How The Flood Insurance Act May Affect You

The National Flood Insurance Act of 1968 was created to protect people who live in flood plains. But you don’t have to live in a flood plain to take advantage of the insurance. Here’s what you need to know regarding how the act may affect you.

Required Flood Insurance
If you live in a Special Flood Hazard Area, otherwise an area that is prone to flooding, your mortgage lender will require that you purchase flood insurance for an approval. You will know that you are in a flood plain because the lender is required under this act to let you know before you sign any papers.

Two Insurance Policies
If you live in one of these areas, you will need to carry standard homeowners insurance plus additional flood insurance policy. Even if you don’t live in a flood plain, it’s a good idea to have flood insurance, for emergency situations.

Required for Renters
Even if you don’t own your home, if you live in a flood plain, flood insurance may be required by the property manager. The maximum coverage limits will be different for a renter, so the rates may be cheaper. Before you move in to a condo or apartment in a coastal, or otherwise flood prone area, check with the property manager for information on the requirements.

Federal Disasters
Many people assume that if their home is damaged because of severe flooding that the federal disaster assistance program will pay for the damage. Unfortunately, this isn’t always true. An area must be declared a federal disaster before any benefits will be paid under this program, and this only happens in about half of the areas affected by flooding. The primary source of assistance from the federal disaster assistance program is in the form of a low interest loan. With flood insurance your premiums cover any damage and don’t require repayment.

Rain and Other Events
You don’t have to live in a low lying coastal area to be considered flood prone. Low lying areas that are prone to hard driving rains, areas where mudslides may occur, and even homes along lakes that are prone to frequent rising can be considered flood zones. These areas will also require flood insurance to protect your home and assets.

The National Flood Insurance Act may affect you even if you don’t live on the ocean. Be sure to check in to the local area and see if the act will affect your insurance requirements.

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