Information About The National Flood Insurance Program

The National Flood Insurance Program (NFIP) is an emergency disaster program established by the government under the supervision of the Federal Emergency Management Agency (FEMA) to help assist homeowners and renters in acquiring insurance for damages and/or loss caused by flood.

Who Is Required to Get Flood Insurance

All homeowners and business owners whose homes and office buildings are located in high-risk flood zones are required by the government to purchase flood insurance for their properties. A "risk profile" online service is provided at the NFIP website. The tool will help you determine whether you live in a flood-prone area, rate your risk and estimate the premiums.

Residents that are located in moderate-to-low risk areas and where federally regulated insurance companies exist are not required by the government to buy flood insurance. However, statistics show that 25% of the claims derived from these regions. Therefore, FEMA still strongly recommends that homeowners and business owners must buy flood insurance.

NFIP Coverage

The National Flood Insurance Program protects two kinds of properties:

Building coverage

  • any building and its foundation that is insured
  • pipe systems and other apparatus for conveying water
  • electrical systems
  • appliances
  • air conditioning system, water heaters and furnaces
  • carpets that are permanently installed
Content coverage
  • clothing, curtains and furniture
  • electronic equipment
  • portable kitchen appliances like microwaves, toasters, etc.
  • clothing washers and dryers
Types of Insurance Policies

There are four types of flood insurance policies:
  • homeowner
  • renter
  • condo owner/renter
  • commercial owner/renter
How Policy Premiums Are Calculated

The policy's cost of premium depends on the type of policy purchased, the list of property covered, and the location's flood risk. For residents of high-risk areas, the National Flood Insurance Program calculates the amount of premium based on the following factors:
  • the year when building was constructed
  • occupancy of the building
  • the number of floors the building has
  • the content's location
  • settlement's flood risk (whether the property is located in a federally-declared flood zone area or not)
  • for newly constructed buildings, the location of the ground floor whether it meets the standard requirement of the flood map regulated by FEMA
  • the amount of deductible you pick
  • the total value of the building and contents included on the coverage

A Preferred Risk Policy (PRP) premium is offered for residents located in moderate-to-low risk zones. Homeowners can get a protection for their homes and its contents at $119 per year, while condo owners and renters can pay for as low as $39 per year for contents only coverage. PRP is also offered to commercial owners at the lowest rate of $550 per year which both covers the building and its properties.

 

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