About Flood Insurance

About Flood Insurance;
Or should I wast my money on insurance that is not required

presented by Kathy Bayes Insurance Agency

Flood Insurance is a Federal Government Insurance program. Claims are guaranteed 100% by the Federal Emergency Management Agency (FEMA). Congress passed the National Flood Insurance Act in 1968, and from then until 1983, federally guaranteed flood insurance was sold only by the National Flood Insurance Program (NFIP). Then the rules changed and private companies began writing the program.

As most of you know, rising water is not covered by your home insurance. I sincerely hope you did not learn this the hard way, at a time when you thought you were turning in a claim to your insurance agent. The Texas homeowner policy, form "B" section on water damage states in the section under, Perils Covered: "Accidental discharge, leakage or overflow of water or steam from within a plumbing, heating or air conditioning system or household appliance." Then, in the same section under: Exclusions states: "We do not cover loss caused by or resulting from flood, surface water, waves, tidal water or tidal waves, overflow of streams or other bodies of water or spray from any of these whether or not driven by wind. We do not cover an ensuing loss by theft or attempted theft or any act or attempted act of stealing." *(*This is only as a condition of a flood situation and means that you actually lose some of the coverage you normally would have under your policy).

What you may not know is that only 10% of all flood disasters qualify for financial assistance, this money is only a loan, repayable by you (with interest), and first you must show proof of the existence of flood insurance. Over 20% of all floods happen in low-risk areas. Recent flood damage in the Midwest totaled 12 billion dollars! Over 50% of those losses were in low-risk areas. Last, but not least, if your home is in a low risk zone the premium is very affordable. A policy covering $250,000.00 on your home and $60,000.00 on your contents can cost as little as $296.00 a year, many people spend more than that in a year on dog food. However, if a loan provider does not require the coverage, the coverage will not be effective for 30 days from the application date.

Floods can also devastate businesses. Your business does not have to be near water to be at risk. Several inches of rain in a short period of time can cause flood damage, even in areas not normally at risk. Only a fraction of businesses and homes exposed to the risk of flood damage are insured.

"But I don’t own my business building or home, I just rent or lease!" Content coverage is available in most instances and your possessions are at risk along with the building.

Floods are random in selection. They happen anytime, anywhere, even in the same place twice. A prior year’s occurrence does not reduce your risk of flood. Floods have become the leading cause of property damage from natural disasters, with more homes destroyed by flood than by fire. Yet, we all fear to risk our homes without fire insurance. Estimates for flood damage have risen to over $4 billion each year. If you are going to be a statistic, please be an insured one.

Please contact your insurance agent and at least get a quote on flood coverage for your home or business. If you don’t want to insure the full value, at least buy some coverage. You may buy any amount from $20,000.00 to $250,000.00 with content amounts from $5,000.00 to $60,000.00. In the event you only cover a portion of your value, you will at least be able to collect the amount you have purchased and also increase your potential for Federal assistance.

Consider this:

Home Worth     $78,000
Contents Worth     $35,000
Mortgage Payment     $550/ month
Monthly Shelter Cost     $550/ month

Home Worth     $0
Contents Worth     $0
Mortgage Payment     $550/ month
Temporary Housing     $600/ month
Contents Replacement     $350/ month
FEMA Loan*     $275/ month
Flood Insurance (now required)     $25/ month
Personal Loan**     $600/ month
Monthly Shelter Costs     $2400/ month

(* FEMA loan assistance is only available on declared disasters)
(**If your home and all personal possessions are destroyed, will you be eligible for a personal loan?) This is only an example of loss.

NFIP (National Flood Insurance Program) FACTS:

  • Sets all of the rules and oversees the entire Flood Program.
  • Provides coverage to all insured risks including renters, homeowners and business owners.
  • Offers various Flood coverages, depending on your property location within the Flood Zone.

FEMA (Federal Emergency Management Agency) Facts:

  • Only 3% of Flood disasters qualify for Federal assistance.
  • The average Federal grant is $3,300.00. To be used for basic needs only, such as food and clothing.
  • Assistance is a Small Business Administration loan repayable at 4-8% interest and is available when you show proof of a current policy.


  • Mortgage payments don’t stop, even if your home is destroyed.
  • The average annual premium for Flood Insurance is only $300 per year.

This information is not meant to be frightening to you, only to inform you of the possibility of a disaster that is very real and could happen to anyone.

My heart goes out to all of the Central Texas flood victims. May God be with them all and speed the healing of heart and soul so their lives may once again be in order.

If you would like to contact me you may do so at:

Kathy Bayes Insurance agency
1108 Main Street
Bastrop, Texas 78602
(512) 303-3008 or (888) 303-3009
E- Mail:kathy@insurance4texas.com