LINCOLN, Neb. -- The recent severe storms, tornadoes and flooding in Nebraska have underscored the value of a flood insurance policy. Since homeowner's insurance policies do not cover flooding, Congress created the National Flood Insurance Program (NFIP) in 1968 in an effort to lessen the financial losses created by flood damage.
The NFIP, overseen by the Federal Emergency Management Agency (FEMA), enables homeowners, business owners and renters to purchase federally backed flood insurance. Flood insurance is easy to obtain and is sold by most insurance agents.
Homeowners and business owners are eligible to purchase flood insurance if their community is among the more than 20,000 communities in the United States participating in the NFIP. These communities agree to adopt and enforce floodplain management ordinances to reduce future flood damage. Mortgage lenders may require prospective home buyers to purchase flood insurance if the home is located in a floodplain.
The average premium for a yearly flood insurance policy is around $500. It takes 30 days after purchase for a policy to take effect. The waiting period is waived if the consumer is obtaining, increasing, extending or renewing a loan on the property.
As an example consider two neighbors who bought homes exactly alike. One owner bought flood insurance. The other did not. For the next 10 years the owner with flood insurance paid a total of $5000 in premiums. Both homes were destroyed by flooding. The owner without coverage saved $5000 in premiums but may have to dig deeply into savings or take out a mortgage to rebuild. ?
Should the owners choose to rebuild on the same lot, flood plain regulations may require them to do so on a foundation elevated high enough to place their home's first floor at or above the 100-year floodplain level.
Flood insurance will not erase the pain of losing your home but it does offer peace of mind. To find an insurance agent who handles flood insurance, visit www.floodsmart.gov or call toll-free 1-888-435-6637.
FEMA coordinates the federal government's role in preparing for, preventing, mitigating the effects of, responding to, and recovering from all domestic disasters, whether natural or man-made, including acts of terror.