These shocking flood insurance myths have left a lot of people wondering if Florida flood insurance is worth it or not.
For most of America’s history, flood insurance was too expensive for households and too dangerous for insurers. The National Flood Insurance Program (NFIP) was established by Congress in 1968 to provide inexpensive flood insurance to homes, renters, and businesses.
The NFIP now insures 5.1 million policies with a total value of $1.3 trillion. In 2019, the program paid out $225 million in claims in Florida alone. Over the last five decades, it has saved the lives of millions of flood victims, but many more are financially devastated each year, either because they don’t have insurance or because their coverage is limited.
The program’s survival is largely due to a $30 billion line of credit provided by taxpayers. Because the program was designed as a government subsidy, there has always been a cloud of uncertainty hanging over it. The majority of homeowners couldn’t pay rates that accurately reflected the danger. The program comes to an end on a regular basis, and Congress must renew it. The program was briefly disrupted due to delays in extending it. It’ll be up for renewal on September 30. If that happens, fresh policy writing will most likely be put on hold.
The public’s failure to realize the rising risk of floods due to sea-level rise and shifting weather patterns is the program’s single greatest problem. The lack of public knowledge of what the program does and does not do is right behind that. Thousands of homes are put in financial risk each year as a result of these myths.
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Below Are the Popular Flood Insurance Myths You Need to Know in Florida
Myth #1: “Flooding is covered by my homeowner’s insurance.” Wrong!
The intense flood of documents flying across the table toward a homeowner closing on the purchase of a new home is perhaps no greater rite of adulthood than the intense flood of documents flying across the table toward a homeowner closing on the purchase of a new home. The deed, mortgage, transfer tax declarations, title insurance, certificate of occupancy, and, of course, proof of homeowner’s insurance are just a few examples.
The average homebuyer could be forgiven for not knowing whether flood insurance is included in the storm of documents and policies. This is especially true if the home isn’t located in a federally designated high-risk flood zone, such as in Florida, where hurricane insurance is frequently used in conjunction with homeowners’ insurance.
However, floods are not covered by homeowner’s insurance. Hurricane insurance is named wind insurance for a reason, which is especially important to Floridians. It does not cover water damage, only wind damage.
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Myth #2: “Flood insurance pays for everything.”
One of the most ridiculous myths about flood insurance is that flood insurance pays for everything. The first financial snare that flood insurance victims encounter is the fact that it does not cover living expenditures, such as rent, while their homes are being renovated. Many flood victims may have to find alternate housing for months, if not years. Following a flood, the rehabilitation and restoration process can be lengthy.
Everything that became wet in the house must be removed and, in most cases, discarded. Furniture, flooring, appliances, electronics, and apparel are all included. Sheetrock must be removed up to just above the flood level.
Toxic mold is a health threat, thus the house and everything in it must be allowed to dry completely. It is necessary to keep track of the damage. It’s possible that emergency repairs will be required. This step alone can take several weeks.
The arrival of the insurance adjuster is only the beginning of what can be a lengthy and nerve-wracking journey. The repairs commence after the claim is adjudicated and a cheque is written. They can take months to complete.
Then there’s the nightmarish scenario of homeowners being evicted from their homes for years on end. This occurs when flooded homeowners are obliged to elevate their home as part of their municipal flood management plan before repairing it. This happens if their house was built below the “base flood elevation,” which was most likely determined after the house was built.
Myth #3: “I’m not in a flood zone, so I don’t need flood insurance.”
Flood insurance is necessary in high-risk flood zones, but it is not required outside of them. Despite this, flood insurance claims for residences outside of high-risk areas account for up to a quarter of all claims filed each year.
There are three main causes for this: m
- Most flood maps are out of date
- Extreme rain events are becoming more frequent
- The natural terrain is being modified at an increasing rate
The Federal Emergency Management Agency (FEMA) designated flood zones (FEMA). Areas at high danger of floods are of particular significance. FEMA considers these areas to have a 1 percent or higher potential of flooding in any given year. That may not appear to be a high level of danger. However, because mortgages are typically paid back over 30 years, the chances of flooding over that time are nearly one in three.
Flood insurance is not required for homes and businesses outside of high-risk flood zones. Those who live in high-risk zones must carry insurance, but only if their home was purchased through a government backed program such as a VA or FHA loan.
Flood insurance is not necessary because the vast majority of flooded houses do not appear on flood maps as being in a high-risk zone. According to a 2017 assessment by the Office of Inspector General of the Department of Homeland Security, FEMA’s parent agency, two-thirds of FEMA’s flood maps are outdated. Congress has required that they be updated every five years, but has not supplied the funds to do so. FEMA’s maps are two-thirds outdated.
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Myth #4: “The government disaster program is always there for me.”
Most floods result in a lack of federal disaster help. The incident that causes the flooding must be so severe that the president declares it a federal disaster in order for flood victims to be eligible for federal help.
Former President Trump proclaimed Hurricanes Isaias, Douglas, and Hanna to be federal disasters in less than a week in July 2020, making flood victims eligible for disaster relief. Even in those circumstances, the maximum amount of assistance per household is $34,900. Temporary lodging, emergency house repairs, uninsured property losses, and medical and funeral expenditures are all possible uses for the funds.
However, FEMA makes it clear that the program isn’t meant to be a replacement for insurance. Its goal is to assist uninsured flood victims in meeting their urgent, basic requirements.
Which of these flood insurance myths are common in your city?