National Flood Insurance Program Flood Insurance
The National Flood Insurance Program (NFIP) was established with the passage of the National Flood Insurance Act of 1968. In 1973, the Flood Disaster Protection Act was passed. The Act prohibited most types of Federal Assistance for acquisition or construction of buildings in the floodplains of non-participating communities. It also required that buildings located in identified flood hazard areas have flood insurance coverage as a condition of receiving Federal financial assistance or loans from federally insured or regulated lenders, and as a condition for receiving federal disaster assistance.
The following are fact sheets, brochures, and booklets on the National Flood Insurance Program and flood insurance. Flood insurance is available for everyone, not just the high-risk zones. Approximately 25% of flood insurance claims are from the low- to moderate-risk zones.
Cost of Flooding
This link will give you, the homeowner, an idea of what flooding costs in terms of loss. Click on launch, then select the size of the building closest to your home. You can raise or lower the elevation of the flood waters by sliding the blue button up or down to see the different costs and types of damages. This tool is for illustrative purposes only and should not be used to estimate actual flood loss.
Flood Insurance Premiums on the Rise
The National Flood Insurance Program (NFIP) historically has offered subsidized rates to certain structures built prior to a community's full implementation of the Program. These subsidized rates do not reflect the full risk of flood loss to such structures.
On July 6, 2012, the Biggert-Waters Flood Insurance Reform Act of 2012 (BW-12) was signed into law. Among other provisions, this Act phases out subsidized rates for certain properties, including for non-primary residences and residences built prior to the community's first Flood Insurance Rate Map (FIRM). The Federal Emergency Management Agency (FEMA) defines the non-primary residence to mean a structure that has not been occupied by the policyholder, or their spouse, for 80% of the policy year. These properties will no longer receive reduced premium rates for flood insurance, and the annual premium rates will increase by 25 percent a year until they reflect the full risk of flood loss. After January 1, 2012, notices will be sent by insurance agents to the owners as their policies are renewed.
Starting August 1, 2012, business properties, severe repetitive loss properties consisting of 1-4 residences and owners of any property that has incurred flood-related damage in which the cumulative amounts of claims payments exceeded the fair market value of their properties will begin seeing the 25 percent increase each year until premiums reflect the full risk of flood loss.
Owners of properties not insured as of the date of the enactment of BW-12, with a lapsed NFIP policy, and property purchased after the date of the enactment of BW-12 will pay full risk rates.
Other buildings, such as primary residences and non-subsidized policyholders affected by map changes, will see an increase of 20 percent per year instead of the previous 10 percent limit, until they reach full risk rates.
This law is intended to make the NFIP financially stable after several severe storms in recent years have drained funds.
For answers to questions regarding these rate changes, please contact your insurance agent.