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Flood Insurance

What you need to know about Flood Insurance

Since 1968, the federal government has been running a program dubbed The National Flood Insurance Program (NFIP). Congress came up with the idea because most private insurers were shying off from insuring homeowners on flood coverage. Federal Emergency Management Agency (FEMA) and private insurers administer the NFIP program.

What does it cover?

The two types of coverage in flood insurance cover the building and content in the building. However, there is an option for choosing separate coverage amounts and deductibles. There are certain exceptions such as covering the washers and dryers under contents while stoves, dishwashers, and refrigerators are covered under the building. The rates for flood coverage are calculated based on the characteristics of the home, the height above sea level, and the flood zone. When calculating your risk, the insurer will find out the discrepancy between the Base Flood Elevation and the home’s height above sea level.

Discover your risk

In high-risk flood zones, there is pre-Flood Insurance Rate Map (FIRM) subsidized rate and the standard rate. Most cities are now embraced into the NFIP program and the pre-FIRM subsidized rate is available for people who built their homes before the commencement of FEMA. Although these subsidies are lower, there are several properties which have lower standard rates because the subsidies keep decreasing.

Typically, renters and homeowners insurance policies won’t cover flood damage and hence you need to consider getting a flood policy. Even though FEMA pays grants to help homeowners who have suffered flood damage, the assistance is so little that it can’t really help you recover from flood damage. If you file a claim after flood damage, you’ll get enough money for recovering from the damage than you can ever get from FEMA regardless of the fact that grants from FEMA shouldn’t be paid back.