Flood Insurance Program
Background on the National Flood Insurance Program (NFIP)
The NFIP is a Federal program enabling property owners in participating
communities to purchase insurance protection against losses from flooding.
This insurance is designed to provide an insurance alternative to disaster
assistance to meet the escalating costs of repairing damage to buildings
and their contents caused by floods. Participation in the NFIP is based
on an agreement between local communities and the Federal Government that
states if a community will adopt and enforce a floodplain management ordinance
to reduce future flood risks to new construction in Special Flood Hazard
Areas, the Federal Government will make flood insurance available within
the community as a financial protection against flood losses.
For decades, the national response to flood disasters was generally limited
to constructing flood-control works such as dams, levees, seawalls, and
the like, and providing disaster relief to flood victims. This approach
did not reduce losses, nor did it discourage unwise development. In some
instances, it may have actually encouraged additional questionable development.
To compound the problem, the public generally could not buy flood coverage
from insurance companies, and building techniques to reduce flood damage
were often overlooked. In the face of mounting flood losses and escalating
costs of disaster relief to the general taxpayers, the U.S. Congress created
the NFIP. The intent was to reduce future flood damage through community
floodplain management ordinances, and provide protection for property
owners against potential losses through an insurance mechanism that requires
a premium to be paid for the protection.
The U.S. Congress established the NFIP on August 1, 1968, with the passage
of the National Flood Insurance Act of 1968. The NFIP was broadened and
modified with the passage of the Flood Disaster Protection Act of 1973
and other legislative measures. It was further modified by the National
Flood Insurance Reform Act of 1994 and the Flood Insurance Reform Act
of 2004. The NFIP is administered by the Federal Emergency Management
Agency (FEMA), a component of the U.S. Department of Homeland Security
What Is The Write Your Own (WYO) Program?
The Write Your Own (WYO) Program began in 1983 and is a cooperative undertaking
of the insurance industry and FEMA. The WYO Program allows participating
property and casualty insurance companies to write and service the Standard
Flood Insurance Policy in their own names. The WYO Program operates as part
of the NFIP, and is subject to its rules and regulations.
The goals of the WYO Program are:
- Increase the NFIP policy base and the geographic distribution of policies;
- Improve service to NFIP policyholders through the infusion of insurance
- Provide the insurance industry with direct operating experience with
Who needs flood insurance? Everyone.
And everyone in a
participating community of the National Flood Insurance Program (NFIP) can
buy flood insurance. Nationwide, almost 20,000 communities have joined the
Top Ten Facts... every consumer needs to know about the National
Flood Insurance Program (NFIP)
1. Everyone lives in a flood zone.
You don't need to live near water to be flooded. Floods are caused by storms,
melting snow, hurricanes, and water backup due to inadequate or overloaded
drainage systems, dam or levee failure, etc.
2. Flood damage is not covered by homeowners policies.
You can protect your home, business, and belongings with flood insurance
from the National Flood Insurance Program. You can insure your home with
flood insurance for up to $250,000 for the building and $100,000 for its
3. You can buy flood insurance no matter what your flood risk is.
It doesn't matter whether your flood risk is high or low. You can buy flood
insurance as long as your community participates in the National Flood Insurance
Program. And, it's a good idea to buy even in low-risk areas: between 20
and 25 percent of all flood insurance claims come from low-risk areas.
4. The low-cost Preferred Risk Policy is ideal for homes and businesses
in low- to moderate-risk areas.
Homeowners can insure buildings and contents for as little as $112 per year.
Business owners can insure building and contents for as little as $500 per
year. Residential renters can insure contents for as little as $39 per year.
5. Flood insurance is affordable.
The average flood insurance policy costs a little more than $400 a year
for about $100,000 of coverage. In comparison, a $50,000 disaster home loan
can cost you about $240 a month at 4 percent interest over 20 years.
6. Flood insurance is easy to get.
You can buy NFIP flood insurance from private insurance companies and agents;
call yours today! You may be able to purchase flood insurance with a credit
7. Contents coverage is separate, so renters can insure their belongings
Up to $100,000 contents coverage is available for homeowners and renters.
