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Myths and Facts About the National Flood Insurance Program

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Release date: 
October 13, 2011
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BURLINGTON, Vt. -- As Vermonters rebuild from the damage caused by Tropical Storm Irene, the provisions of the National Flood Insurance Program may be creating confusion for some.

Officials with the Federal Emergency Management Agency are trying to clear up some myths about the NFIP, which offers federally-backed flood insurance to property owners and renters in communities that participate in the program.

In exchange, those municipalities agree to adopt and enforce floodplain management ordinances that set standards for building or repairing structures in the floodplain to reduce the risk of damage from flooding in the future.

“The NFIP is a key part of our efforts to help prevent flood damage and loss of life,” said FEMA’s Federal Coordinating Officer James N. Russo. “Understanding more about it can make rebuilding after a flood easier for both individuals and communities.”

Nearly 21,000 communities participate in the NFIP nationwide. As of this year, some 231 Vermont towns and cities are participating in the program, which is administered by FEMA but whose policies are sold through private insurance agents throughout Vermont.

More than 25 percent of claims paid are from areas at medium or low risk of flooding. In these areas, NFIP flood insurance can be purchased for as little as $129 a year to insure a building and its contents, or $49 for contents only.

Homes can be insured against flood damage for up to $250,000 and commercial buildings insured for up to $500,000. Policies can be written to include contents coverage up to $100,000 for homes and $500,000 for business owners’ contents. Renters can insure their personal property for up to $100,000.

The average homeowner pays about $600 a year for flood insurance, which pays claims even if a disaster is not declared by the president. Less than half of the floods in the U.S. result in a federal disaster declaration.

Since 1973, the NFIP has paid nearly $40 billion dollars in flood insurance claims, helping hundreds of thousands of families and businesses recover from floods.

Myths and Facts About Flood Insurance

Myth:  If you live in the “100-year floodplain,” that means there is only going to be one big flood every 100 years. You don’t really need insurance, since the flood risk is relatively small.

Fact:  NFIP now calls areas where flooding is most likely to occur “Special Flood Hazard Areas”(SFHA).  Previously, NFIP described these areas as the “100-year floodplain,” a term that continues to cause confusion. The term “100-year floodplain” does not mean there will only be one big flood every 100 years. It means that every single year there is a 1-in-100 chance of a flood. Sometimes there may be two severe floods only a few years apart in these areas.

Myth:  You can't buy flood insurance if you are located in a high risk flood area.
Fact:  In Vermont, you can buy flood insurance through the NFIP no matter where you live, as long as your community participates in the NFIP.

Cities or towns that do not join the NFIP after having flood-prone areas identified, or that fail to adopt and enforce floodplain management ordinances, are considered sanctioned. Buildings in those sanctioned communities that could have been insured by the NFIP are not eligible for FEMA grants to repair or rebuild them, and property owners or renters will not be able to purchase a NFIP flood insurance policy.

For property located in a Special Flood Hazard Area – an area with a 1 percent chance of flooding in any year, often mistakenly called the “100-year floodplain” – lenders must require borrowers to purchase flood insurance as a condition of receiving a federally-backed mortgage loan. 

Myth:  You can't buy flood in...

Last Updated: 
July 16, 2012 - 18:46
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