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FDIC Consumer News: Prepare Your Finances to Weather the Storm

FDIC Consumer News - August 2020

August Article Monthly Image - a small house floating in a raft over flooded waters

Understand the financial impacts of flood disasters

Flood damage to your home or business can be stressful and financially devastating. With adequate flood insurance coverage and your important documents organized and stored appropriately, you can recover quicker from the unforeseen disaster.

Your bank or lender may require you to purchase flood insurance if your home or business is located in a designated flood hazard area. The Federal Emergency Management Agency’s (FEMA) National Flood Insurance Program (NFIP) works with insurance companies to offer you various insurance coverage options. Coverage for a building and for the contents of a building are purchased separately. Private flood insurance coverage may be available to you outside of the NFIP.

Please note that many homeowner policies might cover water damage from broken pipes, but not flood damages from natural events or disasters, though you may choose to add flood insurance voluntarily. Contact your insurance provider regarding specific coverage information.

NFIP coverage

Residential properties

If you own a single family home, condominium, or townhouse, the NFIP offers flood insurance policies to cover your home’s structure and your belongings. When the structure of your home is insured, your home’s foundation, electrical, plumbing, finishing, and appliances are typically covered. Personal items such as, clothing, electronics, artwork, memorabilia, etc. would be covered under the contents insurance, if purchased. Coverage limits under the NFIP are $250,000 for the building and $100,000 for the contents of your home. Unless you have contents coverage, your flood-damaged belongings are not covered.

Commercial properties

If you own a commercial property, the NFIP generally allows you to obtain up to $500,000 of coverage for the building and separate $500,000 of coverage for the contents.

NFIP terms and expiration

When you purchase a NFIP policy, there is usually a 30-day waiting period before your policy goes into effect; however, there are exceptions.

For more information, visit FEMA.

NFIP flood insurance coverage has a term of one year, with the effective date stated in your policy; however, you will remain covered for 30 days after the expiration date. Within this 30-day grace period, claims for losses will be honored, but the full renewal premium must be paid by the end of the 30-day grace period. If your flood insurance premium is not paid within the grace period, you no longer have coverage.

For more information on NFIP and what it can offer you, visit National Flood Insurance Program.

Organize important documents

Keeping these items in a designated location for safekeeping is helpful when dealing with a flood disaster or emergency:

Safely store emergency records and information

Additional resources:

FloodSmart for Consumers

Emergency Financial First Aid Kit (EFFAK)

For more consumer resources, visit, or go to the FDIC Knowledge Center. You can also call the FDIC toll-free at 1-877-ASK-FDIC (1-877-275-3342). Please send your story ideas or comments to You can subscribe to this and other free FDIC publications to keep informed!

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