when they occur. While it is true that you may be able to get by without flood insurance if your home is in a low-risk zone, if a flood ever does occur it will cause great financial strife. A property in a low-risk zone on the Flood Insurance Rate Map will be offered lower prices for flood insurance. The lower prices makes flood insurance a good investment no matter what zone you are in.
