FEMA Disaster Assistance for Homeowners: What It Covers and How It Works With Insurance

After a presidentially declared disaster, FEMA's Individuals and Households Program can help homeowners with needs insurance doesn't cover, such as temporary housing and repairs to a primary residence. It isn't a substitute for insurance: by law, FEMA can't pay for costs your insurance covers, so file your insurance claim right away and be ready to give FEMA the settlement or denial.

I'm Dennis Mark Interdonato with The Dennis Mark Group at Keller Williams Realty Ocean Living. When a big storm comes through, "FEMA" comes up a lot, and how it fits with your own policy comes up a lot less. Whether you're in Monmouth County, Ocean County or anywhere else in New Jersey, here's how the pieces work together, in general terms, so you know what to do first and what paperwork to keep, including for the day you sell.

What does FEMA assistance cover for homeowners?

FEMA describes the Individuals and Households Program as providing "financial and direct services to eligible individuals and households affected by a disaster" who have uninsured or under-insured necessary expenses and serious needs. It also says the program "is not a substitute for insurance and cannot compensate for all losses caused by a disaster."

For housing, FEMA's assistance page lists:

• Money to rent housing if the disaster displaces you from your home
• Reimbursement for emergency lodging, such as a hotel or motel
• Money to help repair or replace your home damaged by the disaster
• For a flood-damaged home in a Special Flood Hazard Area, the purchase of a flood insurance policy with three years of coverage

FEMA says it doesn't offer housing assistance for secondary or vacation homes, only for your primary residence. If the damaged house is a second home, plan on your own insurance being the main source of help.

Why does insurance come first?

FEMA puts it plainly: "By law, FEMA can't pay for costs that your insurance covers." Its guidance for survivors with insurance says:

• List all your coverage when you apply.
• Contact your insurer right away to file a claim.
• Send FEMA your insurance paperwork, either the settlement information or a denial letter. A denial because the damage was below your deductible counts.
• If you're underinsured, FEMA may help pay for costs your insurance didn't cover, up to FEMA's maximum award amounts.
• If the insurance money is late, and 30 days or more have passed since you filed the claim without funds, call the FEMA Helpline at 1-800-621-3362. FEMA may provide initial funds for temporary rental housing.

Your homeowners policy likely has its own coverage for living elsewhere. Here's how loss-of-use coverage works, and here's how a storm damage claim works in New Jersey.

How do you apply?

FEMA's survivor page links to DisasterAssistance.gov to apply and lists the FEMA Helpline at 1-800-621-3362. The Consumer Financial Protection Bureau notes that federal resources may be available in a presidentially declared disaster area, and that in a declared area you can apply to FEMA to help cover uninsured costs. Check whether your area is included in the declaration before you count on federal help.

What about SBA disaster loans?

The U.S. Small Business Administration also lends to homeowners and renters after a declared disaster. Its physical damage loan page says homeowners may apply for up to $500,000 to repair or replace their primary residence, and homeowners and renters can borrow up to $100,000 for personal property. A loan has to be repaid, so weigh it with your own advisors.

How do you avoid scams after a disaster?

The CFPB warns about con artists posing as government employees or insurance adjusters, and says government employees don't charge to help you get a benefit or service. It also warns about contractors selling repairs door to door, especially those who want payment up front. Here's how to check a New Jersey contractor before you hire one.

What should you keep for the day you sell?

More than you'd think. New Jersey's flood disclosure law, P.L.2023, c.93, requires sellers to answer questions that include whether they've received assistance from FEMA or another federal disaster program for flood damage to the property, whether they've filed flood damage claims with any insurer, and whether the property is subject to a federal requirement to obtain and maintain flood insurance. Keep a file with:

• FEMA and SBA award or denial letters
• Insurance claim paperwork and settlement letters
• Repair contracts, permits, final inspections and receipts
• Any flood insurance policy you were required to buy and keep

A well-documented repair is a stronger story to a buyer than a blank page. Here's what New Jersey sellers have to disclose about past damage.

Repair and stay, or sell?

That's a numbers question, and the answer is different for every house. I'm a former New Jersey home builder and residential remodeler, so I can walk the house, tell you what the repairs involve, and help you get estimates from trades I know. Then you see two plans side by side: repair, or sell as-is, with what the home is worth each way. I don't handle insurance claims or FEMA applications; those stay between you, your insurer and the agencies. How I plan around a change like this is on my life events page, and the Life Events Guide lays out the order of operations.

Frequently Asked Questions

Does FEMA pay for home repairs if I have insurance?

FEMA can't pay for costs your insurance covers. If you're underinsured, it may help with costs your insurance didn't cover, up to its maximum award amounts, once it has your settlement or denial paperwork.

Does FEMA help with a second home or vacation home?

No. FEMA says it offers housing assistance only for your primary residence, not for secondary or vacation homes.

How do I apply for FEMA disaster assistance?

Apply through DisasterAssistance.gov or call the FEMA Helpline at 1-800-621-3362, once your area is part of a declared disaster.

Do I have to disclose FEMA assistance when I sell in New Jersey?

For flood damage, New Jersey's flood disclosure law asks whether you've received FEMA or other federal disaster assistance for the property. Keep your award letters, and have your attorney review your answers.

This is general information, not legal, tax or lending advice. Program rules change, so check FEMA, SBA and your insurer for the rules that apply to your disaster.

About the author

Dennis Mark Interdonato is a REALTOR® and Master CDRE® who leads The Dennis Mark Group at Keller Williams Realty Ocean Living in Point Pleasant, NJ, helping buyers and sellers throughout New Jersey make their next move, with Monmouth and Ocean County as home base. Read more about Dennis Mark.

Keep reading

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• Selling a damaged house: repair it or sell as-is?
• Have a question this didn't answer? Send it to Dennis Mark and it may become the next article.