Question

John insures his house with the National Flood Insurance Program. The maximum amount that the NFIP will pay for damage to his house is:

a) $100,000
b) $200,000
c) $250,000
d) $350,000

Answer 1

The NFIP will pay up to $250,000 for flood damage to a residential property, comparable to deposit insurance coverage limits set by the FDIC for bank deposits.

Step-by-step explanation:

The maximum amount that the National Flood Insurance Program (NFIP) will pay for damage to John's house is $250,000. This is comparable to the way deposit insurance works with banks; however, the NFIP specifically deals with coverage for flood damage. The NFIP standard policy caps the coverage for a residential property at a quarter of a million dollars, which provides a significant safety net for homeowners in case of flooding.