Flood Insurance and Credit for Disaster Victims

Publication Number 490-310, August 1996

General

Loss due to flooding is not covered by most homeowner's insurance policies. Many people are fortunate enough to live in a community participating in the National Flood Insurance Program, in which case they are covered. For those flood or hurricane victims not so lucky, there are loans and financial assistance programs available.

Tips

The Red Cross grants assistance for immediate building repairs and living expenses when no other immediate assistance is available.
Many merchants and dealers extend credit for feed, equipment, and rehabilitation of buildings and land.
Farm Service Agency (USDA) offers agricultural loans only when other credit is not available. Qualifying farmers in disaster areas can get short-, medium-, or long-term loans with moderate interest rates.
Small Business Administration offers medium- and long-term loans for rehabilitation of non-farm homes and small businesses. Interest rates are moderate.
Commercial and Federal land banks offer loans with moderately low interest rates for home repairs, improvements, land equipment and livestock.
Insurance companies offer long-term loans at relatively high interest rates for home repair, improvements, land equipment and livestock.
- Your house, including rental units that are part of the building and any attachments to the building, like a garage.
- Any structures on your grounds that are not attached to your house such as a garage, tool shed, pool cabana, or gazebo.
- The lawn, trees and shrubs on your property.
- Vacant land you own or rent, with the exception of farmland.
- Cemetery plots or burial vaults you own.
- Personal possessions you or members of your household own or use anywhere in the world. This includes the contents of your home and any structures on your grounds. It also covers any possessions that guests bring to your home, but it does not include the possessions of any tenants you may have living in your home.
- Any items friends have loaned to you that you're keeping on your property.
- Your living expenses, if your house is unlivable due to damage.
- Rental payments, if you normally rent part of your house but it is unlivable due to damage.
- Legal responsibility for unauthorized use of your credit cards, checks forged under your name, or counterfeit currency accepted in good faith.
- Settlements, medical expenses, defense, and court costs involved in claims brought against you for bodily injury to others or damage to the property of others.

Contracts

Hold on to your money until it has been completely earned by the person you have hired to do a job. Even under critical emergency conditions, complete, good-quality repairs must be done or damage and deterioration will appear at a future date. Strengthen the patches and wait patiently until you can be sure of a good job. Then, start with a clear, complete contract.

Contracts are the best way to handle matters. A contract is a promise or set of promises for which the law gives a remedy in case of breach, or the law in some way recognizes their performance as a duty.

Three Elements of a Contract:

An agreement (or an offer and acceptance) to do specific things in a specific manner. State clearly, simply, and completely all that is to be done. If a beginning and finishing date are involved, state them in the body of the contract. A good item to include in a contract for home rebuilding is that materials and procedures used will be those provided for in minimum standards of the current CABO Code (Council of American Building Officials). Some of these minimum standards are discussed in later articles.
Between Competent Parties -- Parties involved must be at least 18 years of age and mentally competent (not insane, retarded, or suffering mental problems of aging).
For a Consideration -- Something of value changes hands, usually money.

Signatures of parties making the agreement and the date are essential. If money or other considerations change hands before the entire contract is completed, signed receipts should also change hands.

Look for the words, "Bonded, Licensed, Insured," on the business cards or stationery of a contractor you hire. The bond protects you from being sued for wages by laborers the contractor does not pay. The license means the contractor has passed state, county, or city tests or qualification standards. The insurance protects you if the contractor's work later turns out to have been substandard or if the materials used to do the work were substandard.

Check with your Better Business Bureau or Chamber of Commerce to see if the contractor is, indeed, bonded, licensed and insured.

Withhold Full Payment Until:

All building supplies used have been paid for. Require receipts for all paid bills for all materials used.
All subcontractors and employees of the general contractor have been paid. Require a written, signed statement to this effect from the contractor.
Everything has been completed on the job to the full satisfaction of the contract.

Based on information developed by Clemson Cooperative Extension following Hurricane Hugo. Revised for Virginia audiences by Virginia Cooperative Extension.

For more information, contact your local office of Virginia Cooperative Extension.

Visit Virginia Cooperative Extension.

View a list of publications in this series.