Who needs flood insurance? Everyone.  And everyone in a participating
community of the National Flood Insurance Program (NFIP) can buy flood
insurance.  Over 18,000 communities across the country have joined the
Program.  In some instances, people have been told that they can not buy
flood insurance because of where they live.  To clear up this and other
misconceptions about Federal flood insurance, the NFIP has compiled this
list of common myths about the Program, and the real facts behind them, to
give you the full story about this valuable protection.

MYTH: You can't buy flood insurance if you are located in a high
risk flood area.

FACT:  You can buy Federal flood insurance no matter where you live
if your community belongs to the NFIP.  The Program was created in 1968 to
provide flood insurance to people who live in areas with the greatest risk
of flooding, called Special Flood Hazard Areas (SFHAs).  In fact, under the
Flood Disaster Protection Act, lenders must require borrowers whose
property is located within an SFHA to purchase flood insurance as a
condition of receiving a federally-backed mortgage loan.
    Lenders should notify borrowers that their property is located in an
SFHA and that affordable Federal flood insurance is available.

MYTH:  You can't buy flood insurance immediately before or during a
flood.

FACT:  You can purchase flood coverage at any time.  There is a
30-day waiting period after you've applied and paid the premium before the
policy is effective.  But if the title of a property is transferred,
there's no waiting period-the policy goes into effect the day you apply
and pay the premium.
    The policy does not cover a "loss in progress, "defined by the NFIP
as a loss occurring as of 12:01 a.m. on the first day of the policy term.
In addition, you cannot increase the amount of insurance coverage you have
during a loss in progress.

MYTH: Homeowners insurance policies cover flooding.

FACT:  Unfortunately, many homeowners do not find out until it is
too late that their homeowner's policies do not cover flooding.  Federal
flood insurance protects your most valuable assets-your home and belongings.

MYTH:  Flood insurance is available only for homeowners.

FACT: Flood insurance is available to protect homes, condominiums,
apartments and commercial structures.  A maximum of $250,000 of building
coverage is available for single family residential buildings; $250,000
per unit for multifamily residences.  The limit for contents coverage on
all residential buildings is $100,000.
    Commercial structures can be insured to a limit of $500,000 for the
building and $500,000 for the contents.

MYTH:  You can't buy flood insurance if your property has been
flooded.

FACT:  It doesn't matter how many times your home, apartment, or
business has flooded.  You are still eligible to purchase flood insurance,
provided that your community is participating in the NFIP.

MYTH:  Only residents of high risk flood zones need to insure their
property.

FACT:  Even if you live in an area that is not flood-prone, it's
advisable to have flood insurance.  One-third of the NFIP's claims come
from outside high risk flood areas.  The NFIP's Preferred Risk Policy,
available for as little as $106 per year, is designed for residential
properties located in low-to-moderate flood risk zones.

MYTH:  The NFIP does not offer any type of basement coverage.

FACT:  Yes, it does.  The NFIP defines a basement as any area of a
building with a floor which is subgrade, or below ground level on all
sides.  Basement coverage under an NFIP policy includes cleanup expenses
and items used to service the building, such as elevators, furnaces, hot
water heaters, washers and dryers, air conditioners, and freezers.
Required utility connections, circuit breaker boxes and pumps, and tanks
used in solar energy systems are also included.  What's not covered under
the policy: the contents of a finished basement and improvements, such
as finished walls, floors, and ceilings.

MYTH:  Federal disaster assistance will pay for flood damage.

FACT:  Before a community is eligible for disaster assistance, it
must be declared a Federal disaster area.  Federal disaster assistance
declarations are awarded in less than 50 percent of flooding incidents.
The annual premium for an NFIP policy, about $300 per year, is less
expensive than a monthly loan payment for a Federal disaster loan, when the loan
is granted on favorable terms.
    Further, if you are uninsured and receive Federal disaster assistance
after a flood, you must purchase flood insurance to receive disaster
relief in the future.

MYTH:  The NFIP encourages coastal development.

FACT: One of the NFIP's primary objectives is to guide development
away from high risk flood areas.  The Coastal Barrier Resources Act (CBRA)
of 1982 was enacted to protect the fragile nature of undeveloped coastal
barrier islands and their exposure to damaging storms.  CBRA prohibited
all Federal expenditures or financial assistance, including the sale of
flood insurance, for new and substantially improved buildings on
undeveloped areas of coastal barrier islands.
    In November, 1991, the Coastal Barrier Improvement Act more than
doubled the areas within the Coastal Barrier Resource System.
    These laws do not prohibit property owners from building along
coastal areas, but they do transfer the financial risk of such building
from Federal taxpayers to those who choose to live or invest in these
areas.

MYTH:  Federal flood insurance can only be purchased through the
NFIP directly.

FACT:  Federal flood insurance is sold and serviced directly
through the NFIP, or through a Write Your Own (WYO) company.  WYO
companies write and service policies on a nonrisk-bearing basis through
a special arrangement with the Federal Insurance Administration.

MYTH:  The NFIP covers most types of flooding, resulting from
hurricanes, or the overflow of rivers and tidal waters.

FACT:  That's true.  The NFIP defines flooding as a general and
temporary condition during which the surface of normally dry land is
partially or completely inundated.  Two adjacent properties or two or
more acres must be affected.  Flooding can be caused by any one of the
following:

    -    the overflow of inland or tidal waters
    -    the unusual and rapid accumulation or runoff of surface waters
         from any source, such as heavy rainfall
    -    the incidence of mudslides or mudflows, caused by flooding, which
         are comparable to a river of liquid and flowing mud
    -    the collapse or destabilization of land along the shore of a lake
         or other body of water, resulting from erosion or the effect of
         waves, or water currents exceeding normal, cyclical levels

MYTH:  Wind-driven rain is considered flooding.

FACT:  No, it isn't.  Rain entering through wind-damaged windows or
doors, or through a hole in a wall or the roof caused by wind, resulting
in standing water or puddles, is considered windstorm, rather than flood
damage.  Federal flood insurance only covers damage caused by the general
condition of flooding (defined in the question, above), typically caused
by storm surge, wave wash, tidal waves, or the overflow of any body of
water above normal, cyclical levels.  Buildings which sustain this type
of damage usually have a watermark, showing how high the water has risen
before it subsides.  Although the Standard Flood Insurance Policy (SFIP)
specifically excludes wind and hail coverage, most homeowners' policies
provide coverage.

Source of information: NFIP

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