Flood Insurance 101

In most cases, property damage insurance policies such as homeowner’s and renter’s policies specifically exclude flooding from their coverage. Nevertheless, flood insurance is available through the National Flood Insurance Program, a government agency that insures more than 5.5 million Amerian homes, mostly in Texas and Florida.

NFIP eligibility
To become eligible for NFIP assistance, communities must agree to build and maintain a floodplain maintenance ordinance that works to minimize flood damage to future construction. Since 1978, the program has paid more than $38 billion in claims.

Floodplains and obtaining coverage
Floodplains are roughly understood as any flat area of land adjacent to a body of water such as a river or stream. The plain is understood to extend from the banks of the channel to the walls of the enclosing valley. Floodplains are particularly common in the Midwest and Southern regions of the United States.

The NFIP regulates construction and development of recognized floodplains using a standard called the 100-year flood. This system mandates that new construction is built to withstand the level of flood water expected to be equaled or surpassed every 100 years.

NFIP-approved agencies sell insurance to both homeowners and renters, as well as commercial property owners. Typcially, flood insurance coverage provides up to $250,000 for homes and up to $100,000 to cover property losses. Commercial business owners can purchase up to $500,000. 

Potential customers are encouraged to find and compare rates, as the cost of such policies will vary by agency and insurance producer. Prices also vary according to how much is purchased, what is covered, and the surrounding area’s flood risk. Home and business owners will also need to provide agents with their elevation certificate, which specifies the property’s height above the ground, before receiving a coverage estimate.

Determining flood risk and finding an agent
The NFIP’s official website, www.floodsmart.gov, contains tools to help determine flood risk and coverage options.