Flood Insurance Facts and FAQs
Did You Know....
That flood damage is excluded under Homeowner's Insurance policies?
The hazard of flooding, because it can affect a large number of properties at the same time, is considered too large for private insurance to cover. This led to the forming of The National Flood Insurance Program which is a part of FEMA, the Federal Emergency Management Agency. Flood policies are sold and administered through major insurance carriers and their agents, but the claim payments are backed by FEMA and, if necessary, appropriations from Congress.
Here's how "flood" is defined by the National Flood Insurance Program:
"A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is the policyholder's property) from:
Overflow of inland or tidal waters; or
Unusual and rapid accumulation or runoff of surface waters from any source; or Mudflow; or
Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above."
So, in plain English, a flood is an excess of water (or mud) on land that's normally dry.
Floods often happen when bodies of water overflow or tides rise due to heavy rainfall or thawing snow. But you don't have to live near water to be at risk of flooding. A flash flood, which can strike anywhere without warning, occurs when a large volume of rain falls within a short time.
More and more buildings, roads and parking lots are being built where forests and meadows used to be, which decreases the land's natural ability to absorb water. Coupled with changing weather patterns, this construction has made recent floods more severe and increased everyone's chance of being flooded.
Dangerous or damaging floods don't always mean dramatic, rushing waters through the streets of your hometown. Just a single inch of water can cause costly damage to your home! Keep this in mind when you're considering flood insurance.
For more info, you can visit the FEMA flood insurance site at www.floodsmart.gov
Homeowners, Renters, and Flood Insurance....
Standard homeowners and renters insurance does not cover flood damage. Flood coverage, however, is available in the form of a separate policy both from the National Flood Insurance Program - NFIP (888-379-9531) and from a few private insurers.
The NFIP provides coverage for up to $250,000 for the structure of the home and $100,000 for personal possessions. The NFIP policy provides replacement cost coverage for the structure of your home, but only actual cash value coverage for your possessions. Replacement cost coverage pays to rebuild your home as it was before the damage. Actual cash value is replacement cost coverage minus depreciation so that the older your possessions are, the less you will get if they are damaged. There may also be limits on coverage for furniture and other belongings stored in your basement.
Flood insurance is available for renters as well as homeowners. You will need flood insurance if you live in a designated flood zone. But flooding can also occur in inland areas and away from major rivers. Consider buying a flood insurance policy if your house could be flooded by melting snow, an overflowing creek or pond or water running down a steep hill. Don’t wait for a flood season warning on the evening news to buy a policy—there is a 30-day waiting period before the coverage takes effect.
Excess flood insurance is also available from some private insurers for those who need additional insurance protection over and above the basic policy or whose community does not participate in the NFIP. Depending on the amount of coverage purchased, an excess flood insurance policy will cover damage above the limits of the federal program on the same basis as the federal program—replacement cost for the structure and actual cash value for the contents.
Excess flood insurance is available in all parts of the country—in high risk flood zones along the coast and close to major rivers as well as in areas of lower risk—wherever the federal program is available. It can be purchased from specialized companies through independent insurance agents, or from regular homeowners insurance companies that have arrangements with a specialized insurer to provide coverage to their policyholders.
What is the National Flood Insurance Program?
The NFIP is a Federal program enabling property owners in participating communities to purchase insurance protection against Flood related property damage. Participation in the NFIP is an agreement between cities and the Federal Government that makes flood insurance available to communities that adopt and enforce floodplain management standards for new construction in Special Flood Hazard Areas. Lake Oswego has been a participating community since 1977.
How was the NFIP established and who administers it?
The U.S. Congress established the NFIP on August 1, 1968, with the passage of the National Flood Insurance Act of 1968. The NFIP was broadened and modified with the passage of the Flood Disaster Protection Act of 1973. It was further modified by the National Flood Insurance Reform Act of 1994 and signed into law on September 23, 1994. The NFIP is administered by the Federal Insurance and Mitigation Administration (FIMA) and the Mitigation Directorate (MD), components of the Federal Emergency Management Agency (FEMA).
What is a Special Flood Hazard Area (SFHA)?
In support of the NFIP, FEMA is undertaking a massive effort of flood hazard identification and mapping to produce updated Flood Hazard Maps. Areas of flood hazards are commonly identified on these maps. One of these areas is the Special Flood Hazard Area (SFHA), which is defined as an area of land that would be inundated by a flood having a 1-percent chance of occurring in any given year (also referred to as the base flood or 100-year flood). The 1-percent-annual-chance standard was chosen after considering various alternatives. The standard constitutes a reasonable compromise between the need for building restrictions to minimize potential loss of life and property and the economic benefits to be derived from floodplain development. Development may take place within the SFHA, provided that it complies with local floodplain management standards. Flood insurance is required for insurable structures within the SFHA for communities participating in the NFIP.
Why is my town a Participating Community in the NFIP?
Individual citizens cannot regulate building or establish construction priorities for communities. Without community oversight of building activities in the floodplain, the best efforts of some to reduce future flood losses could be undermined or nullified by the careless building of others. Unless the community as a whole is practicing adequate flood hazard mitigation, the potential for loss will not be reduced sufficiently to affect disaster relief costs. Insurance rates also would reflect the probable higher losses that would result without local floodplain management enforcement activities.
Can I buy flood insurance if I am located in a high-flood-risk area?
You can buy flood insurance no matter where you live if your community participates in the NFIP. In fact, under the Flood Insurance Act, lenders require borrowers whose property is located within an SFHA to purchase flood insurance as a condition of receiving a federally regulated mortgage loan.
Does my Homeowner’s insurance policy cover flooding?
Unfortunately, many homeowners do not find out until it is too late that their homeowner’s policies do not cover flooding. National Flood Insurance protects your most valuable assets--your home and belongings.
Can I buy flood insurance if my property has been flooded?
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.
Is it true that only residents of high-flood-risk zones need to insure their property?
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 is designed for residential properties located in low-to-moderate-flood risk zones, areas above the 100-year flood plain.
Does the coverage include my basement?
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, and essential equipment. Some 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.
Note that basement contents coverage may be available through Private Flood Insurance, depending on where your home is located.
Will Federal disaster assistance pay for flood damage?
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. For buildings within a 100-year flood plain, the premium for a NFIP policy is often less expensive than the interest on a Federal disaster loan. 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.