Flood Insurance Myths

Myth #1Federal disaster assistance will pay for flood damage

Before a community is eligible for disaster assistance, it must be declared a federal disaster area. Less than 50 percent of flooding incidents are actually declared federal disasters. Even if you have flood damage, your county might not be designated for federal disaster aid. 

If federal grants are available, the amount may be less than needed to complete repairs and replace property.  Furthermore, if you are uninsured and receive federal disaster assistance after a flood, you must purchase flood insurance to remain eligible for future disaster relief. The annual premium on a flood insurance policy will generally be far less expensive than repaying a federal disaster loan.

Flood insurance policies pay claims whether or not a disaster is declared.  Flood insurance covers more damage than disaster assistance. A home with flood insurance may be covered for up to $250,000, whereas, the same house would be covered for $35,000 with federal assistance.

Myth #2Flood insurance is always expensive

Flood insurance through the National Flood Insurance Program (NFIP) is sometimes expensive and sometimes cheap, depending on various factors such where you live and how much your home and its contents are worth.

To get an idea of premium cost, take a look at the following examples:

  • If you buy the highest possible coverage of $250,000 and live in a high-risk area, it can cost up to $6,000 a year.
  • It could cost $472 for $35,000 in damage coverage in a high-risk area.
  • For $20,000 of rebuilding coverage and $8,000 in contents in a low-risk area, it can cost as little as $129 a year.

Low-risk flood plain areas have a lower chance of flooding and, therefore, have lower premiums. According to FEMA, the average cost for flood insurance across the country is less than $500.

Myth #3Flood insurance is only for people who live in high-flood-risk areas

It is a common misconception that people living in a designated flood plain are the only ones who need to worry about flooding. All areas are susceptible to flooding, although to varying degrees.  

Even if you live in an area which is not flood-prone, it’s advisable to have flood insurance.  Flooding can be caused by snow melt, dam breach, extremely heavy rainfall, new development which decreases ground absorption of water, or a hurricane. Between 20 and 25 percent of the National Flood Insurance Program’s (NFIP) claims come from outside high-flood-risk areas.

If you have questions about any of these flood insurance myths, call us today at 800-922-8381 to get the facts straight!