National Flood Insurance Program (NFIP)
The National Flood Insurance Program (NFIP) was created with the passage of the National Flood Insurance Act of 1968. The goal of the program is to help mitigate future losses caused by flooding through community enforced building standards.
Participation in the NFIP is voluntary and is based on a community's agreement to adopt and enforce, at a minimum, the Federal standards for building within a Special Flood Hazard Area (SFHA). In exchange, the Federal Government makes flood insurance available as a financial protection against flood losses.
How does the NFIP work?
The U.S. Congress established the National Flood Insurance Program (NFIP) with the passage of the National Flood Insurance Act of 1968. Subsequent passage of the Flood Disaster Protection Act of 1973, the National Flood Insurance Reform Act of 1994 and the Flood Insurance Reform Act of 2004 further modified and strengthened the original 1968 Act. The intent of the legislation is to help reduce future flood damage through floodplain management criteria and to provide protection to property owners through an insurance mechanism.
The NFIP is designed so that floodplain management and flood insurance complement and reinforce each other. The partnership is established on the provision that FEMA will make flood insurance available to the citizens of a community, provided that the community implements floodplain management regulations that meet or exceed the Federal minimum requirements.
A "flood" is defined as a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is the policyholder's property) from:
- Overflow of inland or tidal waters; or
- Unusual and rapid accumulation or runoff of surface waters from any source; or
- Mudflow; or
- Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood.
In general, homeowners insurance does not provide protection from damages to a structure or to contents caused by flooding and it is necessary for property owners to have a separate flood insurance policy to cover a loss cause by a flood.
NFIP's Risk Rating 2.0
FEMA is updating the National Flood Insurance Program's insurance risk rating through a new pricing methodology called Risk Rating 2.0- Equity in Action. This new methodology leverages industry best practices and cutting-edge technology to enable FEMA to deliver rates that are actuarially sound, equitable, easier to understand and better reflect a property's flood risk. While we can anticipate more updates and trainings from FEMA in the future, here is what we know so far:
When will these changes take place?
- Phase I: beginning October 1, 2021, new policies will be subject to the new Risk Rating 2.0 methodology. On this date, existing policyholders can take advantage of decreased premiums if they are eligible for renewal.
- Phase II: All policies renewing on or after April 1, 2022 will be subject to the Risk Rating 2.0 rating methodology.
How will this change insurance requirements from lenders?
- Risk Rating 2.0 establishes the insurance premiums, but it does not change how Flood Insurance Rate Maps (FIRMs) or Flood Insurance Studies are generated. FIRMs will continue to be used by lenders to determine if a building is in a high-risk area.
How will policies be rated?
- This new method will take more into account than just the flood hazard zones, rating tables, and elevations that have been used to rate NFIP policies. The new rating will also include factors such as distance to water, type and size of nearest bodies of water, the elevation of the property relative to the flooding source and building specifics such as replacement cost. Risk Rating 2.0 aims to reflect the individual property's risk, rather than national averages.
What does this mean for floodplain administrators?
- Risk Rating 2.0 will not change any regulatory requirements, which means that floodplain administrators can continue to enforce their programs as they have been. However, it is important for floodplain administrators to communicate to folks that these changes will be coming so that they know what to expect with their insurance policies.
Are there ways to get discounts on my policy?
- FEMA has produced a Discount Explanation Guide to break down the eligible discounts. Discounts are based on characteristics such as foundation type, first floor height, and flood openings.
Will I need an elevation certificate?
- An Elevation Certificate is a form used by the NFIP which lists a building’s location, lowest point of elevation, flood zone, and other characteristics. This form can only be filled out by a licensed engineer, surveyor, or architect. Under Risk Rating 2.0, elevation certificates will no longer be required to purchase flood insurance, however, they can still be submitted to the insurance agent and will only be used if it will lower your cost.
The State does not keep elevation certificates on file, however, your local floodplain administrator might. You can find a listing of Floodplain Administrators and their contact information.
For more information about Risk Rating 2.0, visit the FEMA Risk Rating 2.0 : Equity in Actions page.
How can you participate in the NFIP?
To participate in the NFIP, a community must adopt floodplain management criteria that match the flood risk data that have been provided by FEMA. These minimum criteria are set forth in 44 CFR 60.3(a), (b), (c), (d) or (e). By adopting a resolution and an appropriate level of ordinance or court order, a community can apply to FEMA for participation in the NFIP.
If your community is interested in participating in the NFIP, please visit How can you participate in the NFIP? to be taken to our enrollment information page.
Community Rating System (CRS)
The Community Rating System (CRS) is a voluntary program that recognizes and encourages a community's efforts that exceed the NFIP minimum requirements for floodplain management. The CRS program emphasizes three goals: the reduction of flood losses, facilitating accurate insurance rating and promoting the awareness of flood insurance. By participating in the CRS program, communities can earn a discount for flood insurance premiums based upon the activities that reduce the risk of flooding within the community. For more information about the CRS program, visit the Community Rating System (CRS) page.
For additional Information such as flyers, technical bulletins, links, additional grant information and other helpful resources, visit the Community Resources page.
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