Whether you rent or own your home or business, make sure to ask your insurance
agent about contents coverage. It is not automatically included with the
building coverage (except under the Preferred Risk Policy).
8. Up to a total of $1 million of flood insurance coverage is available
for non-residential buildings and contents.
Up to $500,000 of coverage is available for non-residential buildings. Up
to $500,000 of coverage is available for the contents of non-residential
9. There is usually a 30-day waiting period before the coverage
goes into effect.
Plan ahead so you're not caught without flood insurance when a flood threatens
your home or business.
10. Federal disaster assistance is not the answer.
Federal disaster assistance is only available if the President declares
Flood insurance pays even if a disaster is not declared. It's just good
sense to protect your home and business.
In some instances, people have been told that they cannot buy flood insurance
because of where they live. To clear up this and other misconceptions about
National Flood Insurance, the NFIP has compiled the following list of common
myths about the Program, and the real facts behind them, to give the full
story about this valuable protection.
You can't buy flood insurance if you are
located in a high-flood-risk area.
You can buy National Flood Insurance no matter where
you live if your community participates in the NFIP, except in Coastal Barrier
Resources System (CBRS) areas. The Program was created in 1968 to make federally
backed flood insurance available to property owners who live in eligible
communities. Flood insurance was then virtually unavailable from the private
insurance industry. The Flood Disaster Protection Act of 1973, as amended,
requires federally regulated lending institutions to make sure that mortgage
loans secured by buildings in high-flood-risk areas are protected by flood
insurance. Lenders should notify borrowers, prior to closing, that their
property is located in a high-flood-risk area and that National Flood Insurance
You can't buy flood insurance immediately before
or during a flood.
You can purchase National Flood Insurance at any
time. There is usually a 30-day waiting period after premium payment before
the policy is effective, with the following exceptions:
1. If the initial purchase of flood insurance is in connection with the
making, increasing, extending, or renewing of a loan, there is no waiting
period. Coverage becomes effective at the time of the loan, provided application
and payment of premium is made at or prior to loan closing.
2. If the initial purchase of flood insurance is made during the 13-month
period following the effective date of a revised flood map for a community,
there is a 1-day waiting period. This applies only where the Flood Insurance
Rate Map (FIRM) is revised to show the building to be in a Special Flood
Hazard Area (SFHA) when it had not been in an SFHA. The policy does not
cover a "loss in progress," defined by the NFIP as a loss occurring as of
12:01 a.m. on the first day of the policy term. In addition, you cannot
increase the amount of insurance coverage you have during a loss in progress.
Homeowners insurance policies cover flooding.
Unfortunately, many home and business owners do not
find out until it is too late that their homeowners and business multiperil
policies do not cover flooding. The NFIP offers a separate policy that protects
the single most important financial asset, which for most people is their
home or business. Homeowners can include contents coverage in their NFIP
policy. Residential and commercial renters can purchase contents coverage.
Business owners can purchase flood insurance coverage for their buildings
and contents/inventory and, by doing so, protect their livelihood.
Flood insurance is only available for homeowners.
Most people who live in NFIP participating communities,
including renters and condo unit owners, are eligible to purchase federally
backed flood insurance. A maximum of $250,000 of building coverage is available
for single-family residential buildings; $250,000 per unit for residential
condominiums. The limit for contents coverage on all residential buildings
is $100,000, which is also available to renters. Commercial structures can
be insured to a limit of $500,000 for the building and $500,000 for the
contents. The maximum insurance limit may not exceed the insurable value
of the property.
You can't buy flood insurance if your property has
You are still eligible to purchase flood insurance
after your home, apartment, or business has been flooded, provided that
your community is participating in the NFIP.
Only residents of high-flood-risk areas need to insure
All areas are susceptible to flooding, although to
varying degrees. If you live in a low-to-moderate flood risk area, it is
advisable to have flood insurance. Between 20 and 25 percent of the NFIP's
claims come from outside high-flood-risk areas. Residential and commercial
property owners located in low-to-moderate risk areas should ask their agents
if they are eligible for the Preferred Risk Policy, which provides very
inexpensive flood insurance protection.
