7 Flood Insurance Myths

Much of what you know about federal flood insurance may be flood insurance myth.

Palm Coast, FL – May 5, 2011Much of what you know about federal flood insurance may be flood insurance myth.

Myth #1: Hurricanes, not floods, are the No. 1 natural disaster and cause the biggest economic losses in the United States.
Hurricanes grab the headlines, but because floods happen in virtually every part of the country, they cause more losses than any other type of natural disaster.
What causes floods?
  • Rising rivers
  • Storms
  • Early snowmelts
  • Manmade problems from the construction of roads, shopping malls, homes, and industrial complexes
  • Hurricanes
Myth #2: Everyone who lives in a flood zone has to buy flood insurance.
Nope. You must buy flood insurance only if you meet all three of these criteria:
  • You buy a home in a special flood hazard area where there’s a 1% chance of flooding in any year.
  • You buy your home using a loan from a federally insured financial institution, or a Fannie Mae- or Freddie Mac-guaranteed loan.
If you don’t meet these three requirements, no one will make you buy flood insurance.

About 5.6 million home and small-business owners live in the more than 21,000 communities that participate in the flood insurance program, according to the Government Accountability Office.

Myth #3: Flood insurance is always expensive.
Flood insurance through the National Flood Insurance Program is sometimes expensive and sometimes cheap, depending on how much your home and its contents are worth.
  • It can cost up to $6,000 a year if you buy the highest possible coverage of $250,000 and live in a high-risk area.
  • It could cost $472 for $35,000 in damage coverage in a high-risk area.
  • It can cost as little as $129 a year for $20,000 of rebuilding coverage and $8,000 in contents in a low-risk area.
Premiums vary a lot based on where you live. If you want to buy $250,000 of building coverage and $100,000 of contents coverage, you’d pay about:
  • $6,000 in a high-risk coastal area
  • $2,700 in a high-risk inland area
  • $400 a year in a low-to-moderate-risk inland area.
Myth #4: Taxpayers are footing the bill for federal flood insurance.
The NFIP doesn’t spend any tax dollars. The government sets the premium rates high enough to cover flood insurance claims and operating expenses in an average historical loss year. The program can borrow money from the U.S. Treasury when losses are heavy, but has to pay those loans back with interest.
Myth #5: Companies sell flood insurance, so we don’t need government to compete.
Private flood insurance isn’t available for homes valued at less than $1 million and only four companies offer flood insurance to home owners with high-value property, according to a Government Accountability Office study. The National Flood Insurance Program is the only program offering low- and middle-income home owners flood insurance. If it disappeared, those home owners wouldn’t have another option.
Myth #6: I don’t own a beach house. People who do use flood insurance most.
Many people associate beachfront property with flooding, but more than 98% of the properties insured through the National Flood Insurance Program are inland. Most beach areas are off limits to the National Flood Insurance Program because the Coastal Barrier Resources Act bans federal support of beachfront development.
Myth #7: The flood insurance program subsidizes beachfront home owners.
Five of the top 12 states with the most number of years in which claims exceeded premiums are in the Midwest. Many of the states hardest hit by floods are nowhere near the beach:
  • Illinois
  • Kansas
  • Missouri
  • Ohio 
  • South Dakota
  • West Virginia
In the few coastal areas where the National Flood Insurance Program is allowed, the number of flood insurance policies issued represents only 2% of all NFIP policies. 

Dona DeZube, HouseLogic’s News Editor, has been writing about real estate for over two decades. She lives in a suburban Baltimore 1970s rancher that flooded in one corner of the basement when she first bought it. The flooding stopped after she added a drain to the front yard and gutters.

Source: HouseLogic [March 23]

3 replies
  1. George Edward Chuddy
    George Edward Chuddy says:

    Palm Coast – 100 Year Flood Design

    ‘ …Palm Coast has been designed to withstand what is termed ‘the 100 year Flood’.
    From: Richard Vaughan, director of environmental affairs for the ITT Community Development Corporation
    The PalmCoaster, Volume 11, Number 1, Winter/Spring, 1982, Front Cover Page, p 1., p 13.

    Hurricane in Palm Coast? Not Likely

    Like reports of Mark Twains’ death, reports of Florida hurricanes too have been greatly exaggerated.

