Purchasing Flood Insurance Now Can Help Reduce Financial Woes Later
December 9, 2005, JACKSON, Miss. -- Property owners who purchase flood insurance now can alleviate future financial losses incurred in the aftermath of storms like Hurricane Katrina. Many victims along the Mississippi coast and well inland were unaware that their homeowners insurance does not cover flood damage. As the #1 natural disaster in the United States, the effects of Katrina are a hard reminder that flooding occurs everyday in all regions of the nation, in disasters large and small.
The National Flood Insurance Program (NFIP) was created for this reason. Securing flood insurance is a prudent and affordable first step for any home or business owner and is also available to renters. Managed by the Department of Homeland Security’s Federal Emergency Management Agency (FEMA), flood insurance is designed to provide an alternative to disaster assistance and reduce the ever-rising costs of rebuilding.
Insuring property outside a floodplain can be relatively inexpensive compared to the massive cost of reconstruction. Premiums for maximum coverage ($250,000 for homes and up to $100,000 for contents) can cost less than $1 a day. Small business structures are covered for up to $500,000 and their contents for a maximum of $500,000. Most policies take only 30 days to take effect once purchased.
Anyone obtaining a federally backed loan for a home in a Special Flood Hazard Area (SFHA), including most mortgages and disaster loans from the U.S. Small Business Administration (SBA), must purchase flood insurance.
Nearly 20,000 communities across the United States (including 273 in Mississippi) participate in the program. Communities that adopt and enforce floodplain management ordinances to reduce future flood damage are eligible for federally backed flood insurance. Community participation in the program is voluntary and there are about 4.7 million policy holders nationwide.
Flood damage is reduced by nearly $1 billion a year through communities implementing sound floodplain management. Costs for this year’s record hurricane season are currently projected to exceed $23 billion nationwide.
Congress established the NFIP in the National Flood Insurance Act of 1968 as an alternative to taxpayer-funded disaster relief for flood victims.
For information on the National Flood Insurance Program, call 1-800-480-2520 or visit FEMA’s Web site at www.fema.gov/nfip.
FEMA manages federal response and recovery efforts following any national incident. FEMA also initiates mitigation activities, works with state and local emergency managers, and manages the National Flood Insurance Program. FEMA became part of the U.S. Department of Homeland Security on March 1, 2003.
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