When Tropical Storm Debby hit Pinellas County, Florida, in early August, Danielle Jensen thought her home was protected by flood insurance from the National Flood Insurance Program (NFIP). After all, she spent $8,600 on a policy administered directly by the Federal Emergency Management Agency (FEMA).
But when insurance adjusters came along, they denied her claim, through no fault of her own. A “previous loss” report revealed that the previous owner had filed a flood claim but hadn’t completed the repairs before the claim was paid. Everything from the condition of the home to the serial numbers on the appliances was identical to the previous claim, leaving her family on the hook for nearly $100,000 in damages.
Not to be missed
“It’s no use unless we flood again after we do all these repairs,” Jensen told Tampa Bay’s News Channel 8. “Then we could use it because it’s all new materials.”
A denial like this can happen to anyone living in one of the approximately 23,000 NFIP communities if owners are unaware of their property’s past.
How the National Flood Insurance Program Works
The National Flood Insurance Program is offered to homeowners by more than 50 insurance companies and directly by FEMA with NFIP Direct. According to FEMA, anyone living in a “high flood risk area” and with a mortgage from a government-backed lender must purchase flood insurance.
The insurance policy can cover both the home and the owner’s belongings. Building coverage includes things like the foundation and electrical and plumbing systems, while contents coverage can help homeowners recover personal belongings like clothing, electronics and furniture. According to government data, more than $79 billion has been paid out for nearly 1.9 million claims filed throughout the program’s lifespan.
Unfortunately, traditional homeowners and renters insurance policies do not cover flood damage. Additionally, if your home has already received federal disaster assistance, you are required to carry flood insurance for as long as you live in the property. This does not guarantee that all situations will be covered. In Jensen’s case, the actions of the previous owner led to his flood insurance claim being denied.
Under the current NFIP claims manual, a claim may be denied if there was a prior claim for flood damage and no repairs were made with the policy payment.
But starting October 1, 2024, sellers will be legally required to disclose all previous flood-related claims and payments to home buyers so they can avoid this trap.
Learn more: These 5 Magic Hacks Will Help You Boost America’s Net Worth in 2024, and You Can Do Each Step in Just Minutes. Here’s How
What can I do to protect my home from flood insurance claim denials?
The problem so far for communities participating in the NFIP is that federal law does not require disclosure of past flood insurance claims or the results of those claims. Any disclosure of claims information without the consent of the applicant or current homeowner has been considered a violation of the Privacy Act, meaning the homeowner has not had to provide information about past claims during the home sale process.
Until Florida House Bill 1049 goes into effect, it’s a good idea to get a clear yes or no regarding the seller’s past claims on the disclosure form before purchasing a home in a high-risk flood zone. Any gaps in knowledge or uncertain answers can be a red flag. You can also work with your real estate agent to get as much information as possible before closing, including asking the seller for a complete report of past losses.
State Congressional Representatives Kathy Castor and Gus Bilirakis also told News Channel 8’s Better Call Behnken that they are working on broader solutions to protect flood victims and are urging those whose claims have been denied to seek help. They plan to increase competition among providers to lower flood insurance rates and require more transparency to prevent what happened to Jensen from happening again.
What to read next
This article is provided for informational purposes only and should not be construed as advice. It is provided without warranty of any kind.
