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National flood insurance program regulations – Facts and myths

Four out of five Americans know that their home insurance does not cover flood damage. They also admit that glaciers are melting resulting in the increase of sea level but most of them dot buy flood insurance program offered by country. This is an alarming fact because millions of people are always on the verge of losing their house in state of natural disaster. Flood is also considered as the number one risk for Americans among all the other natural disasters. Only 13% of American home owners have bought flood insurance policy which is a frightening fact.

What is national flood disaster program?

This program was introduced by American government just a few years ago. This program was introduced to save American nationals from the biggest threat. Ordinary home insurance does not cover most natural disasters including flood. Home owners always had to lose their entire house after being hit by flood but it is not going to happen anymore. It was passed as a part of 1968 act and the reason was destruction due to flood alongside the Mississippi river in early 1960s.

national flood insurance program

NFIP provide the opportunity for home owners to save their house against the flood loss. This insurance works through the participative communities of home owners. Flood insurance provides some extra help in rebuilding houses. Any house owner can also have extra flood insurance but he will have to get covered by national flood disaster program. You can get all the detailed information regarding procedure of acquiring national flood disaster program on the official website.

Some important myths and facts:

  1. National flood insurance program cannot be purchased by people livingĀ in areas with high flood risk:

Apparently the biggest myth of national flood insurance program is that people think they will not be able to benefit from flood insurance if they live in high risk areas. In fact, this insurance is specially designed for people whose property faces high flood risks. These areas were named as Special Flood Hazard Areas or SFHA. According to the act of 1968, lenders have to make sure that their borrower has purchased flood insurance before lending them. This clause is only applicable in SFHA. However, only Coastal Barrier Resources System are the only areas where flood insurance is not applicable.

  1. Flood insurance cannot be purchased immediately before or after any flood incident

This is the myth which can destroy the houses and important property of thousands of people therefore its correction is important. This is totally wrong and anyone can purchase flood insurance policy as well as national flood insurance program surcharge at any time. Although there is a thirty days time period in which the policy will become effective but there are certain exceptions to this rule also. You can search for these exceptions on the official website. As these exceptions only lower the waiting time period therefore it is confirm that insurance will be purchased at any time but its effectiveness will start after a specific time interval. The only basic rule is that it is never too late.

  1. Normal insurance policies of home owners cover flood disasters

Most people get trapped in the fancy wordings of insurance sales people. They do not try to search about every single detail therefore some facts are just taken as understood. One out of every five people in America thinks that his home owner insurance policy is covering flooding. This issue needs to be cleared in front of all those people therefore it is stated that no home owner policy will ever cover flood. You have to get national flood insurance program in order to save your property from flood. The need for national flood insurance policy arose due to absence of this coverage in other insurance policies.

  1. Only home owners can benefit from flood insurance

This is just a myth because most writers emphasise on home owners while writing about this issue. Commercial buildings and offices are ignored. The fact is that this insurance policy covers single homes, multifamily buildings and commercial buildings. The amount of coverage does differ in different buildings because a single family is insured for just $250000 for building and $100000 for contents. Same is the case with multifamily buildings and they are insured for $250000 for building and $100000 for contents. On the other hand commercial buildings are also insured and there coverage is $500000 for building and $500000 for contents. Therefore you do not have to step back if you do not read commercial building facts in any online information because your commercial building is definitely covered in this policy.

  1. A person, whose property was flooded before, cannot buy flood insurance

Knowing the rules and regulations of national flood insurance program is very important because there is a lot which normal people are unaware of. A lot of people step back from purchasing flood insurance just due to ignorance of national flood insurance program regulations. You should not be one of them so read all these myths carefully.

There is not rule like the one mentioned at number 5. Any person can purchase flood insurance at any time irrespective of the fact that his property got flooded before. The only rule here is that your community must participate in national flood insurance program.

  1. Federal disaster assistance will help to pay during the flood disaster

Most people think that they do not have to purchase flood insurance because federal disaster will pay them with easy terms and low interest rate. This money can help them to reinstate their lives and properties. This is also a myth because federal disaster assistance is not offered after every flood. This offering is made in less than fifty percent of flooding disasters. Interest rate on their loan is also higher as compared to national flood insurance program.

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