Frequently Asked Questions
1. Does my homeowner's insurance policy cover flooding?


No. Flood damage is not typically covered by a homeowner's insurance policy.



2. My community has never been flooded. Why do I need flood insurance?


Flooding occurs in moderate-to-low risk areas as well as in high-risk areas. Poor drainage systems, rapid accumulation of rainfall, snowmelt, and broken water mains can all result in flood. Properties on a hillside can be damaged by mudflow, a covered peril under the Standard Flood Insurance Policy. Structures located in high-risk flood areas have a significant chance (26 percent) of suffering flood damage during the term of a 30-year mortgage. In a high-risk area, your home is more than twice as likely to be damaged by a flood than by fire. For these reasons, flood insurance is required by law for buildings in high-risk flood areas as a condition of receiving a mortgage from a federally regulated or insured lender.



3. If my home is flooded, won't federal disaster assistance pay for my damages?


Not necessarily. Federal disaster assistance typically comes in the form of a low interest loan to help cover flood damage, not compensation for your losses. Even then, those loans are only available if the president formally declares a disaster and must be repaid along with any existing mortgage.



4. How is flood insurance purchased?


After a community joins the NFIP, a policy may be purchased from any licensed property insurance agent or broker who is in good standing in the state in which the agent is licensed or through any agent representing a Write Your Own (WYO) Company, including an employee of the company authorized to issue the coverage. The agent will complete the flood insurance application, obtain the proper supporting documentation required, and determine the rates for establishing the flood insurance premium.



5. 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.


Participation 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.



6. Is there a minimum coverage requirement for a flood insurance policy?


No, there is no minimum coverage requirement if coverage is being purchased voluntarily.


However, if coverage is being purchased as the result of a lender requirement (mandatory purchase requirement), the amount of flood insurance required must be at least equal to the lesser of (1) the outstanding principal balance of the loan, (2) the maximum amount available under the NFIP, or (3) the total insurable value of the property.


However, if coverage is being purchased as the result of a lender requirement (mandatory purchase requirement), the amount of flood insurance required must be at least equal to the lesser of (1) the outstanding principal balance of the loan, (2) the maximum amount available under the NFIP, or (3) the total insurable value of the property.



7. Can my lender require the purchase of flood insurance?


Lenders are mandated under the Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994 to require the purchase of flood insurance by property owners who acquire loans from federally regulated, supervised, or insured financial institutions for the acquisition or improvement of land, facilities, or structures located within or to be located within an SFHA.



8. Is the purchase of flood insurance mandatory?


The Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994 mandate that federally regulated, supervised, or insured financial institutions and Federal Agency lenders require flood insurance for buildings located in a participating NFIP community and in an SFHA. Some financial institutions may require flood insurance for properties outside the SFHA as part of their own risk management process.



10. What is a Special Flood Hazard Area (SFHA)?


In support of the NFIP, FEMA identifies flood hazard areas throughout 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 would 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.



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


FEMA provides mapped communities witha 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 http://msc.fema.gov. Property owners can also contact their insurance agent, who usually has access to FEMA maps or to a Flood Zone Determination service.



12. When a property's flood zone changes from a non-Special Flood Hazard Zone (SFHA) to an SFHA as a
result of a FIRM update, can the property continue to be rated using the PRP?


Yes. Because flood zone revisions on updated FIRMs have resulted in a financial challenge for many homeowners, FEMA has implemented a measure that provides financial relief by delaying the applicability of the SFHA standard rating for 2 years. Buildings newly mapped into an SFHA by a map effective on or after October 1, 2008, are eligible for the PRP for 2 years beginning on January 1, 2011, or the map change effective date, whichever is later. The building must also meet the PRP loss history requirements. At the end of the extended PRP eligibility period, the policy would be renewed as a standard-rated policy, and may be eligible for grandfathering on a standard-rated policy.



13. Are there grandfather rules to allow policyholders to maintain the current rating despite a map revision
that places property in a higher-rated flood zone?


Yes. To recognize policyholders who have built in compliance with the fRIM and/or remainedloyal customers of the NFIP by maintaining continuous coverage, FEMA has "grandfather rules." These rules allow such policyholders to benefit in the rating for that building. For such buildings, the insured would have the option of using the current rating criteria for that building or having the premium rate determined by using the BFE and/or flood zone on a previous FIRM that was in effect when the building was originally constructed (for those built in compliance) or when coverage was first obtained (for those with continuous coverage).



14. Can flood insurance be canceled at the request of the insured with a refund of premium?


Yes, in some cases. For example, if the policyholder sold the property and no longer has an insurable interest in it, the policy can be canceled with a pro-rated return. However, due to the seasonal nature of flooding, and to protect the lender's interest, there are limited valid cancellation reasons. The valid cancellation reasons and the proper procedures and documentation required to cancel a policy are outlined in the NFIP Flood Insurance Manual.



15. Does insurance under the NFIP provide coverage at replacement cost?


Replacement cost coverage is available for a single-family dwelling, insured under the Dwelling Form that is the policyholder's principal residence and is insured for at least 80 percent of the building's total insurable value at the time of the loss, or the maximum amount of insurance available under the Program. Replacement cost coverage does not apply to manufactured (i.e., mobile) homes smaller than certain dimensions specified in the policy.


Losses are adjusted on a replacement cost basis for residential condominium buildings insured under the Residential Condominium Building Association Policy (RCBAP). However, coverage amounts less than 80 percent of the building's full replacement cost value (RCV) at the time of loss will be subject to a coinsurance penalty.


Building losses under the General Property Form are always adjusted on an actual cash value basis.


Contents losses are always adjusted on an actual cash value basis. Actual cash value means the replacement cost of an insured item of property at the time of loss, less the value of physical depreciation of the item damaged.



16. What if I want to purchase more insurance than the NFIP offers?


Many private insurance companies offer Excess Flood Protection, which provides limits over and above those of the NFIP. For more information, contact your insurance agent or company, or find an agent serving your area by filling out the Flood Risk Profile.



17. Where can I find more information about the maps that were used to determine my relative risk level?


FEMA publishes maps indicating a community's flood hazard areas and the degree of risk in those areas. Flood insurance maps usually are on file in a local repository in the community, such as the planning and zoning or engineering offices in the town hall or the county building.


In addition, you can order maps online or by writing, phoning, or faxing a request to the FEMA Map Assistance Center. There is a minimal charge for maps for most users.







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