National Flood Insurance can only be purchased through
the NFIP directly.
NFIP flood insurance is sold through private insurance
companies and agents, and is backed by the federal government.
The NFIP does not offer any type of basement coverage.
Yes it does. The NFIP defines a basement as any area
of a building with a floor that is below ground level on all sides. While
flood insurance does not cover basement improvements (such as finished walls,
floors, or ceilings), or personal belongings kept in a basement (such as
furniture and other contents), it does cover structural elements and essential
The following items are covered under building coverage, as long as they
are connected to a power source, if required, and installed in their functioning
- Sump pumps
- Well water tanks and pumps, cisterns, and the water in them
- Oil tanks and the oil in them, natural gas tanks and the gas in them
- Pumps and/or tanks used in conjunction with solar energy
- Furnaces, water heaters, air conditioners, and heat pumps
- Electrical junction and circuit breaker boxes and required utility
- Foundation elements
- Stairways, staircases, elevators, and dumbwaiters
- Unpainted drywall walls and ceilings, including fiberglass insulation
The following items are covered under contents coverage:
- Clothes washers and dryers
- Food freezers and the food in them
The NFIP recommends both building and contents coverage for the broadest
The NFIP encourages coastal development.
One of the NFIP's primary objectives is to guide
development away from high-flood-risk areas. NFIP regulations minimize the
impact of structures that are built in SFHAs by requiring them not to cause
obstructions to the natural flow of floodwaters. Also, as a condition of
community participation in the NFIP, those structures built within SFHAs
must adhere to strict floodplain management regulations enforced by the
community. In addition, the Coastal Barrier Resources Act (CBRA) of 1982
relies on the NFIP to discourage building in fragile coastal areas by prohibiting
the sale of flood insurance in designated CBRA areas. While the NFIP does
not prohibit property owners from building in these areas, any Federal financial
assistance, including federally backed flood insurance, is prohibited. However,
the CBRA does not prohibit privately financed development or insurance.
Federal disaster assistance will pay for flood damage.
Before a community is eligible for disaster assistance,
it must be declared a federal disaster area. Federal disaster assistance
declarations are issued in less than 50 percent of flooding events. The
premium for an NFIP policy, averaging a little over $400 a year, can be
less expensive than the monthly payments on a federal disaster loan. Furthermore,
if you are uninsured and receive federal disaster assistance after a flood,
you must purchase flood insurance to remain eligible for future disaster
FLOOD ZONES EXPLAINED:
Zone--A geographical area shown on a Flood Hazard Boundary Map or a Flood
Insurance Rate Map that reflects the severity or type of flooding in the
Flood hazard areas identified on the Flood Insurance Rate Map are identified
as a Special Flood Hazard Area (SFHA). SFHA are defined as the area that
will be inundated by the flood event having a 1-percent chance of being
equaled or exceeded in any given year. The 1-percent annual chance flood
is also referred to as the base flood or 100-year flood. SFHAs are labeled
as Zone A, Zone AO, Zone AH, Zones A1-A30, Zone AE, Zone A99, Zone AR, Zone
AR/AE, Zone AR/AO, Zone AR/A1-A30, Zone AR/A, Zone V, Zone VE, and Zones
V1-V30. Moderate flood hazard areas, labeled Zone B or Zone X (shaded) are
also shown on the FIRM, and are the areas between the limits of the base
flood and the 0.2-percent-annual-chance (or 500-year) flood. The areas of
minimal flood hazard, which are the areas outside the SFHA and higher than
the elevation of the 0.2-percent-annual-chance flood, are labeled Zone C
or Zone X (unshaded).
Zone A is the flood insurance rate zone that corresponds to the 100-year
floodplains that are determined in the Flood Insurance Study by approximate
methods. Because detailed hydraulic analyses are not performed for such
areas, no Base Flood Elevations or depths are shown within this zone. Mandatory
flood insurance purchase requirements apply.
