A single inch of floodwater on a property could cause thousands in damages. The average homeowner doesn’t realize that fact and doesn’t think twice about flooding. However, a hurricane nor heavy rainfall is required for a flood to occur. Even a smaller storm leads to flooding under the right circumstances and settings. Standard homeowners insurance excludes coverage for flood damage due to the sheer cost of servicing such claims. Only the largest insurance carriers could provide flood coverage across the nation, if they even wanted to do so. (Related: Reasons Every Homeowner Should Have an Emergency Repair Fund)
A Creation of Congress Administered By Insurance Carriers With Backing By FEMA
Congress created the National Flood Insurance Program to address this situation. Overseen by FEMA and run by partnered insurance carriers,the NFIP offers flood insurance nationwide to homeowners. FEMA sets the guidelines and requirements of the program while insurance carriers set up coverage for homeowners. In this situation, insureds typically deal with their chosen carrier rather than dealing with FEMA directly. The setup might sound complicated, but most homeowners will find everything more than manageable.
What Does The NFIP Cover?
To the surprise of nobody, the NFIP covers damages caused by floodwaters. It doesn’t matter whether the damage was caused by light rainfall or a record-breaking hurricane. Coverage kicks in once water causes flood conditions on two or more adjacent properties and leads to tangible damages. This can happen in high-risk flood zones but can also occur in other areas without warning. Simply put, an area doesn’t need to be flood-prone to experience a flood. The NFIP covers millions of residences across the nation today. (Related: Get Your Home Ready for California Storms)
What Coverage Limits Are Available For Homeowners?
Coverage through the NFIP is limited to $250,000 for a dwelling and $100,000 for personal property. Homeowners can choose to lower these limits, but higher limits aren’t available through the NFIP. Typically, a waiting period exists for coverage purchased through this program, and that often spans 30 days. Terms and exclusions apply to NFIP coverage, just like any other insurance policy. Excess flood insurance can be purchased from private insurance carriers.
Are Alternative Options Available For Flood Coverage?
On top of that, private insurers sometimes offer private flood insurance in place of the NFIP. Such coverage may cost less than a similar NFIP policy and comes with some advantages. The NFIP is technically the more financially secure solution as it’s backed by the federal government. Still, private coverage is an option, and many people elect to purchase excess flood coverage. It’s not surprising that many homes are worth more than $250,000 to rebuild in a total loss after all.
In the end, the NFIP is an important program administered by the federal government. Homeowners would stand to lose everything they own without this coverage. Insurance carriers alone couldn’t offer flood insurance to the entire nation due to inherent risks associated with flood zones. For that reason, the NFIP plays an invaluable role in protecting homeowners from losses related to flood damage. Some homeowners are required to maintain this coverage, and many others elect to purchase coverage to protect themselves.
Homeowners cannot forget about the NFIP and private alternatives.