A Time To Buy Flood Insurance
Release Date: May 29, 2003
Release Number: 1464-40
» More Information on Tennessee Severe Storms, Tornadoes and Flooding
Nashville, TN -- The Federal Emergency Management Agency (FEMA) is encouraging renters and property owners in Tennessee, where more than two-thirds of the counties have been declared disaster areas, to purchase flood insurance for their homes.
"Buying flood insurance is one of the most important things people can do to protect their homes, businesses and possessions from a future disaster," said Michael Bolch, the official in charge of federal recovery operations in Tennessee. "We can't stop floods and storms, but we can prevent them ruining people financially."
The National Flood Insurance Program (NFIP), administered by FEMA, makes federally backed flood insurance available in communities that adopt and follow floodplain management ordinances. More than 4.4 million policies representing nearly $559 billion in coverage are now in force in more than 19,000 participating communities.
"Flood damage-unlike wind damage-is not covered by homeowner or business insurance policies," Bolch said. "Insurance companies find this supplemental coverage to be more risk than they wish to bear, so the federal government has helped spread the risk among more communities and has backed the coverage. If individuals and businesses wish to purchase flood insurance, however, their community must participate in the National Flood Insurance Program."
The NFIP is a cooperative, self-supporting program. Claims and operating expenses are paid from premiums, not tax dollars, creating a network of mutual support among policyholders. Furthermore, it is estimated that NFIP building standards, which reduce future flood losses by imposing construction standards, prevent $1 billion in losses annually and reduce the burden of relief costs on all taxpayers.
Bolch said it's a mistake for people to assume federal disaster assistance will cover all flood damage. Disaster assistance requires a presidential declaration, and is often in the form of a loan that must be repaid. "That's not as good as flood insurance, which pays for damage outright; all the policyholder must do is submit a claim. It also covers any localized floods when a federal disaster hasn't been declared."
Most insurance companies and licensed insurance agents sell federally guaranteed flood insurance for attractive rates, compared with the prospect of devastating flood damage.
The maximum coverage for a single-family home is $250,000 for the structure and $100,000 for its contents. Even renters may purchase up to $100,000 of coverage for their personal belongings. The maximum coverage for businesses is $500,000 for buildings and $500,000 for contents. A 30-day waiting period applies before a new flood insurance policy is in effect.
Bolch emphasizes that a community is taking strong steps to protect its residents when it participates in the NFIP, because communities that decline to do so are not eligible for federal assistance in rebuilding after a disastrous flood. Disaster assistance is available to meet immediate humanitarian needs such as food and temporary shelter, but no funds are available for loans or grants to replace personal belongings or repair structures in non-participating communities. Special flood hazard areas have been identified in 109 Tennessee communities that have either chosen not to participate in the NFIP or have not maintained necessary compliance with NFIP standards.
Even if a community hasn't been found to be a significant flood-hazard area, residents may purchase flood insurance as long as the community is enrolled in the NFIP. In fact, they may obtain full coverage at especially attractive premiums because their community has taken steps to minimize future flood damage.
| Flooded communities with flood insurance available (Participate in NFIP) | Flooded communities not in NFIP |
|---|---|
| Bedford Co. (unincorp.) | Normandy (Bedford Co.) |
| Camden (Benton Co.) | Big Sandy (Benton Co.) |
| Pikeville (Bledsoe Co.) | Bledsoe Co. |
| Bradley Co. (unincorp.) | Elkton (Giles Co.) |
| Dyer Co. (unincorp.) | Lakeside (Hamilton Co.) |
| Ardmore (Giles Co.) | Cottage Grove (Henry Co.) |
| Chattanooga (Hamilton Co.) | Houston Co. (unincorp.) |
| Crump (Hardin Co.) | Humphreys Co. (unincorp.) |
| Henry Co. (unincorp.) | Iron City (Lawrence Co.) |
| Erin (Houston Co.) | Medon (Madison Co.) |
| McEwen (Humphries Co.) | McMinn Co. (unincorp.) |
| Lake Co. (unincorp.) | Megis Co. (unincorp.) |
| Gates (Lauderdale Co.) | Madisonville (Monroe Co.) |
| Ethridge (Lawrence Co.) | Lobelville (Perry Co.) |
| Jackson (Madison Co.) | Sequatchie Co. (unincorp.) |
| Chapel Hill (Marshall Co.) | |
| Columbia (Maury Co.) | |
| Athens (McMinn Co.) | |
| Decatur (Meigs Co.) | |
| Monroe Co. (unincorp.) | |
| Clarksville (Montgomery Co.) | |
| Montgomery Co. (unincorp.) | |
| Perry Co. (unincorp.) | |
| Benton (Polk Co.) | |
| Dayton (Rhea Co.) | |
| Eagleville (Rutherford Co.) | |
| Dunlap (Sequatchie Co.) | |
| Dover (Stewart Co.) | |
| Atoka (Tipton Co.) | |
| Dresden (Weakley Co.) |
Last Modified: Friday, 30-May-2003 09:18:29