The vast majority of homeowner insurance policies will not include coverage for damage sustained by flooding. In most cases, should you desire flood coverage for your home, you will need to obtain supplemental insurance coverage. If your dwelling is located in a zone that is considered at high risk for floods, this type of coverage is available through the NFIP or National Flood Insurance Program, which was enacted by Congress in the late 1960s.
NFIP Insurance was birthed into existence in response to the incredible water damage that hurricanes and other natural disasters had caused to real estate in certain parts of the country. The Federal Emergency Management Agency (FEMA) is the governmental concern that is control of the NFIP.
The main objective of the NFIP is to mitigate the financial consequences of flooding on personal property. This is borne out through two main efforts. In the first place, FEMA assists and coaxes communities situated in these flood zones to take on sensible floodplain management strategies. The second way that the NFIP program helps is through the provision to homeowners of relatively inexpensive insurance against flooding in these high risk areas.
Before the NFIP was established, private insurance providers were highly resistant to insuring against floods. Consequently, flooding disasters were wreaking havoc and causing vast swaths of destruction to the uninsured. The government stepped in to alleviate this crisis. This insurance program is designed so that FEMA can join with the insurance providers in mitigating the financial repercussions of flood damage in NFIP deemed floodplains.
Like normal, those who live in these identified flood zones buy insurance through a private insurance provider. However, in the case of a policyholder’s home being damaged by a flood, a part of the claim dollar amount is handled by the NFIP. By spreading out the exposure to loss in high-risk areas, insurance is made the more affordable to you, the homeowner, and the insurance company.
Banks and other lenders will require a prospective homeowner to obtain NFIP insurance, should the dwelling be located in an NFIP floodplain zone. Note that this kind of insurance is also available regardless of whether the property is considered high risk or not. Often times it is worth the extra outlay when considering the peace of mind in knowing that you are protected in a flood event.