More on Home Insurance
More on Home Insurance
If your home or personal property are damaged by flooding and you don't have flood insurance, you can apply for federal government assistance if certain conditions are met.
Published September 10, 2019
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Flooding is the most expensive and pervasive natural catastrophe, affecting 98% of counties and accounting for 90% of all natural disasters in the United States. No one is immune to a flood disaster, and yet it’s estimated that only around 15% of homeowners have a flood insurance policy.
There are several reasons for this: almost half of homeowners incorrectly think their homeowners insurance covers flooding, some have already paid off their home and no longer have the lender requirement, and some have simply calculated that the minuscule chance of their home being flooded isn’t worth the cost of flood insurance.
But the fact is that homeowners without coverage are impacted by flood events every single day. If you don’t have flood insurance, you can still find a safety net. The U.S. government provides grants through the Federal Emergency Management Agency (FEMA), and loans through the Small Business Administration (SBA) to help you get back on your feet.
If you don’t have flood insurance and your home is damaged by floods, you can apply for federal government assistance
Federal assistance is available in the form of SBA Disaster Loans and FEMA grants
SBA loans and FEMA grants both have strict eligibility requirements
If your home and personal belongings are damaged by flooding and you don’t have flood insurance, you have the option of applying for federal disaster relief in the form of grants or loans to help you with everything from meals to home repair.
There are two main forms of federal disaster relief:
|Assistance type||Maximum payout|
|SBA loan to repair or rebuild a home||$200,000|
|SBA loan to replace or repair personal property (homeowners and renters)||$40,000|
|SBA loan to refinance mortgage||Up to the amount of the loan for repair or replacement ($200,000 max)|
|FEMA grant for loans and repairs||$33,000|
To see if your county is in a declared disaster area, click here.
An SBA disaster loan provides relief if your home and/or personal property are damaged by flooding, but you need to prove that the damage isn’t covered by insurance. If you’re not eligible for credit elsewhere, the maximum interest rate on SBA disaster loans is 4%. If you can get credit elsewhere, the maximum interest rate is 8%. Loan repayment terms last up to 30 years. With SBA disaster loans, you may be eligible for:
According to the SBA, they generally approve around 50% of the disaster applications that they receive. The majority of declined applications are because of low credit scores. If you’re declined an SBA disaster loan because of a low credit score, the SBA will refer you to FEMA’s unmet need program for a potential grant.
Click here to apply for an SBA loan.
Another option if you’re uninsured is to apply for a FEMA grant through the FEMA Individuals and Households Program (IHP). You need to live in a federally recognized disaster area in order to qualify for an IHP grant.
The purpose of this program is twofold: to provide relief for folks without flood insurance, and to help those with flood insurance pay for disaster-related expenses not covered by their policy. If you’re getting a grant and you don’t have insurance, you don’t need to pay back the federal government. If you have insurance and you’re getting an IHP grant, you’re required to pay back the money, but you can use your insurance funds to do so.
The limit for FEMA IHP grants is $33,000. The money can only be used for temporary housing, construction and repairs, so the amount paid out to recipients is generally far less than the maximum amount offered. According to FEMA, the average payout of IHP grants is around $5,000. FEMA disaster grant money can be used for the following reasons:
The federal government can provide disaster relief funding in several other ways, including emergency funds for utility bills, unemployment assistance, mortgage payments, tax relief, and more. Check out FEMA disaster-relief services here.
If you’re buying last-minute flood insurance and are concerned about the NFIP’s 30-day waiting period before your policy goes into effect, you may be able to get a private flood insurance policy with a shorter waiting period. Neptune flood insurance, for example, has a waiting period of just 10 days vs. the 30 under the NFIP.
Have questions about flood insurance? Talk to a licensed agent at Policygenius. We work with several carriers that provide both NFIP and private flood insurance, depending on your coverage needs.
Pat Howard is a homeowners insurance editor at Policygenius in New York City. He has written extensively about home insurance cost, coverage, and companies since 2018, and his insights have been featured on Investopedia, Lifehacker, MSN, Zola, HerMoney, and Property Casualty 360.
Pat has a B.A. in journalism from Michigan State University.
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