Glossary of Flood Insurance Terms

• Additional Living Expense (ALE): Coverage that helps policyholders with living expenses if they are displaced from their homes due to flood damage. Coverage can include things like temporary housing, meals, and boarding costs for a pet. (read your policy for specific details) This type of coverage is typically only available through private flood insurance carriers and is not offered by the NFIP.

• Base Flood Elevation (BFE): The anticipated elevation to which floodwaters will rise during a flood, as established by FEMA during the flood mapping process.

• Comprehensive Loss Underwriting Exchange (CLUE) report: A report that provides a seven-year history of flood insurance claims on a property, including claims for flood damage. Reports from the NFIP are typically only available to the current homeowner.

• Elevation Certificate: A document that identifies the potential flood risk of a home by detailing its elevation characteristics, usually prepared by a licensed surveyor or engineer. The certificate includes information such as the building's location, lowest point of elevation, flood zone, base flood elevation (BFE), and the date the flood map was created.

• Federal Emergency Management Agency (FEMA): The U.S. government agency that is responsible for coordinating the response to natural disasters. They administer the National Flood Insurance Program (NFIP). FEMA is responsible for creating and updating flood maps, setting flood insurance rates for the NFIP, and providing flood risk information to the public.

• FEMA Flood Maps: Maps that show areas of high flood risk, also known as Special Flood Hazard Areas (SFHAs).

• Flood Insurance Rate Map (FIRM): A map that shows flood zones, BFEs, and other flood risk information in a community.

• Flood Zone: A geographic area that FEMA has categorized according to its estimated flood risk. Flood zones are designated by letters, such as A, V, B, C, and X, with each letter indicating a different level of flood risk.

• Force-Placed Flood Insurance: Insurance that a lender may purchase on a homeowner's behalf if the homeowner fails to maintain flood insurance as required by the terms of their mortgage. Force-placed flood insurance is typically more expensive and may offer less coverage than a policy purchased directly by the homeowner.

• Letter of Map Amendment (LOMA): An official document from FEMA that corrects or updates a property’s flood zone, typically used to remove it from a high-risk flood designation.

• Letter of Map Revision (LOMR): An official document from FEMA that updates a rate map due to physical changes in the area, such as new bridges or levees. While a LOMA typically addresses only one property, a LOMR  could change the flood zone designation for multiple properties.

• Loss of Use Coverage: Similar to ALE coverage, Loss of Use Coverage can reimburse a homeowner for living expenses if their home becomes uninhabitable due to flood damage. This type of coverage is not standard in NFIP policies but may be offered through private flood insurance​. The National Flood Insurance Act of 1968 (NFIA) is the federal law that created the NFIP.

• National Flood Insurance Program (NFIP): A government-run program that provides flood insurance to homeowners, renters, and businesses in participating communities.

• Private Flood Insurance: Flood insurance that is offered by large private insurance companies, as opposed to the NFIP. These policies typically offer broader coverage, often at a lower price than the NFIP.

• Replacement Cost: The amount of money it would take to rebuild a home to its original condition using current materials and labor costs.

• Risk Rating 2.0: A new rating methodology implemented by FEMA in October 2021 to more accurately assess the flood risk of individual properties and adjust flood insurance premiums accordingly. The new system considers multiple flood risk variables, including flood frequency, flood types, distance to a water source, and property characteristics.

• Special Flood Hazard Area (SFHA): A geographic area that FEMA has determined to have a 1% or greater chance of flooding in any given year. Properties located in SFHAs are considered to be at high risk of flooding and are required to have flood insurance if they have a federally backed mortgage.

• Waiting Period (Flood Insurance): The time between purchasing a flood insurance policy and when it becomes effective. For NFIP policies, this period is typically 30 days, while private flood insurers may offer shorter waiting periods, sometimes as short as 0 to 15 days. These waiting periods are typically waived if the flood insurance is required for a new loan.

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