Disaster Aid Promotes Long-Term Flood Insurance 

Release Date: November 12, 2002
Release Number: 1437-124

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Baton Rouge, LA -- With nearly 40,000 Louisiana individuals and households approved for direct financial assistance to meet disaster-related necessary expenses and serious needs not covered by insurance, state and federal recovery officials remind applicants that a commitment to flood insurance is a major part of the aid package.

Under the National Flood Insurance Reform Act of 1994, homeowners and renters who receive assistance from the state-run Individual and Family Grant (IFG) Program and who live in portions of the floodplain designated as a Special Flood Hazard Area (SFHA) must purchase and maintain flood insurance.

As part of the IFG Program, the state will purchase a National Flood Insurance Program (NFIP) policy for the homeowner/renter for a period of three years. After the three-year period the insured parties must renew the policy at their own expense. Renters must maintain the insurance as long as they occupy the dwelling for which the grant was made.

Property owners who do not purchase and maintain the required flood insurance will not be eligible for most forms of disaster assistance in the future.

If the property is sold, the seller must inform the buyer of the requirement to maintain coverage.

Applicants who qualify for federally guaranteed loans also must maintain flood insurance for the life of those loans. This also is true for U.S. Small Business Administration (SBA) loans for properties in SFHAs.

Although flooding is the leading cause of property loss from natural disasters in this country, ordinary homeowner's policy does not cover flood damage. NFIP policies are available to residents and businesses in communities that have agreed to adopt and enforce sound floodplain management practices to reduce future flood damage. It is available in or out of the floodplain for buildings and contents.

Coverage is not only for homeowners. Businesses may also apply for coverage to their buildings and contents, including equipment. There are also separate policies for contents of homes for both homeowners and renters. For a home business, a separate NFIP policy is available.

Recovery officials said that, to date, 38,478 individuals and households had been approved for IFG assistance totaling $49,060,586 million due to losses from Tropical Storm Isidore and Hurricane Lili.

Last Modified: Tuesday, 22-Apr-2003 15:44:34