Myths and Facts About Flood Insurance

The end of 2017 brought about a number of disastrous weather events for homeowners up and down the East Coast and throughout the entire Gulf Coast. According to the National Oceanographic and Atmospheric Administration, 2017 was the costliest year ever for weather and climate disasters in the United States, totaling $306 billion in damages. Hurricanes Harvey, Irma and Maria alone caused over $265 billion in damages, much of which was flood related. According a recent Insurance Information Institute poll, only 12 percent of U.S. homeowners have flood insurance, yet data shared by FEMA suggests that all 50 states have experienced flooding in the past five years. Myths about flood insurance seem to only add to the confusion for homeowners. Here are a few myths about flood insurance, and the facts to debunk them:

Myth #1: “My homeowners’ insurance policy covers everything I need.”

Some water damage is covered by a general homeowners’ policy, such as if a storm causes damage to a roof, allowing water to leak in and damage the inside of the home. However, it is a common misconception that all types of water damage are covered by homeowners’ insurance. Most insurance agents should be aware that flood damage is specifically excluded under almost every standard homeowners’ insurance policy and flood insurance would need to be purchased separately.

Myth #2: “I’m not in a floodplain, so I should be fine.”

Even homeowners that don’t live in a floodplain can be affected by flooding. Flash floods are not the only flood risks for homeowners. Regardless of the location of a home, excessive rain can cause drainage problems that result in water entering underneath doors or even through the foundation. According to “The Big Cost of Flooding” report released by FEMA, just one inch of flooding can cause nearly $27,000 in damages to an average home.

Additionally, geography is always changing. Just because a home was not in a floodplain when it was purchased, does not mean it will be that way forever. FloodSmart.gov is a great resource for keeping updated on floodplain maps and information on related flood risks.

Myth #3: “I don’t need flood insurance, I can get assistance from FEMA.”

Before FEMA assistance can even become available, the event that caused the flooding must be declared a federal disaster by the president. Less than 50 percent of flooding events result in a federal disaster declaration. Moreover, if a federal disaster declaration is made, the resulting disaster assistance is given in the form of loan, which must eventually be repaid. Federal loans and grants can takes months to be approved by the government, leaving homeowners’ stuck in limbo.

Flood insurance claims are paid to homeowners even when the flood event is not a federally declared disaster. Carrying flood insurance gives homeowners the peace of mind that they will be reimbursed for all of their covered losses, and will not have to wait for assistance or repay it later.

 

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