Myths and Facts About the National Flood Insurance Program
Who needs flood insurance? Everyone. And everyone in a
participating community of the National Flood Insurance
Program (NFIP) can buy flood insurance. Nationwide more than
19,000 communities have joined the Program. In some instances
people have been told that they cannot buy flood insurance
because of where they live. To clear up this and other
misconceptions about National Flood Insurance, the NFIP has
compiled the following list of common myths about the Program,
and the real facts behind them, to give you the full story
about this valuable protection.
Myth: You can’t buy flood insurance if you are located in
a high-flood-risk area.
FACT: You can buy National Flood Insurance no matter where
you live if your community participates in the NFIP, except in
Coastal Barrier Resources System (CBRS) areas. The Program was
created in 1968 to provide flood insurance to people who live
in areas with the greatest risk of flooding, called Special
Flood Hazard Areas (SFHAs). In fact, under the National Flood
Insurance Act, lenders must require borrowers whose property
is located within an SFHA to purchase flood insurance as a
condition of receiving a federally regulated mortgage loan.
There is an exemption for conventional loans on properties
within CBRS areas.
Lenders should notify borrowers that their property is
located in an SFHA and National Flood Insurance is required.
Myth: You can’t buy flood insurance immediately before or
during a flood.
FACT: You can purchase flood coverage at any time. There is
a 30-day waiting period after you’ve applied and paid the
premium before the policy is effective, with the following
1) If the initial purchase of flood insurance is in
connection with the making, increasing, extending or renewing
of a loan, there is no waiting period. The coverage becomes
effective at the time of the loan, provided application and
payment of premium is made at or prior to loan closing.
2) If the initial purchase of flood insurance is made
during the 13-month period following the effective date of a
revised flood map for a community, there is a one-day waiting
period. This only applies where the Flood Insurance Rate Map
(FIRM) is revised to show the building to be in a SFHA when it
had not been in a SFHA.
The policy does not cover a "loss in progress,"
defined by the NFIP as a loss occurring as of 12:01 a.m. on
the first day of the policy term. In addition, you cannot
increase the amount of insurance coverage you have during a
loss in progress.
Myth: Homeowners’ insurance policies cover flooding.
FACT: Unfortunately, many homeowners do not find out until
it is too late that their homeowners’ policies do not cover
flooding. National Flood Insurance protects your most valuable
assets—your home and belongings.
Myth: Flood insurance is only available for homeowners.
FACT: Flood insurance is available to protect homes,
condominiums, apartments and non-residential buildings
including commercial structures. A maximum of $250,000 of
building coverage is available for single-family residential
buildings; $250,000 per unit for residential condominiums. The
limit for contents coverage on all residential buildings is
$100,000, which is also available to renters.
Commercial structures can be insured to a limit of $500,000
for the building and $500,000 for the contents.
Myth: You can’t buy flood insurance if your property has
FACT: You are still eligible to purchase flood insurance
after your home, apartment or business has been flooded,
provided that your community is participating in the NFIP.
Myth: Only residents of high-flood-risk zones need to
insure their property.
FACT: Even if you live in an area that is not flood-prone,
it’s advisable to have flood insurance. Between 20 percent
and 25 percent of the NFIP’s claims come from outside
high-flood-risk areas. The NFIP’s Preferred Risk Policy,
available for just over $100 per year, is designed for
residential properties located in low-to-moderate-flood risk
Myth: National Flood Insurance can only be purchased
through the NFIP directly.
FACT: NFIP flood insurance is sold through private
insurance companies and agents, and is backed by the Federal
Myth: The NFIP does not offer any type of basement
FACT: Yes, it does. The NFIP defines a basement as any area
of a building with a floor that is below ground level on all
sides. While flood insurance does not cover basement
improvements, such as finished walls, floors or ceilings, or
personal belongings that may be kept in a basement, such as
furniture and other contents, it does cover structural
elements, essential equipment and other basic items normally
located in a basement.
Many of these items are covered under building coverage,
and some are covered under contents coverage. The NFIP
encourages people to purchase both building and contents
coverage for the broadest protection.
The following items are covered under building coverage, as
long as they are connected to a power course and installed in
their functioning location:
- Sump pumps.
- Well water tanks and pumps, cisterns and the water in
- Oil tanks and the oil in them, natural gas tanks and the
gas in them.
- Pumps and/or tanks used in conjunction with solar
- Furnaces, hot water heaters, air conditioners, and heat
- Electrical junction and circuit breaker boxes and
required utility connections.
- Foundation elements.
- Stairways, staircases, elevators and dumbwaiters.
- Unpainted drywalls and sheetrock walls and ceilings,
including fiberglass insulation.
The following items are covered under contents coverage:
- Clothes washers.
- Clothes dryers.
- Food Freezers and the food in them.
Myth: Federal disaster assistance will pay for flood
FACT: Before a community is eligible for disaster
assistance, it must be declared a Federal disaster area.
Federal disaster assistance declarations are issued in less
than 50 percent of flooding incidents. The premium for an NFIP
policy, averaging a little more than $350 a year, is less
expensive than interest on Federal disaster loans.
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.
Myth: The NFIP encourages coastal development.
FACT: One of the NFIP’s primary objectives is to guide
development away from high- flood-risk areas. NFIP regulations
minimize the impact of structures that are built in SFHAs by
requiring them not to cause obstructions to the natural flow
of floodwaters. Also, as a condition of community
participation in the NFIP, those structures built within SFHAs
must adhere to strict floodplain management regulations.
In addition, the Coastal Barrier Resources Act (CBRA) of
1982 relies on the NFIP to discourage building in fragile
coastal areas by prohibiting the sale of flood insurance in
designated CBRA areas. While the NFIP does not prohibit
property owners from building along coastal areas, any Federal
financial assistance, including federally backed flood
insurance, is prohibited. However, CBRA does not prohibit
privately financed development or insurance.
Myth: The NFIP does not cover flooding resulting from
hurricanes or the overflow of rivers or tidal waters.
FACT: The NFIP defines covered flooding as a general and
temporary condition during which the surface of normally dry
land is partially or completely inundated. Two properties in
the area or two or more acres must be affected. Flooding can
be caused by:
- The overflow of inland or tidal waters, or
- The unusual and rapid accumulation or runoff of surface
waters from any source, such as heavy rainfall, or
- Mudslides, i.e., mudflows, caused by flooding, that
could be described as a river of liquid and flowing mud
- The collapse or destabilization of land along the shore
of a lake or other body of water, resulting from erosion
or the effect of waves, or water currents exceeding
normal, cyclical levels.
Myth: Wind-driven rain is considered flooding.
FACT: No, it isn’t. Rain entering through wind-damaged
windows, doors or a hole in a wall or the roof, resulting in
standing water or puddles, is considered windstorm- rather
than flood-damage. National Flood Insurance only covers damage
caused by the general condition of flooding (defined above),
typically caused by storm surge, wave wash, tidal waves, or
the overflow of any body of water over normally dry land
areas. Buildings that sustain this type of damage usually have
a watermark, showing how high the water rose before it
subsided. Although the Standard Flood Insurance Policy (SFIP)
specifically excludes wind and hail damage, most homeowners
policies provide such coverage.
For more information about the NFIP, ask your insurance
agent or company, or call the NFIP’s toll-free number at
1-888-FLOOD29, TDD# 1-800-427-5593.