Top 10 NFIP FAQs
1. What is the NFIP?
The NFIP stands for the National Flood Insurance Program. The NFIP provides flood insurance to property owners, renters, and businesses. The Federal Emergency Management Agency (FEMA) administers the NFIP through its Regional Offices and Mitigation Division.
2. Why did Congress create the NFIP?
Congress established the NFIP with the passage of the National Flood Insurance Act in 1968 (NFIA). It was created to reduce future flood damage through enforcement and enactment of floodplain management regulations, and to provide protection for property owners against potential flood loss through insurance policies.
3. What is a flood map?
A Flood Insurance Rate Map, also known as a FIRM, is a guide to indicate flood risk. High risk areas are referred to as Special Flood Hazard Areas (SFHAs). These areas have a 1-in-4 chance of flooding during a standard 30-year mortgage.
If you live in an SFHA and have a federally backed mortgage, flood insurance will be required by your lender. If you live near an SFHA, we still recommend obtaining flood insurance.
4. If someone lives outside of an SFHA, should they still purchase flood insurance?
FEMA recommends that everyone purchase flood insurance. No home is safe from potential flooding, and floods can be financially devastating. About 40% of NFIP flood insurance claims come from outside of SFHAs.
5. How are NFIP premiums calculated?
Since the start of Risk Rating 2.0, premiums are calculated based on specific features of each individual property. These features include distance from water, source of potential flooding, flood frequency, foundation type, replacement cost value, and the height of the lowest floor relative to the base flood elevation (BFE).
6. Who can purchase an NFIP flood insurance policy?
The NFIP is available in 23,000 participating NFIP communities. These communities adopt and enforce floodplain management regulations that meet the minimum NFIP criteria. Within these communities, homeowners, business owners and renters can purchase flood insurance.
7. Who cannot purchase an NFIP flood insurance policy?
Those who do not live in a participating community cannot purchase an NFIP policy. Also, if an NFIP-sanctioned community is suspended due to a failure to adopt regulations, business and property owners that live there cannot purchase an NFIP flood insurance policy.
8. What is federal disaster assistance?
When there is a presidential disaster declaration due to a large flooding event, eligible survivors can register for various types of federal aid in the form of loans and grants. However, these low-interest federal disaster loans must be repaid by the property owner.
9. When is it mandatory to purchase flood insurance?
Buildings located in an SFHA that have a loan from a federally regulated, supervised, or insured financial institutions require flood insurance. This is mandated by the Flood Disaster Protection Act of 1973 for participating NFIP communities. Some financial institutions might also require flood insurance even for properties outside of SFHAs as part of their risk management process.
10. Where to buy NFIP flood insurance?
NFIP flood insurance is available from FloodPrice. We can compare NFIP rates with private flood insurance carriers to find you the right coverage for the best price. Call and get a quote today: 866-503-5663.