Understanding Flood Insurance

If your home or apartment gets flooded, will insurance cover the damage?

The answer depends on whether or not you have flood insurance. Regular homeowner’s insurance or renter’s insurance typically does not cover flood losses. For flood coverage, you will need a policy offered through the Federal government’s National Flood Insurance Program.

All residents of Dane County are encouraged to assess their flood risk and consider buying flood insurance. There are a number of persistent misperceptions about flood insurance. For your own protection, it is important to understand the truth about flood damage and flood insurance.

1. Myth: Only people that live in the “floodplain” need flood insurance.
   • This is simply not true. Based on past experience, many of the flood losses and damages in Dane County occur outside of mapped flood hazard areas and floodplains. A case in point is the recent catastrophic flooding of August 20, 2018. In this event, less than 4% of the almost 2,000 homes damaged by flood water were actually located in the mapped floodplain. That means that 96% of properties damaged in the flood were not located in a floodplain. The floodplain maps are a good starting point for assessing your flood risk, but there are many other factors that go into determining this risk. All homeowners (and renters) – even those who do not live in a mapped floodplain – should assess their risks and seriously considering buying flood insurance.
2. Myth: Flood insurance is too expensive.
   • The price of flood insurance is based on standardized rates and depends on the property’s value and exposure to flood risk. As with any insurance policy, premiums are directly related to risk. Insurance premiums for properties with a high flood risk, such as those located within a mapped floodplain, are higher than the premiums for properties located in a lesser risk area. Nation-wide, the average flood insurance premium is about $660 per year.
3. Myth: Government assistance will be available if I don’t have flood insurance.
   • People often assume that government assistance will cover the cost of repair after a flood. Again, this is simply not true. This misperception often leads to some real heartache for people who have had property damage or have lost belongings in a flood. Federal disaster funds are rarely available. Even when available, federal disaster aid programs do not cover the full extent of losses. In addition, county and local governments simply do not have general disaster relief or flood relief funds to assist with flood repair or restoration of private property.

Unless a property owner has flood insurance, damages to buildings and personal possessions are typically uninsured losses. Subsequent costs for repair and replacement are almost always borne by the affected property owner. This is often a hard, cold reality when it happens.