Your Flood Insurance Options

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Flooding can be devastating and causes billions of dollars in damages across the United States every year. Statistically, your house is much more likely to be flooded than suffer from fire damage. Flooding is the number one natural disaster in America, with the average flood claim between 2008 and 2012 a staggering amount of almost $42,000. A total of around $4 billion is claimed yearly.

National Flood Insurance Program

flood insurance

Congress created the National Flood Insurance program to reduce future flood damage through zoning ordinances and community-enforced building, while also providing access to affordable, subsidized flood insurance protection. Community involvement is also greatly encouraged in this program, which is based on an agreement between Federal Government and the local communities. The principle is that the community needs to enforce and adopt floodplain management ordinances to help reduce any future flood risks to new buildings in flood hazard areas and the Federal Government will provide financial support through flood insurance. The NFIP flood insurance can be purchased through casualty and property insurance agents at set rates, so the premium should not differ between companies or agents. Rates depend on the type of home construction, its age and the level of risk the building carries.

When is Flood Insurance Required?

Federally regulated lenders have been mandated by Congress to require flood insurance on all properties that are situated in high risk areas. This means that if you buy a property in a high-risk flood area and make use of a federally regulated or insured lender, you have to get flood insurance. High risk areas have a one in four chance of experiencing flooding every 30 years.

Businesses and homes situated in moderate-risk or low-risk areas are not federally required to have flood insurance. However, flood insurance is still highly recommended and many lenders will still require it. A quarter of all NFIP claims are filed by people in moderate-risk or low-risk areas, which shows the importance of being insured against flooding. Disaster assistance, when available, is usually a loan that you have to repay with interest. Websites such as can give you more information about your mortgage and whether your lender will require flood insurance.

What is Covered by Flood Insurance

Depending on your insurance plan, flood insurance may cover two types of property: the building itself and then its contents. The land it is located on is usually not covered. Building insurance typically includes the building with its foundation, the plumbing and electrical system, furnaces, and central air conditioning as well as water heaters. Built-in appliances such as cooking stoves, refrigerators and dishwashers are also covered under the building insurance. Flooring and permanently installed carpets are also included. Content insurance will cover personal possessions such as furniture, clothing, curtains, electronic equipment and portable appliances.

Changes to National Flood Insurance Program

After many people suffered devastating losses from Hurricane Katrina and Superstorm Sandy, new legislation was approved in March 2014 to roll back the NFIP to provide some relief to homeowners. The overall complaint was that homeowners living in flood-prone areas suffered sharp premium increases. The new bill is aimed at allowing property sellers to pass their subsidized, low insurance rates to new buyers, thereby limiting how much their flood insurance premiums may rise every year.

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Comments: 3

  1. Tad March 27, 2014 at 5:37 pm Reply

    Why do they assume that anyone on welfare is just lazy?
    Why do they assume that the homeless deserve to live outside?
    Why do they assume that those who make meager income only deserve meager income, and then complain that their boss rides them, and that they don’t get paid enough? Doesn’t their own rule of thumb indicate that they themselves don’t work hard enough for their boss, and that they don’t DESERVE to be paid a fair wage?

    I have spent a lot of time helping people defend their basic rights, but I hear all the time that people who are not making a lot of money, just plane deserve to starve, and so do their kids. How do people make such cruel assumptions? Why don’t they ever consider that they might be sick, injured, over worked and under paid, or that they have a hard time getting hired because of some stigma like old age, or that they can’t afford to go to collete to get a proper job, or that they were struck by identity theft and were left with huge sums of debt, or that they are blowing all of their money on medical bills, or that the economy has resulted i inflated costs, a shortage of jobs, and a flooding of desperate people struggling to get those jobs, even for minimum wage, so their families MIGHT be able to keep their home?

    Also, does it bother you that people in EU work less hours, but get paid as much as you do, live a more relaxed lifestyle, spend more time enjoying family, and also receive better benefits and social programs and welfare, which is not constantly withheld when they need it most? (Yes there are hard times in EU, but we are far better off than you are, and the reason is that our attitude is more supportive of our fellows than your attitude is to toward yours.)
    Shamus: No they don’t. What numbers have you been looking at?
    Shamus: No they don’t. What numbers have you been looking at?
    My knowlage on tis is based on my work in the area. That’s a lot of knowlage.

    I know what Americans think on the subject because they insist on spraypainting it on my building, or walking up to me and reading me the riot act about what I’m doing to their country by helping the poor to defend their rights. And because the govt fights sick people tooth and nail, before giving them a penny, often forcing the disabled to hire lawyers they can’t afford, andsleep outside for a year before giving them a lousy $400 a month to live off of. Americans are awful to those who don’t make money.
    [US is the] “most giving nation when it comes to our social services and worldwide disaster relief”

    This is often true -to those outside of USA. You treat your own people like ****.

