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FEMA Flood
The fact is...you need flood
insurance
July 1993
The rain began to fall...and
fall...and fall. By the time the rain ended over 17,000 square miles
were under water because of the overflowing Mississippi, Missouri, and
tributary rivers. Twenty-six people died. With over $8 billion
in damage, 200 counties were declared federal disaster areas. Only
about 25 percent of the flood victims carried flood insurance--the rest
were on their own. But the real lesson of this flood is what
happened in the following years. The Midwest was subject to flooding
of the same magnitude in both 1995 and 1996.
Flooding as a national problem
Until the late 1960s, most
property owners were unable to get insurance against flood damage.
Private insurance firms, aware of the potential for catastrophic losses
were unwilling to assume the financial risk. This put the burden on
taxpayers to provide costly disaster relief to a growing number of flood
victims.
In 1968, Congress addressed this issue by creating the National Flood
Insurance Program (NFIP). This federal program provides flood insurance at
a reasonable cost in exchange for the careful management of flood-prone
areas by local communities.
Today the NFIP serves over 4 million customers in over 18,000
communities across the country. It is administered by the Federal
Emergency Management Agency (FEMA) through its Federal Insurance
Administration. To become eligible, a community first enters the
emergency phase of the NFIP by adopting preliminary actions to reduce the threat of flooding. Everyone in the
community can then apply for limited amounts of flood insurance at
federally subsidized rates.
Much higher levels of insurance become available when a community
qualifies for the regular phase of the program. This occurs after
FEMA has conducted a detailed flood study and local officials have enacted
more stringent measures to safeguard life and property from future
flooding. To find out whether your community is eligible, ask your
Farmers Insurance agent.
The truth about flood
insurance
Myth: "It won't happen to me"
Fact: You don't have to live by water to be at risk.
Approximately 30 percent of all flood claims occur in low-to-moderate risk
areas.
Myth: "My Homeowners insurance is enough"
Fact: Homeowners insurance does not cover flood damage--federal flood
insurance does. Flood insurance also covers mudflow, dirt, and
debris resulting from moving water.
Myth: "I don't need flood insurance."
Fact: Homeowners with mortgaged property in a Special Flood Hazard
Areas (SFHA) are now required by federal law to obtain flood insurance.
Lenders must comply by requiring flood insurance on the outstanding
mortgage balance for the life of the loan.
Myth: "The government will pay."
Fact: To receive federal disaster assistance, a flood must first be
declared a "federal disaster" by the US President. Less than 50
percent of the floods that damage homes across the country every year wind
up being classified a federal disaster.
Myth: "Flood insurance is expensive."
Fact: Flood insurance is affordable. Flood damage is not.
The average loss of property and contents from the 1993 Midwest flood was
more than $25,000. Compare this to the average annual flood premuim
of just over $300.
Your coverage is based on your home's value. Flood insurance up
to $25,000 is available for residential buildings. Since Flood
policies are backed by the U.S. government, all valid claims are 100
percent guaranteed!
Myth: "Flood insurance covers contents."
Fact: Standard flood coverage does not cover the contents of your home.
Separate Contents Coverage is available up to $100,000. Preferred
Risk Policies for structures in low-risk areas offer a comibination up to
$250,000 for a residence and $60,000 for its contents.
Myth: "I can buy flood insurance anytime."
Fact: There is generally a 30-day waiting period for flood insurance.
So the best way to protect your home is to act now--before the flood
comes. |
