Flood insurance is the best way to protect yourself against catastrophic flood losses. the damage is almost never covered by standard homeowners or renters insurance policies.
But if you don’t have coverage and your home was damaged by a flood, you’re not completely without resources. The federal government provides grants (through FEMA) and loans (through SBA) that can help you repair flood damage to your home, as well as cover other expenses.
fema disaster grants
FEMA’s Individuals and Households Program, or IHP, grants are available to people whose homes are located in a federally recognized disaster area, which may include flooding. ihp grants provide quick grants to get your house or apartment back to livable condition after a disaster. Officially, grants can go up to $33,000, but payments tend to be much lower than that: The average grant for homes flooded by Hurricane Sandy in 2012, for example, was $8,016.
what does a fema ihp grant cover?
if you don’t have flood insurance, fema’s ihp grant can help you in a targeted way after a flood or other disaster. this includes paying for the cost of repairing the structure of your home and any additional living expenses you incur as a result of being displaced from your home.
Keep in mind that you will only receive enough money to make your home habitable again, not to return it to its pre-disaster condition. it only covers enough to make your home safe to live in.
here are some things ihp grants can cover:
who is eligible for fema ihp grants?
ihp grants have specific eligibility requirements. First, only people who live in a federally recognized disaster area can apply. this assignment is made on a case-by-case basis and has specific geographic boundaries, usually set by the county.
Additional requirements to qualify for an ihp grant include:
Finally, if you live in a Special Flood Hazard Area and don’t have flood insurance, you can only file an IHP claim. after that, you must purchase flood insurance. if you don’t, all claims for the following disasters will be denied.
small business administration home repair loans
if you exceed the maximum payment for an ihp grant or are not eligible to receive funds, an alternative is a small business administration homeowners disaster loan.
Because it’s a loan, you’ll eventually have to pay it back, but they have low interest rates and long repayment periods, up to 30 years. payment terms are established on a case-by-case basis and take into account your ability to pay.
We recommend that you apply for an sba disaster loan if you are eligible, even if you think you won’t use it. You are not required to accept the money, and the application may allow you to apply for fema grant money that you would not otherwise be eligible for.
what you can use an sba disaster loan for
unlike fema ihp grants, sba loans have fairly broad terms regarding what you can use the money for. The money can be used to repair or replace both your home and personal property, including a flooded car, if you’re not covered by comprehensive auto insurance. the most significant limitation is that you cannot use the money to improve your home or make additions. you can only use it to return your house to its previous state.
sba disaster relief loans are only available to homeowners whose properties are in federally declared disaster areas, such as grants from fema. In addition, you can only use SBA Home Disaster Loans to repair your primary residence and will not cover business-related damage, such as if you have a home office, although you can apply for a Business Disaster Loan. separately.
If you can’t get a loan elsewhere to help rebuild your home, the interest rate offered by the SBA will not exceed 4%. if you can get one from another lender, the maximum is 8%. If you’re borrowing more than $25,000, you’ll likely need to provide some form of collateral. All borrowers must also have a satisfactory credit history and demonstrate the ability to repay the loan within the appropriate term.
private flood insurance has a shorter waiting period
Of course, private flood insurance can’t cover you for damage that has already happened or happens within your waiting period, and insurers typically stop selling flood insurance if a major storm is imminent.
There are also some exceptions to the waiting period rule. Both public and private flood insurance go into effect with no waiting period if you’re buying a new property or adding a new mortgage.
But if you’ve already experienced flood damage, we recommend purchasing flood insurance to protect yourself in the future. you already know your home is at risk of flooding, and there’s no reason it shouldn’t flood again. In addition, you may need to purchase coverage to qualify for a future FEMA grant.