Flood Insurance Basics

The National Flood Insurance Program (NFIP) is a somewhat misunderstood system.  According to the FEMA website (who runs the NFIP):

“The NFIP is a Federal program created by Congress to mitigate future flood losses nationwide through sound, community-enforced building and zoning ordinances and to provide access to affordable, federally backed flood insurance protection for property owners … Participation in the NFIP is based on an agreement between local communities and the Federal Government that states that if a community will adopt and enforce a floodplain management ordinance to reduce future flood risks to new construction in Special Flood Hazard Areas (SFHAs), the Federal Government will make flood insurance available within the community as a financial protection against flood losses.”

The first point of confusion is that some believe that flood insurance is part of  a homeowner’s insurance policy.  This is generally not the case as most homeowner’s policies do not cover flood damage.  Another point of confusion is related to disaster recovery money. Federal disaster assistance may be directed at the community after the President declares it a disaster area, but those monies typically come in the form of a low interest loan to help cover flood damage.  You will generally not be compensated for your losses in the same way you are with traditional insurance money.

Another frequently related story seems to focus on residents saying they were previously not “allowed” to get flood insurance. In the town of Bloomsburg, that is simply not the case.  While municipalities have to agree to be part of the program, the town of Bloomsburg and neighboring areas are all members.  According to the town, “Any house in Bloomsburg can be covered by a flood insurance policy. Detached garages and accessory buildings are covered under the policy for the lot’s main building.”  In addition, Beaver, Benton, Berwick, Briar Creek, Catawissa, Danville, Fishing Creek, Hemlock Township, Main, Mifflin, Millville, Montour Township, Orangeville, Scott Township, and Stillwater all participate in the NFIP.

Policies can cover the structure, contents, or both.  Structural coverage protects the basic structure of the home — basically anything that would stay with the house if it were sold.  Contents coverage protects personal contents inside the home. Both low risk and high risk properties can be covered.  And low risk properties can receive the same coverage that high risk ones do. For a sampling of rates, click here.  An important thing to remember is that if you are in a high risk area and have received federal disaster recovery assistance, you will be required to purchase flood insurance as long as you own the home.  In addition, you will be legally required to inform potential buyers of the need to carry flood insurance on the property if you sell the house.

If you visit the floodsmart.gov website, you can get an instant flood risk profile.  Simply enter your address and you can find out what type of risk level your property faces, what your flood insurance premiums would be for the structure, contents, or both, as well as see a listing of agents who can sell you the policy locally or nationally.  All agents must sell the NFIP policies at the same rates.  But don’t wait around until the next flood is coming.  It takes 30 days for flood insurance to take effect so, if you wait, you may not be able to get coverage in time.

Written by Jen Ralston and Kristin Camplese