What Should You Do If You Have Uninsured Flood Damage? Will FEMA Help?
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Flood insurance is the best way to protect yourself against extensive losses from flooding. 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 flooding, you still have options. The federal government provides grants (through FEMA) and loans (through the SBA) that may help you repair flood damage to your home and cover certain other expenses.
FEMA disaster grants
FEMA (Federal Emergency Management Agency) provides grants through its Individuals and Households Program, or IHP, to people whose homes are in a federally recognized disaster area, which can include flooded areas. The IHP gives swift grants to return your house or apartment to habitable condition after a disaster. Officially, grants can reach up to $42,500, but the payouts tend to be much lower. The average grant for houses flooded by Hurricane Sandy in 2012, for example, was $8,016.
These grants are meant for expenses not covered by flood insurance. Everyone may apply, regardless of income level or whether they have flood insurance. If you have flood insurance, you just have to pay back the grant with your flood insurance payout once you receive it.
What does a FEMA IHP grant cover?
If you have no flood insurance, FEMA's IHP grant can help you in specific ways after a flood or other disaster. This includes paying for the cost of repairing your home's structure and additional living expenses you incur as a result of being displaced.
Keep in mind that you'll only receive enough money to make your home safe to live in, not return it to its pre-disaster condition.
For example, if your house is flooded in a guest bedroom where no one regularly sleeps, a FEMA grant would not pay for that extra bed. As a result, most people receive far less than the maximum payout of $42,500. This is much less coverage than National Flood Insurance Program (NFIP) insurance, which covers up to $250,000 to repair or replace your home and belongings.
Here are some things IHP grants may cover:
- Repair assistance: You can get money from FEMA to repair your home, including its structure, electrical and HVAC systems and water and sewage lines. However, you shouldn't expect an IHP grant to cover the full expense of bringing your house back to pre-disaster condition. The goal is simply to make your home habitable again.
- Temporary housing assistance: This pays for the cost of an apartment or other temporary living arrangement if your house is uninhabitable due to a disaster. These funds are typically given in one- to three-month increments, for up to 18 months after a disaster.
- Other needs assistance: You can claim a few other items under an IHP grant. These include medical, dental and funeral expenses, and necessary purchases related to disaster recovery, such as a chain saw or dehumidifier. You may also be able to claim losses for personal property like clothing, but only if you've been denied a Small Business Administration (SBA) loan to pay for them.
Who is eligible for FEMA IHP grants?
IHP grants have 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 geographic boundaries, usually set by the county.
For example, in the case of Hurricane Michael in 2018, residents of 12 counties in the Florida Panhandle were eligible for assistance. Anyone with damage in a different Florida county wasn't eligible for an IHP grant.
Additional requirements to qualify for an IHP grant include:
- The home is inaccessible or uninhabitable due to the disaster.
- The home is where you live for the majority of the year.
- You have necessary expenses or needs not covered by insurance or another source.
- At least one resident is a U.S. citizen, noncitizen national or otherwise qualified resident.
Finally, if you live in a Special Flood Hazard Area and do not have flood insurance, you're only allowed to make one IHP claim. If you don't buy flood insurance after that, any claims for future disasters will be denied.
Home repair loans from the SBA
If your repairs exceed the maximum payout for an IHP grant or you're ineligible to receive funds, one alternative is a homeowners disaster loan from the SBA.
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. Repayment terms are set on a case-by-case basis and consider your ability to pay.
An SBA disaster loan is worth considering, even if you don't think you'll use it. You are not obligated to accept the money, and applying may make you eligible to apply for a FEMA grant r.
What you can use an SBA disaster loan for
Unlike FEMA IHP grants, SBA loans have fairly broad terms regarding the use of the money. It can be used to repair or replace your home and your personal property, including a flooded car not covered by comprehensive car insurance. The biggest limitation is that you can't use the money to upgrade your home or make additions. You can only use it to return your house to its previous condition.
Type | What it covers | Limit |
|---|---|---|
| Residence | Repair or replacement of primary residence to pre-disaster condition | $500,000 |
| Personal property | Replacement of clothing, furniture, cars, appliances and other property | $100,000 |
Eligibility requirements
Like FEMA grants, SBA disaster relief loans are only available for homes located in federally declared disaster areas. Also, you can only use SBA home disaster loans to repair your primary residence. It won't cover business-related damages — like a home office — but you can apply for a separate business disaster loan.
If you can't get a loan elsewhere to help rebuild your home, the SBA's interest rate won't exceed 4%. If you are able to get one from another lender, the maximum is 8%. If you are borrowing more than $25,000, you'll likely have to provide collateral. All borrowers must also have a satisfactory credit history and demonstrate the ability to repay the loan within the appropriate time frame.
Private flood insurance has a shorter waiting period
You have to wait 30 days for NFIP flood insurance to go into effect. If you're concerned about an upcoming storm or rainy season and need coverage sooner, private flood insurance may offer a shorter waiting period of 10 to 14 days.
Of course, private flood insurance cannot cover you for damage that has already occurred or happens in the waiting period. And companies typically stop selling flood insurance if a major storm is imminent.
There are also a few exceptions to the waiting period rule. Both public and private flood insurance go into effect with no waiting period if you are buying a new property or adding a new mortgage.
But if you've already had flood damage, consider purchasing flood insurance to protect yourself in the future. You already know your home is at risk of flooding again. Plus, you may be required to get coverage to qualify for future grant money from FEMA.
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