Myth #1: Hurricanes, not floods, are the No. 1 natural disaster and cause the biggest economic losses in the United States.
Hurricanes grab the headlines, but because floods happen in virtually every part of the country, they cause more losses than any other type of natural disaster. Homeowners insurance doesn’t cover floods. Only flood insurance covers flood damage to your home.
What causes floods?
- Rising rivers
- Storms
- Early snowmelts
- Man made problems from the construction of roads, shopping malls, homes, and industrial complexes
- Hurricanes
Nope. You must buy flood insurance only if yo
u meet all three of these criteria:
u meet all three of these criteria:
- You buy a home in a special flood hazard area where there’s a 1% chance of flooding in any year.
- Your community participates in the National Flood Insurance Program.
- You buy or refinance your home using a loan from a federally regulated financial institution, or a Fannie Mae- or Freddie Mac-guaranteed loan.
Myth #3: Flood insurance is always expensive
Flood insurance through the National Flood Insurance Program is sometimes expensive and sometimes cheap, depending on your home’s value, location, and height off the ground, as well as the value of your possessions.
- It can cost more than $8,000 a year if you buy the highest possible coverage of $250,000 for property and $100,000 for contents for a second home in the highest-risk areas.
- It can cost as little as $129 a year for $20,000 of rebuilding coverage and $8,000 in contents for your main home, if it’s in a low-risk area.
- $7,173 in a high-risk coastal area.
- $3,289 in a high-risk area.
- $1,798 a year in a low-to-moderate-risk area.
The NFIP doesn’t spend any tax dollars. The government sets the
premium rates high enough to cover flood insurance claims and operating
expenses in an average historical loss year. The program can borrow
money from the U.S. Treasury when losses are heavy, but has to pay those
loans back with interest.
To make sure it stays solvent, the NFIP is:
To make sure it stays solvent, the NFIP is:
- Phasing out subsidies for second and vacation homes and homeowners..
- Improved the accuracy of flood maps.
Private flood insurance is very expensive and only a handful of
companies offer excess flood insurance to homeowners with whose homes
are valued at more than $250,000. The National Flood Insurance Program
is the only program offering low- and middle-income homeowners flood
insurance. If it disappeared, those homeowners wouldn’t have another
option.
Source: HouseLogic - Surprising Facts About Flood Insurance By: Dona DeZube Read more: http://www.houselogic.com/home-advice/disaster-insurance/flood-insurance-facts/7/. Visit HouseLogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®
Source: HouseLogic - Surprising Facts About Flood Insurance By: Dona DeZube Read more: http://www.houselogic.com/home-advice/disaster-insurance/flood-insurance-facts/7/. Visit HouseLogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®