Flood Insurance: Dollars And Sense

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Release date: 
July 17, 2003
Release Number: 
1464-77

Nashville, TN -- The figures are remarkable. In the last quarter-century, more than 16,000 Tennesseans with flood insurance have received more than $37.5 million in loss payments. In the last fiscal year alone, FEMA's National Flood Insurance Program (NFIP) paid out 383 claims to state policyholders to the tune of $4.4 million.

And now, water-logged residents with and without flood insurance are faced with an enormous new set of rebuilding and repairing costs after month-long May storms caused nearly $100 million in damage statewide.

"The numbers speak for themselves," said Michael Bolch, FEMA's federal coordinating officer overseeing Tennessee's recovery. "But the most convincing case anyone can make for purchasing flood insurance is the increased peace of mind of knowing that you've protected your most valuable asset or personal property."

Still, almost 73 jurisdictions in Tennessee with flood-prone areas do not participate in the National Flood Insurance Program. Residents living in these parts of the state aren't eligible to purchase flood insurance, and, if they live in the flood plain, could be denied some types of federal assistance when the next flood disaster strikes.

Flood insurance is available to any property owner or renter in a community participating in the NFIP. Statewide, 302 communities are enrolled in the program. All areas are susceptible to flooding, although to varying degrees. In fact, nationwide 25 to 30 percent of all flood claims occur in the low-to-moderate risk areas, or outside the "100 year floodplain".

To get secured financing to buy, build or improve structures in Special Flood Hazard Areas (SFHAs) you may be required to purchase flood insurance. Federally regulated or insured lending institutions must determine if the structure is located in a Special Flood Hazard Area and must provide written notice requiring flood insurance.

Bolch said that misinformation and misunderstandings were the main reasons many residents don't buy flood insurance.

"It fills a huge gap in homeowner coverage at an affordable cost," Bolch said. "It also can cover a renters personal property as well as some nonresidential buildings such as farm and commercial structures in participating communities."

Bolch noted other misunderstandings that often arise:

  • Flood damage is not covered by a homeowner's policy. 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 its contents;

  • You should buy flood insurance no matter what your flood risk. It doesn't matter whether your risk is high, medium or low, you can buy flood insurance from your local agent, even if they tell you that you can't or don't need it, so long as your community participates in the NFIP. You don't have to live in a Special Flood Hazard Area in order to purchase flood insurance.

  • 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. Many floods in the United States are not declared as federal disasters. Flood insurance covers the losses even if a disaster is not declared.

Nearly 20,000 communities in the United States and its territories participate in the NFIP by adopting and enforcing floodplain management ordinances to reduce future...

Last Updated: 
July 16, 2012 - 18:46
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