Zone AE and A1-A30
Zones AE and A1-A30 are the flood insurance rate zones that correspond to
the 100-year floodplains that are determined in the Flood Insurance Study
by detailed methods. In most instances, Base Flood Elevations derived from
the detailed hydraulic analyses are shown at selected intervals within this
zone. Mandatory flood insurance purchase requirements apply.
Zone AH is the flood insurance rate zone that corresponds to the areas of
100-year shallow flooding with a constant water-surface elevation (usually
areas of ponding) where average depths are between 1 and 3 feet. The BFEs
derived from the detailed hydraulic analyses are shown at selected intervals
within this zone. Mandatory flood insurance purchase requirements apply.
Zone AO is the flood insurance rate zone that corresponds to the areas of
100-year shallow flooding (usually sheet flow on sloping terrain) where
average depths are between 1 and 3 feet. The depth should be averaged along
the cross section and then along the direction of flow to determine the
extent of the zone. Average flood depths derived from the detailed hydraulic
analyses are shown within this zone. In addition, alluvial fan flood hazards
are shown as Zone AO on the FIRM. Mandatory flood insurance purchase requirements
Zone AR is the flood insurance rate zone used to depict areas protected
from flood hazards by flood control structures, such as a levee, that are
being restored. FEMA will consider using the Zone AR designation for a community
if the flood protection system has been deemed restorable by a Federal agency
in consultation with a local project sponsor; a minimum level of flood protection
is still provided to the community by the system; and restoration of the
flood protection system is scheduled to begin within a designated time period
and in accordance with a progress plan negotiated between the community
and FEMA. Mandatory purchase requirements for flood insurance will apply
in Zone AR, but the rate will not exceed the rate for unnumbered A zones
if the structure is built in compliance with Zone AR floodplain management
For floodplain management in Zone AR areas, elevation is not required for
improvements to existing structures. However, for new construction, the
structure must be elevated (or floodproofed for non-residential structures)
such that the lowest floor, including basement, is a maximum of 3 feet above
the highest adjacent existing grade if the depth of the base flood elevation
(BFE) does not exceed 5 feet at the proposed development site. For infill
sites, rehabilitation of existing structures, or redevelopment of previously
developed areas, there is a 3 foot elevation requirement regardless of the
depth of the BFE at the project site.
The Zone AR designation will be removed and the restored flood control system
shown as providing protection from the 1% annual chance flood on the NFIP
map upon completion of the restoration project and submittal of all the
necessary data to FEMA.
Zone A99 is the flood insurance rate zone that corresponds to areas of the
100-year floodplains that will be protected by a Federal flood protection
system where construction has reached specified statutory milestones. No
BFEs or depths are shown within this zone. Mandatory flood insurance purchase
The Zone D designation on NFIP maps is used for areas where there are possible
but undetermined flood hazards. In areas designated as Zone D, no analysis
of flood hazards has been conducted. Mandatory flood insurance purchase
requirements do not apply, but coverage is available. The flood insurance
rates for properties in Zone D are commensurate with the uncertainty of
the flood risk.
Zone V is the flood insurance rate zone that corresponds to the 100-year
coastal floodplains that have additional hazards associated with storm waves.
Because approximate hydraulic analyses are performed for such areas, no
BFEs are shown within this zone. Mandatory flood insurance purchase requirements
Zone VE is the flood insurance rate zone that corresponds to the 100-year
coastal floodplains that have additional hazards associated with storm waves.
BFEs derived from the detailed hydraulic analyses are shown at selected
intervals within this zone. Mandatory flood insurance purchase requirements
Zones B, C, and X
Zones B, C, and X are the flood insurance rate zones that correspond to
areas outside the 100-year floodplains, areas of 100-year sheet flow flooding
where average depths are less than 1 foot, areas of 100-year stream flooding
where the contributing drainage area is less than 1 square mile, or areas
protected from the 100-year flood by levees. No BFEs or depths are shown
within this zone.
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