Hollidaysburg

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Things You Should Know About Flood Insurance

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Overview

This document, published by the Federal Emergency Management Agency (FEMA), serves as a public information guide regarding the National Flood Insurance Program (NFIP). It aims to educate residents on the necessity of flood insurance, coverage limits, and the financial benefits of purchasing a policy versus relying on federal disaster assistance.

Key Information for Residents

Why You Need Flood Insurance

  • Universal Risk: Floods are the most common natural disaster in the U.S. Approximately 20% to 25% of flood claims come from medium or low-risk areas, not just high-risk zones.
  • Mandatory Requirements: If you buy a home in a designated high-risk area and receive a mortgage from a federally regulated lender, you are legally required to purchase flood insurance.
  • Availability: As long as your community participates in the NFIP, you can purchase a policy regardless of whether you live in a high-risk or low-risk area.
  • Coverage Gap: Standard homeowners insurance does not cover flood damage.

Coverage Limits and Eligibility

The NFIP provides coverage for residential and commercial buildings, as well as their contents. Coverage is available to owners and renters with the following maximum limits:

  • Residential Buildings: Up to $250,000 for single-family, two-to-four family, and other residential buildings.
  • Non-Residential Buildings: Up to $500,000 for non-residential buildings, including small businesses.
  • Residential Contents: Up to $100,000 for contents coverage for residences (owners and/or renters).
  • Business Contents: Up to $500,000 for contents coverage for businesses.

Flood Insurance vs. Disaster Assistance

The document strongly advises against relying on federal disaster assistance, highlighting several key differences:

  • Declaration Requirement: Federal disaster assistance is only available if a disaster is federally declared. If no declaration is made, homeowners may face total ruin with no hope for recovery.
  • Repayment: Disaster assistance is often a loan that must be repaid in full with interest.
  • Cost Comparison:
    • Insurance: The average premium is approximately $400 a year for $100,000 of coverage.
    • Loan Repayment: Paying back a $50,000 disaster home loan costs an average of $240 a month over 30 years.
  • Reimbursement: With insurance, you pay an annual premium and are reimbursed for covered losses without having to repay anything.

Action Steps

  • Check Participation: Call your insurance company or agent to verify if your community participates in the NFIP.
  • Purchase Timing: Policies go into effect 30 days after purchase, so residents are urged to buy early.
  • Contact Information:
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