What is the National Flood Insurance Program (NFIP)?

The NFIP is a Federal program created by Congress to mitigate future flood losses nationwide through sound, community-enforced building and zoning ordinances and to provide access to affordable, federally backed flood insurance protection for property owners.  The NFIP 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.

Partcipation in the NFIP is based on an agreement between local communities and the Federal Government that states that if a community will adopt and enforce a floodplain management ordinance to reduce future flood risks to new construction in Special Flood Hazard Areas (SFHAs), the Federal Government will make flood insurance available within the community as a financial protection against flood losses.

What is a Special Flood Hazard Area (SFHA)?

In supprot of the NFIP, FEMA identifies flood hazard areas throughtout the United States and its territories.  Most areas of flood hazard are commonly identified on Flood Insurance Rate Maps (FIRMs).  Areas not yet identified by a FIRM may be mapped on Flood Hazard Boundary Maps (FHBMs).  Several areas of flood hazards are identified on these maps.  One of these areas is the Special Flood Hazard Area (SFHA).

The SFHA is a high-risk area defined as any land that woudl be inundated by a flood having a 1-percent chance of occurring in a given year (also referred to as the base flood).  The high-risk-area standard constitutes a reasonable compromise between the need for building restrictions to minimize potential loss of life and property and the economic benefits to be derived from floodplain development.  Development may take place within an SFHA, provided that development complies with local floodplain management ordinances, which must meet the minimum Federal requirements.  Flood insurance is required for insurable structures within high-risk areas to protect Federal financial investments and assistance used for acquisition and/or construction purposes within communities participating in the NFIP.

What is a Flood Insurance Rate Map (FIRM)?

A Flood Insurance Rate Map (FIRM) is an official map of a community on which FEMA has delineated both the special hazard areas and the risk premium zones applicable to the community.

How does the NFIP benefit property owners?  Taxpayers?  Communities.?

Through the NFIP, property owners in participating communities are able to insure against flood losses.  By employeing wise flooplain management, a participating community can reduce risk and protect its ccitizens and the community against much fo the devastating financial losses resulting form flood disasters.  Careful local mangement of development in the floodplains results in construction practices that can reduce flood losses and the high cost associated with flood disasters to all levels of government.

Why is participation in the NFIP on a community basis rather than on an individual basis?

The National Flood Insurance Act of 1968 allows FEMA to make flood insurance available only in those areas where the appropriate public body has adopted adequate floodplain management regulations for its flood-prone areas.  Individual citizens cannot regulate building or establish construction priorities for communities.  Without community oversight of building activities in the floodplain, the best efforts of some to reduce future flood losses could be undermined or nullified by the careless building of others.  Unless the community as a whole is practicing adequate flood hazard mitigation, the potential for loss will not be reduced sufficiently to affect disaster relief costs.  Insurance rates also woudl reflect the probable higher losses that would result without local floodplain management enforcement activities.

What happens when a participating community chooses not to adopt the effective FIRM and compliant floodplain management ordinance?

As part of their agreement to participate in the NFIP, communities adopt and enforce these ordinances, including FIRMs.  If communities do not, they can be placed on probation or suspended from the program.  This is done only after FEMA has provided assistance to the community to help it become compliant.

What penalties are imposed when a community is placed on probation?

A surcharge is added to the premium for each policy sold or renewed in the community.  The surcharge is effected for at least 1 year after the community's probation period begins.  The surcharge is intended to focus the attention of policyholders ont he community's noncompliance to help avoid suspension of the community, whihc has serious adverse impacts on those policyholders.  Probation does not affect the availability of flood insurance.

Who may purchase a flood insurance policy?

NFIP coverage is availalbe to all owners of eligible property (a building and/or its contents) located in a community participating in the NFIP.  Owners and renters may insure their property against flood loss.  Owners of buildings in the course of construction, condominium associations, and owners of residential condominium units in participating communities all may purchase flood insurance.

Condominium associations may purchase insurance coverage on a residential building, including all units, and its commonly owned contents under the Residential Condominium Building Association (RCBAP).  The unit owner may separately insure personal contents as well as obtain additional building coverage under the Dwelling Form as long as the unit owner's share of teh RCBAP and his/her added coverage do not exceed the statutory limits for single-family dwelling.  The owner of any condominium unit in a non-residential condominium building may purchase only contents coverage for that unit.

How can a property owner determine whether or not his or her property is in a Special Flood Hazard Area (SFHA)?

FEMA provides mapped communities with a single paper map of their community.  The maps are generally kept in community planning or building permit departments where they should be available for review.  In addition, digital flood maps can be viewed on FEMA's Map Information eXchange (FMIX) website at  Property owenrs can also contact their insurance agent, who usually has access to FEMA maps or to a Flood Zone Determination service.

Is there a waiting period for flood insurance to become effective?

Yes.  There is a 30-day waiting period before flood coverage goes into effect.  The effective date of a new policy will be 12:01 a.m., local time, on the 30th calendar day after the application date and the presentment of premium.