  2. Galen April 8, 2014 at 4:29 pm Reply

    Millionaires are so last millennium. The new Forbes 400 list of richest Americans is billionaires only.

    If you’re net worth is a mere $999 million, forget it. A billion means a thousand million, and that’s the Forbes 400 minimum — up from $900 million in 2005.

    Donald Trump and two of his kids grace the Forbes 400 cover, but ranked No. 94 with $2.9 billion, Trump’s a long way from No. 1 Bill Gates with $53 billion.

    The combined wealth of the 400 richest Americans is a record-breaking $1.25 trillion. That’s about the same amount of combined wealth held by the 57 million households who make up half the U.S. population.

    The economy is booming for billionaires. It’s a bust for many other Americans.

    A record 400 Americans are billionaires — and a record 47 million Americans have no health insurance.

    America has 400 billionaires — and 37 million people below the official poverty line.

    The official poverty line for one person was just $9,973 in 2005 (latest data). That wouldn’t cover the custom-made men’s shoes ($4,128) and Hermes purse ($6,250) on the Forbes Cost of Living Extremely Well Index. The official poverty line of $15,577 for a three-person family is lower than the cost of the Patek Philippe men’s gold watch ($17,600).

    The Forbes 400 minimum is up $100 million since 2005, but the federal minimum wage has been stuck at $5.15 an hour — just $10,712 a year — since 1997. GOP leaders in Congress have been holding a raise for minimum wage workers hostage to more giant tax cuts for wealthy inheritors.

    Wealth isn’t trickling down. It’s flooding up — from workers to bosses, small investors to big, poorer to richer.

    The heirs to Wal-Mart founders Sam and Bud Walton have a combined $82.5 billion — while the children of Wal-Mart workers swell the ranks of state health insurance programs for the neediest.

    In today’s corporate America, workers see gutted paychecks and pensions despite rising worker productivity, while CEOs get golden pay, perks, pensions and parachutes. The pay gap between average workers and CEOs has grown nine times wider since the 1970s.

    The number of billionaires is a record high, but the share of national income going to wages and salaries is at a record low.

    U.S. corporate profits increased 21 percent in the past year, Market Watch reported in March. “Profits have been so high because almost all of the benefits from productivity improvements are flowing to the owners of capital rather than to the workers,” said Market Watch.

    The wealthiest 1 percent of Americans (minimum net worth $6 million) owned 62 percent of the nation’s business assets, 51 percent of stocks and 70 percent of bonds as of 2004, according to the latest data from the Federal Reserve Survey of Consumer Finances — which excludes the Forbes 400. That’s way up from 1989, when the wealthiest 1 percent owned 54 percent of business assets, 41 percent of stocks and 52 percent of bonds.

    Our growing economy is not producing a growing middle class, but a richer aristocracy.

    The high point for median household income — the income of the household in the middle — was $47,671 in 1999, adjusted for inflation. In 2005, median household income was $1,345 less at $46,326. In the same period, the Forbes 400 gained more than 100 billionaires.

    Government policies are fueling rising inequality. Taxpayers with incomes above $1 million will see their after-tax income grow by about 6 percent this year thanks to tax cuts the nation can’t afford.

    In an economy where money is flowing up to the very top, even college-educated workers are going backward. Inflation-adjusted median household income was lower in 2005 than 1999 even when the householder had a bachelor’s degree, master’s degree, professional degree or doctorate.

    The problem is much bigger than the rich getting richer, while the poor get poorer. The really rich are getting richer at the expense of most everyone else.

    Solutions include restoring the link between rising worker productivity and pay, raising the miserly minimum wage, narrowing the obscene pay gap between workers and CEOs, rolling back tax cuts for the wealthy — and stop taxing income from work more than income from capital gains.

  3. Micah April 17, 2014 at 1:34 am Reply

    Isn’t house insurance only about $100 per month? What is covered? (like city crazy arsonist guy? TVs and computers? or just the structure? just curious!)

    What does house insurance do? I’ve heard horror stories from Hurricane Katrina that the victims were homeless the house not rebuilt, etc etc. Am I required to buy this house ins? Hopefully, flood should not be a concern (high ground, on a hill?) but maybe tornadoes or high winds and storms? sometimes.

    I live in Michigan! Am I required by law to have this house insur?

    Does it cost less to have house insurance in the city? Or more?

    We are trying to decide between rural living (where we grew up, familiar favorite hometowns) and city life (we could potentially get free college tuition for our child.). but… we love forests chickens and stuff. (can’t have that in the city.) Also, in the city we could ride the bus and not have the expense of a car. We are poor, but we kinda want a car. We could visit Lake Michigan or go camping up north. Maybe the car thing is irrelevant, but I know in the city we would not buy one. and just hope that Grandpa takes us camping or something.

    PS. The crazy city arsonist is only hitting the Appartment buildings here. but just in theory, any crazy arsonist f(NOT ME!) could target my house….

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