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 Pricing Approach

FEMA has updated the National Flood Insurance Program's insurance pricing methodology. The 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.

When did these changes take place?

  • Phase I: beginning October 1, 2021, new policies were subject to the new methodology. On this date, existing policyholders could also take advantage of decreased premiums if they were eligible for renewal.
  • Phase II: All policies renewing on or after April 1, 2022 were subject to the new rating methodology.
  • Phase III: As of April 1, 2023, FEMA fully implemented the new pricing approach.

What does this mean for insurance requirements from lenders?

The pricing approach establishes the insurance premiums by using new capabilities and tools to address rating disparities and incorporating more flood risk variables. 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 Special Flood Hazard Area and requires flood insurance.

What does this mean for floodplain regulations?

The pricing approach does not impact 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 understand the pricing approach in case they need to communicate to folks what to expect with their insurance policies.

How will policies be rated?

The new methodology takes into account more than just the flood zones, rating tables, and elevations that have been used to rate NFIP policies since the 1970s. New factors reflect the individual property's risk, rather than national averages. Factors relate to three questions:

Where is it built?

  • A building's distance to flooding sources, including the distance to the coast, ocean, rivers, and Great Lakes
  • The ground elevation where the building is located relative to the elevation of the surrounding area and the elevation of nearby flooding sources
  • Community characteristics such as if the community participates in the Community Rating System and the level of their discounts

How is it built?

  • Foundation type
  • First floor height
  • Number of floors
  • Building occupancy
  • Unit location
  • Construction type
  • Flood openings
  • Machinery and equipment location

What is built and covered?

  • Building replacement cost value
  • Building and contents coverage
  • Building and contents deductible

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 and your local floodplain administrator, which lists a building's location, lowest point of elevation, flood zone, and other characteristics. An elevation certificate is no longer required to purchase flood insurance. Yet, it can still be submitted to the insurance agent and used if it will lower the cost of a premium.

The State does not keep elevation certificates on file, however, your local floodplain administrator should. You can check a listing of Floodplain Administrators and their contact information.

For more information about the new methodology, visit the NFIP Pricing Approach page and FloodSmart.gov - NFIP's Pricing Approach.

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.

Community Resources

For additional Information such as flyers, technical bulletins, links, additional grant information and other helpful resources, visit the Community Resources page.

Do you have questions, please contact flood@twdb.texas.gov