NFIP Myths and Facts

We'd like to take a few moments to correct some common misconceptions about the National Flood Insurance Program (NFIP).

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.

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.

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.

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