National Flood Insurance Program

Myths and Facts about 

the National Flood 

Insurance Program

F-002

MYTH: The NFIP encourages 

coastal development.

FACT: One of the NFIP’s primary objectives 

is to guide development away from high-flood 

risk areas. NFIP regulations minimize the 

impact of structures that are built in SFHAs by 

requiring them not to cause obstructions to the 

natural flow of floodwaters. Also, as a condition 

of community participation in the NFIP, those 

structures built within SFHAs must adhere 

to strict floodplain management regulations 

enforced by the community. 

In addition, the Coastal Barrier Resources Act 

(CBRA) of 1982 relies on the NFIP to discourage 

building in fragile coastal areas by prohibiting 

the sale of flood insurance in designated CBRA 

areas. While the NFIP does not prohibit property 

owners from building in these areas, any Federal 

financial assistance, including federally backed 

flood insurance, is prohibited. However, the 

CBRA does not prohibit privately financed development or insurance.

MYTH: Federal disaster assistance 

will pay for flood damage.

FACT: Before a community is eligible 

for disaster assistance, it must be declared a 

federal disaster area. Federal disaster assistance 

declarations are issued in less than 50 percent 

of flooding events. The premium for an NFIP 

policy, averaging a little over $500 a year, can be 

less expensive than the monthly payments on a 

federal disaster loan. 

Furthermore, if you are uninsured and receive 

federal disaster assistance after a flood, you must 

purchase flood insurance to remain eligible for 

future disaster relief. 

MYTH: The NFIP does not cover 

flooding resulting from hurricanes or the 

overflow of rivers or tidal waters. 

FACT: The NFIP defines covered flooding as 

a general and temporary condition during which 

the surface of normally dry land is partially or 

completely inundated. Two properties in the area 

or two or more acres must be affected. Flooding 

can be caused by: 

• Overflow of inland or tidal waters, or

• Unusual and rapid accumulation or runoff of 

surface waters from any source, such as heavy 

rainfall, or

• Mudflow, i.e., a river of liquid and flowing 

mud on the surfaces of normally dry 

land areas, or 

• Collapse or subsidence of land along the shore 

of a lake or other body of water, resulting from 

erosion or the effect of waves, or water currents exceeding normal, cyclical levels. 

For more information about the NFIP and flood insurance, call 

1-800-427-4661

or contact your insurance company or agent.

For an agent referral, call 1-888-435-6637

TDD 1-800-427-5593

http://www.fema.gov/business/nfip

http://www.floodsmart.gov

FEMA B-690 / Catalog No. 08094-3 (2/10)
Who needs flood insurance? Everyone!

And almost everyone in a participating community of the National Flood 

Insurance Program (NFIP) can buy flood insurance. Nationwide, more than 20,000 

communities have joined the Program. In some instances, people have been told 

that they cannot buy flood insurance because of where they live. To clear up this 

and other misconceptions about National Flood Insurance, the NFIP has compiled 

a list of common myths about the Program, and the real facts behind them, to give 

you the full story about this valuable protection.

MYTH: You can’t buy flood insurance if 

you are located in a high-flood risk area.

FACT:You can buy National Flood Insurance 

no matter where you live if your community 

participates in the NFIP, except in Coastal Barrier 

Resources System (CBRS) or other protected areas. 

The Program was created in 1968 to make federally backed flood insurance available to property 

owners who live in eligible communities. Flood 

insurance was then virtually unavailable from 

the private insurance industry. The Flood Disaster 

Protection Act of 1973, as amended, requires federally regulated lending institutions to make sure 

that mortgage loans secured by buildings in highflood risk areas are protected by flood insurance. 

Lenders should notify borrowers, prior to closing, 

that their property is located in a high-flood risk 

area and that National Flood Insurance is required. 

MYTH: You can’t buy flood insurance 

immediately before or during a flood.

