Seven Myths About Flood Insurance

Think there isn’t a need for flood insurance in your community? Think again. There are many myths out there concerning flood insurance—when it’s needed, when it’s possible to buy it, and when it’s not necessary. Here are a few of the common misconceptions your insurance customers might hold—and the information insurance agents can use to combat those misunderstandings.

It isn’t possible to buy flood insurance if you’re at high risk for floods. The National Flood Insurance Program (NFIP) is a federally funded program that provides flood insurance to those who need it—particularly those in high-flood-risk zones. The insurance is sold through private insurers, and is backed by the government. Some communities don’t participate in the NFIP. But for those who do, flood insurance is available no matter the risk.

No one will sell flood insurance to people during a flood. Actually, people can buy flood insurance anytime—including during the flood of the century. The catch is that the coverage won’t kick in until 30 days after the first premium has been paid. If the community’s flood map has been revised within the past 13 months, however, and the building in question is now in a high-risk area, the waiting period may be reduced to a single day.

People with homeowners insurance policies don’t need flood insurance. Most multi-peril policies for home and business do not include flood coverage. If a homeowner buys flood insurance from the NFIP, they can include personal property coverage under that policies. Both residential and commercial renters can also buy flood insurance coverage for their belongings. Commercial insureds can also purchase flood insurance for their property and inventory.

People can’t buy flood insurance after they’ve experienced a flood. The NFIP will sell people coverage even after their buildings have been flooded.

The federal government will pay damages for floods, so coverage isn’t needed. Federal disaster assistance can provide relief to many communities affected by flooding. However, this only happens when the President declares the area a national disaster area. This doesn’t happen for a large number of flood events. If the community does qualify for disaster assistance, much of that assistance comes in the form of loans that need to be repaid.

People who don’t live in high-flood-risk areas don’t need flood insurance. Approximately 25% of flood claims come into the NFIP from areas that were not previously assessed as high risk. Communities deemed high-risk may be more expensive to insure, but anyone can buy flood insurance—and everyone needs it.

One flood insurance policy will cover everything. There are actually separate policies for buildings and contents, and the NFIP recommends people buy both for the broadest coverage possible.

Floods can happen almost anywhere, and flood insurance is essential to protecting businesses, homes, and belongings in case of a flood.

Want to learn more about flood insurance? Check out our insurance continuing education classes.

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