| When asked to name the worst possible home disaster we could experience, most homeowners would say "fire" without skipping a beat. Floods, in contrast, are less feared. "It's only water," we say, believing that under such circumstances, many of our belongings could be salvaged. But that's not always the case, as many California residents are painfully aware. Like fires, floods can strike anytime and anywhere, but their potential for devastation is far more widespread. As floods move and gain momentum, they destroy everything in their paths. And since floods have the strength to travel great distances, simply living far from the water's edge doesn't make you immune to the hazards of flood damage. A lifetime of memories and carefully planned investments may be snuffed out in a matter of minutes.
According to the Federal Emergency Management Agency, 90 percent of all natural disasters in the United States involve flooding, and between 25 percent and 30 percent of flood insurance claims come from regions designated as "low-risk." It's important to remember that all of us live in flood-prone areas; the distinction is to what degree we are prone.
Flood myths abound, and most of them are clarified only after a flood rages through our homes, when it's too late. Two of the more common myths are (1) home owner's insurance policies cover flood damage (they don't); and (2) if a flood destroys your home, the government will take care of you (it probably won't).
The majority of floods, according to FEMA, are either too small or too local to qualify for federal assistance. And on the off-chance that you do indeed qualify for federal assistance, it's probably going to come in the form of either grants or loans. Grants aren't likely to offset your losses -- they may barely cover them -- so it's doubtful you'll be able to rebuild based on the assistance you receive. Disaster home loans have an average repayment plan of 18.5 years and must be repaid with interest -- and that's on top of your existing mortgage loan.
If you're denied federal assistance either because flooding occurred only in your neighborhood or worse yet, in your home alone, you going to have to navigate these muddy waters (no pun intended) on your own. But you do have a defense that could play a significant role in coming to your rescue. First, the National Flood Insurance Program (NFIP), which works in cooperation with major insurance companies and independent insurance agents throughout the United States. Congress created NFIP in an effort to provide insurance for property owners in flood-prone communities. The communities receive flood insurance on the condition that they implement and enforce measures to reduce the possibilities of future damage.
Even if your area isn't declared a federal disaster, flood insurance claims are paid under NFIP. And the annual premium on flood insurance is relatively affordable; in low-risk areas, for example, annual premiums may run less than $100. All things considered, flood insurance is a much cheaper route than the monthly payment for the typical disaster home loan, and chances are good you're eligible for it -- the majority of the nation's more flood-prone communities have joined the NFIP program.
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