FACT: You can purchase National Flood 

Insurance at any time. There is usually a 30-day 

waiting period after premium payment before the 

policy is effective, with the following exceptions:

1. If the initial purchase of flood insurance is 

in connection with the making, increasing, 

extending, or renewing of a loan, there is no 

waiting period. Coverage becomes effective at 

the time of the loan, provided application and 

payment of premium is made at or prior to 

loan closing.

2. If the initial purchase of flood insurance is 

made during the 13-month period following 

the effective date of a revised flood map for a 

community, there is a 1-day waiting period. 

This applies only where the Flood Insurance 

Rate Map (FIRM) is revised to show the building to be in a Special Flood Hazard Area 

(SFHA) when it had not been in an SFHA. 

The policy does not cover a "loss in progress," 

defined by the NFIP as a loss occurring as of 12:01 

a.m. on the first day of the policy term. In addition, you cannot increase the amount of insurance 

coverage you have during a loss in progress. 

MYTH: Homeowners insurance 

policies cover flooding.

FACT: Unfortunately, many home and 

business owners do not find out until it is too late 

that their homeowners and business multiperil 

policies do not cover flooding. The NFIP offers 

a separate policy that protects the single most 

important financial asset, which for most people 

is their home or business. 

Homeowners can include contents coverage in 

their NFIP policy. Residential and commercial 

renters can purchase contents coverage. Business 

owners can purchase flood insurance coverage for 

their buildings and contents/inventory and, by 

doing so, protect their livelihood.

MYTH: Flood insurance is only 

available for homeowners.

FACT: Most people who live in NFIP 

participating communities, including renters 

and condo unit owners, are eligible to purchase 

federally backed flood insurance. A maximum 

of $250,000 of building coverage is available for 

single-family residential buildings; $250,000 per 

unit for residential condominiums. The limit for 

contents coverage on all residential buildings is 

$100,000, which is also available to renters. 

Commercial structures can be insured to a limit 

of $500,000 for the building and $500,000 for the 

contents. The maximum insurance limit may not 

exceed the insurable value of the property.

MYTH: You can’t buy flood insurance if 

your property has been flooded.

FACT: You are still eligible to purchase flood 

insurance after your home, apartment, or business 

has been flooded, provided that your community 

is participating in the NFIP.

MYTH: Only residents of high-flood risk 

areas need to insure their property.

FACT: All areas are susceptible to flooding, 

although to varying degrees. If you live in a lowto-moderate flood risk area, it is advisable to have 

flood insurance. Nearly 25 percent of the NFIP’s 

claims come from outside high-flood risk areas. 

Residential and commercial property owners 

located in low-to-moderate risk areas should ask 

their agents if they are eligible for the Preferred 

Risk Policy, which provides inexpensive flood 

insurance protection.

MYTH: National Flood Insurance can only 

be purchased through the NFIP directly.

FACT: NFIP flood insurance is sold through 

private insurance companies and agents, and is 

backed by the federal government.

MYTH: The NFIP does not offer any 

type of basement coverage.

FACT: Yes it does. The NFIP defines a 

basement as any area of a building with a floor 

that is below ground level on all sides. While flood 

insurance does not cover basement improvements 

(such as finished walls, floors, or ceilings), or 

personal belongings kept in a basement (such 

as furniture and other contents), it does cover 

structural elements and essential equipment. 

The following items are covered under building 

coverage, as long as they are connected to a 

power source, if required, and installed in their 

functioning location:

• Sump pumps

• Well water tanks and pumps, cisterns, 

and the water in them

• Oil tanks and the oil in them, natural gas 

tanks and the gas in them

• Pumps and/or tanks used in conjunction 

with solar energy

• Furnaces, water heaters, air conditioners, 

and heat pumps

• Electrical junction and circuit breaker boxes 

and required utility connections

• Foundation elements

• Stairways, staircases, elevators, and dumbwaiters

• Unpainted drywall walls and ceilings, including 

nonflammable insulation

• Cleanup

The following items are covered under 

contents coverage:

• Clothes washers and dryers

• Food freezers and the food in them

The NFIP recommends both building and 

contents coverage for the broadest protection.