However, There are exceptions in which the 30-day waiting period does not apply:

-In connection with making, increasing, extending, or renewing a loan, whether conventional or otherwise, flood insurance that is initially purchased in connection with the making, increasing, extending, or renewal of a loan shall be effective at the time of loan closing, provided that they policy is applied for and the presentment of premium is made at the time of or prior to the loan closing.

-In connection with lender requirement, the 30-day waiting period does not apply when flood insurance is required as a result of a lender determination that a loan on a building in an SFHA that does not have flood insurance coverage should be protected by flood insurance.  The coverage is effective upon the completion of an application and the presentment of payment of premium.

-When the initial purchase of flood insurance is in connection with the revision of updating of a Flood Hazard Boundary Map (FHBM) or Flood Insurance Rate Map (FIRM): During the 13-month period beginning on the effective date of the map revision, the effective date of a new policy shall be 12:01 a.m., local time, following the day after the application date and the presentment of premium.  This rule applies only where the FHBM or FIRM is revised to show the building to be in an SFHA when it had not been in an SFHA.

What flood losses are covered?

Direct physical losses "by flood," losses resulting from flood-related erosion caused by waves or currents of water activity exceeding anticipated cyclical levels, or caused by severe strom, flash flood, abnormal tidal surge, which result in flooding, as defined in teh SFIP.  Damage caused by mudflows, as specifically defined in the policy forms, is covered.

What is the role of the community in floodplain management?

When a community chooses to join the NFIP, it must adopt and enforce minimum floodplain management standards for participation.  FEMA works closely with state and local officials to identify flood hazard areas and flood risks.  The floodplain managment requirements within the Special Flood Hazard Area (SFHA) are designed to prevent new development from increaseing the flood threat and to protect new and existing buildings from anticipated flood events.

When a community chooses to join the NFIP, it must require permits for all development in the SFHA and ensure that construction materials and methods used will minimize future flood damage.  Permit files must contain documentation to substantiate how buildings were actually constrcuted.  In return, the Federal Government makes flood insruance available for eligible buildings and their contents within the community.

Communities must ensure that their adopted floodplain management ordinance and enforcement procedures meet program requirements.  Local regulations must be updated when additional data are provided by FEMA or when Federal or state standards are revised.

How are flood hazard areas and flood levels determined?

Flood hazard areas are determined using statistical analyses of records of riverflow, storm tides, erosion, wave heights, and rainfall; information obtained through consultation with the community; floodplain topographic surveys; and coastal hydrologic, and hydraulic analyses.  The FIS covers those areas subject to flooding from rivers and streams, along coastal areas and lakeshores, and/or shallow flooding areas.

What flood hazard zones are shown on the FIRM and what to they mean?

Several areas of flood hazard are commonly identified on teh DFIRM and FIRM.  One of these areas is teh SFHA, which is defined as the area that would 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".  SFHAs are labeled as Zone A, Zone AO, Zone AH, Zones A1-A30, Zone AE, Zone 99, Zone AR, Zone AR/AE, Zone AR/AH, Zone AR/AO, Zone AR/A1-A30, Zone AR/A, Zone V, Zone VE, and Zones V1-V30.  Moderate flood hazard areas, labled Zone B, are also shown on the FIRM and DFIRM and are the areas between the limits of the base flood and the 0.2-percent-annual-chance 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 labled Zone C.  On new and revised maps, Zone X is used in place of Zones B and C.  An unshaded Zone X holds the same meaning as the labeled Zone B.  A shaded zone X can mean any of the following: the area is in the 0.2 floodplain; is protected by a levee; is subject to inundation by a flood event having a 1 percent chance of reaching less than a 1.0-foot depth; is subject to inundation by a 1-percent-annual-by a 1-percent-annual-chance flood determined using future conditions.

What procedures are available for changing or correcting a FIRM?

FEMA has established administrative procedures for changing effective FIRMs, DFIRMs, and FIS report based on new or revised scientific or technical data.  A physical change to the affected DFIRM and FRIM panels, and protions of the FIS report, are referencfed as a Physical Map Revision (PMR).  Changes can also be made by a Letter of Map Change (LOMC).  The three LOMC categories are Letter of Map Amendment (LOMA).  Letter fo Map Revision Based on Fill (LOMR-F), and Letter of Map Revision (LOMR).  They are discussed in more detail in Questions 92-94.

What is a Letter of Map Amendment (LOMA)?

A LOMA is a letter that officially revises an effective FEMA NFIP map.  A LOMA results from an administrtive procedures involving the review of scientific or technical data submitted by the owner or lessee of property who believes the property has incorrectly been included in a designated SFHA or has been incorrectly identified in the wrong SFHA.  A LOMA amends the currently effective FEMA map and establishes that a specific property is not located in the SFHA or is located within the correct SFHA.

~The information in this section is taken from the National Flood Insurance Program "Answers to Questions About the NFIP" FEMA F-084/March 2011.  To view this manual in its entirety CLICK HERE.