Flood Insurance: Dollars And Sense
Release Date: November 13, 2002
Release Number: 1437-128
» More Information on Louisiana Hurricane Lili
Baton Rouge, LA -- The figures are remarkable. In the last quarter-century, more than 165,000 Louisianans with flood insurance have received more than $1.5 billion in loss payments. In the last fiscal year alone, the National Flood Insurance Program (NFIP) compensated 8,243 state homeowners and renters to the tune of more than $89 million.
And now, water-logged state residents with and without flood insurance are faced with an enormous new set of rebuilding and repairing costs after the double-deluge of torrential rainfall and stormwater surge associated with Tropical Storm Isidore and Hurricane Lili.
"The numbers speak for themselves," said Carlos Mitchell, federal coordinating officer helping oversee disaster recovery efforts. "But the most convincing case anyone can make for purchasing NFIP insurance is the increased peace of mind of knowing that you've protected your most valuable asset or personal property."
Flood insurance is available to any property owner or renter located in a community participating in the NFIP. Statewide, 288 Louisiana communities are enrolled in the program. All areas are susceptible to flooding, although to varying degrees, in fact, 25 percent of all flood claims occur in the low-to-moderate risk areas.
To get secured financing to buy, build or improve structures in Special Flood Hazard Areas (SFHAs) you will be required to purchase flood insurance. Lending institutions that are federally regulated or federally insured must determine if the structure is located in a SFHA and must provide written notice requiring flood insurance.
Mitchell said that misinformation and misunderstandings were the main reasons why many residents failed to look into obtaining flood insurance.
"It fills a huge gap in homeowner coverage at an affordable cost," Mitchell said. "It also can cover a renters personal property as well as some nonresidential buildings such as farm and commercial structures in participating communities.
Mitchell addressed other misunderstandings that often arise:
- Everyone lives in a flood zone. You don't need to live near water to be flooded. Floods are caused by storms, hurricanes and water backup due to inadequate or overloaded drainage systems and dam or levee failure;
- Flood damage is not covered by homeowners policies. You can protect your home, business and belongings with NFIP insurance. You can insure your home with flood insurance for up to $250,000 for the building and $100,000 for your contents;
- You can buy flood insurance no matter what your flood risk is. It doesn't matter whether your flood risk is high, medium or low, you can buy flood insurance as long as your community participates in the NFIP;
- There is a low-cost policy for homes in low- to moderate-risk areas. The Preferred Risk Policy is available for just over $100 a year. You can buy up to $250,000 of coverage for your home and $60,000 of coverage for your contents;
- Flood insurance is easy to get and affordable. You can buy NFIP flood insurance from local private insurance companies and agents. You may be able to purchase flood insurance with a credit card;
- Contents coverage is separate, so renters can insure their belongings too. Up to $100,000 contents coverage is available for homeowners and renters. Whether you rent or own your home or business, make sure to ask your insurance agent about contents coverage. It is not automatically included with the building coverage;
- Up to a total of $1 million of flood insurance coverage is available for non-residential buildings and contents. Up to $500,000 of coverage is available for non-residential buildings. Up to $500,000 of coverage is available for the contents of non-residential buildings;
- There is a 30-day waiting period before the coverage goes into effect. Plan ahead so you're not caught without flood insurance when a flood threatens your home or business; and
- Federal disaster assistance is not the answer. Federal disaster assistance is only available if the President declares a disaster. More than 90 percent of all disasters in the United States are not declared as federal disasters. Flood insurance pays even if a disaster is not declared.
Nearly 20,000 communities across the United States and its territories participate in the NFIP by adopting and enforcing floodplain management ordinances to reduce future flood damage. NFIP loss claims are not paid for by the taxpayer, but through premiums collected for flood insurance policies.
You can buy NFIP flood insurance through most major private insurance companies and licensed property insurance agents who sell homeowners' or property insurance or call the NFIP's toll-free information line at 800-427-4661, (TYY/TDD) 800-427-5593.
Last Modified: Tuesday, 22-Apr-2003 16:08:46