    Over the years people have become accustomed to thinking of hurricanes as the exclusive property of Florida. One reason might be that the National Hurricane Center is headquartered in Miami. Almost every hurricane news report originates in Miami, regardless of where the storm is located, be it 50 miles or 2,000 miles from Flroida.

    What is a hurricane? it’s a large tropical cyclone with winds of at least 74 miles per hour, generally accompanied by heavy rains and high tides. The great spiral clouds of an average hurricane cover an area several hundred miles in diameter, although the area hit by the highest winds- those over 74 miles per hour-may only be 30 to 100 miles in diameter.

    Hurricanes form over warm , tropical ocean areas and move to higher lattitudes like great spinning tops. Their movement is quite erratic. They can suddenly change directions, make loops, slow up or stop-and later move at 10 to 20 miles per hour. This forward speed of the hurricane system increases the fury of the circular winds flowing around the hurricane’s eye, or center.

    The north American hurricane season runs from June 1 to November 30, with most storms occuring in August, September and October.

    The North Florida area isn’t immune to direct hits by hurricanes-no part of the United States’ gulf coast or eastern coastline is. But weather bureau records show that chances of a hurricane striking the Palm Coast region are considerably less than in most other coastal areas of the state and nation. Meteorologist Fred Crosby of the National Weather Service says,"the configuratioin of the coastline and the region’s latitude help explain the area’s relatively hurricane free record, which is based on the tracks of previous storms."

    "During the early stages of a tropocal storm," says Crosby, ‘The movement is generally from the east to the west. The direction gradually changes…this movement pattern would reduce the probabiltiy of one of them directly hitting the northeast Florida coast."

    Looking at the past 100 years, Flagler and Volusia counties hold an envious distinction neither county ever received a direct hit from a full hurricane moving directly in from the ocean.

    Although a total of 19 hurricane’s occuring during the 100-year period have posed serious threats and five have actually passed over the area, in each case those storms had already been over land for a number of hours and were greatly weakened in force and without the beach damage caused by ocean storms.

    —->The last hurricane to afffect Palm Coast was Hurricane David, which brushed the area in early September, 1979. David’s highest wind gust recorded in Palm Coast was 59 miles per hour, and though it did drop 4.16 inches of rain over a 48 -hour period, no flood-related water damage occurred. One of the main reasons damage did not occur is because Palm Coast has been designed to withstand, what is termed, "the 100-year flood." That, says Richard Vaughan, director of environmental affairs for ITT Community Development Corporation, means a flood that statistically could occur once in a hundred years could hit Palm Coast and no flood water would enter the houses.<——-

    Here is a probablity table based on National Weather Service data showing the chances of hurricane making landfall at varioius Gulf of Mexico and Eastern Seaboard areas:

    Probability of Tropical Cyclone Making Direct Landfall during any given year:

    Coastline areas:

    Corpus Christi, Texas 1 : 8

    Galveston, Texas 1 : 5

    New Orleans, Louisiana 1 : 5

    Pensacola, Florida 1 : 5

    Apalachiocola, Florida 1 : 6

    Tampa- St. Petersburg, Florida 1 : 10

    Miami, Florida 1 : 6

    Palm Coast, Florida 1 : 14

  2. George Edward Chuddy
    George Edward Chuddy says:

    Palm Coast – Richard Vaughn

    : Richard Vaughan, director of environmental affairs for the ITT Community Development Corporation
    The PalmCoaster, Volume 11, Number 1, Winter/Spring, 1982, Front Cover Page, p 1., p 13 :

    For those interested look at his impressive Bio:


    Richard Dugger Vaughan, Rear Admiral, U. S. Public Health Service (Ret.), 83, died peacefully at home in Ormond Beach, FL, on May 28, 2010. Services will be held in Ormond Beach, Wednesday, June 2…2:00 PM…St. James Episcopal Church, 44 S. Halifax Avenue. Viewing will be Tuesday, June 1…5:00 to 7:00 PM…Lohman Funeral Home, 733 Granada Avenue. Burial will take place at Arlington National Cemetery. Born in Evanston, Illinois to Beatrice and Merlin Vaughan, he spent his early years in Miami, FL…later graduating from Montgomery Blair High School in Silver Spring, Md. He served in the U.S. Army during World War II. In 1951, holding a Bachelor of Civil Engineering degree from Georgia Tech, Dick began a distinguished career in Environmental Engineering with the Public Health Service, rising to the rank of Assistant Surgeon General before retiring in 1971. He held Master of Civil Engineering and Master of Public Health degrees from the University of Michigan, and was a Diplomate of the American Academy of Environmental Engineering. Retirement brought him to the Halifax area as an executive with ITT Palm Coast. Dick and his wife, the former Laura M. Henderson of Sarasota, FL, became active in community affairs, with Dick serving as President of Civic Music and the Daytona Playhouse and as a member of Seaside Music Theater’s Advisory Board. He enjoyed being in musicals. Civic duties included the Board of Visitors for Embry-Riddle University and chairing the City of Ormond Beach Environmental Advisory Board. He served as Commodore of the Halifax River Yacht Club in 1999, later becoming Chairman of the Building Committee. He was a member of the Museum of Arts and Sciences and the Art League. He is survived by his wife Laura; son Robert, his wife Debbie and son Noah; daughter Cynthia Simmons, her husband Bruce, and children Jennifer, Steven, and Christine; daughter Kathryn Cejner, her husband Steve and children Blake and Lauren; sister Barbara Long, her son Curt and his wife of Pensacola, FL: beloved dog, Luvy; his adopted Simmons and Koch families; and the children of Children’s Musical Theatre Workshop. In lieu of flowers, donations may be made to Special Olympics or to Children’s Musical Theatre Workshop of Ormond Beach. Friends may send condolences http://www.LohmanFuneralHomes .com. Arrangements are under the careful supervision of Lohman Funeral Home Ormond.

  3. George Edward Chuddy
    George Edward Chuddy says:

    Highest calibre engineering and design capability.

    ‘….’The Palm Coast Project’…to provide the public with property in a quality environment, supported by the highest-calibre engineering and design capability…’


    Bio-Physical Environment and Pollution Control
    Issues of environment and ecology have captured the interest of government, industry, and most importantly, the public. Mirroring this concern for environmental quality, Palm Coast has committed major efforts toward preserving or enhancing the balance of nature in the planning and development of a future city for 750,000 people. The issue at hand can be simply stated: is it possible to have environment and development as complementary, parrallel objectives, or are theymutually antagonistic to each other?
    Page 130

    Page 131

    sewers and dumps–which tend to develop into ‘open’ systems. Conscious effort must now be made toward closed systems that harmonize with natural processes. Infinite natural assimilative capacity cannot be assumed any longer. Wherever and whenever possible, resources that have been turned into ‘waste’ should be recycled into the ecosystem and be reused, either by present or future generations. For example, tidal action, nutrients, plant species, and shellfish are one such seashore ecosystem.
    It is fashionable to speak of systems analysis as an almost magical route to the solution of many problems, and indeed it is a powerful and necessary tool. One must recognize, however, that the environmental system is made up of a bewildering number of subsystems that often are only distantly interdependent. Therefore, the status of existing technology does not allow precise definition of the paths of energy and materials passing back and forth between organisms and environment.
    In the order of priorities, therefore, it has been incumbent upon environmentalists to control first those critical factors that lead to unfavorable alteration of surroundings, wholly or largely as a byproduct of man’s actions. In the Palm Coast Project, major consideration has been given not only to preventing impairment of the air-water-land resource for beneficial human uses, but also to enhancing their properties as well. It has been management’s philosophy and objective to provide the public with property in a quality environment, supported by highest-calibre engineering and design capability. To that end, many significant studies and action programs initiated at the inception of the project have been carried out to establish the feasibility of environment controls on development. The first task is to foresee a potential problem, then study the alternatives, and then establish a control. The below problems have been studies, and solutions thereto have been proposed in a ‘first generation’ effort toward this new form of city

    A. Waterwater Treatment and Disposal…

    * FR:
    An Approach to a New City: Palm Coast,
    Dr. Norman Young and Dr. Stanley Dea.
    ( Reprinted from Environmental Affairs, Volume2, Number 1, Spring, 1972.)

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