ENVIRONMENTAL EMERGENCY SERVICES, INC

Flood Insurance

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Answers and Questions About The National Flood Insurance Program (Taken from FEMA publication FIA-2/ November 1997)

What is the National Flood Insurance Program (NFIP)?

What is a Special Flood Hazard Area (SFHA)?

How does the NFIP benefit property owners? Taxpayers? Communities?

What happens when a community does not enforce its floodplain management ordinances?

Is the purchase of flood insurance mandatory?

What if I disagree with my lender's determination that I am in a Flood Hazard Zone?

What flood losses are covered?

How can property owners or renters find out if they are eligible to purchase flood insurance?

How can a property owner determine if the property is in a Special Flood Hazard Area (SFHA)?

-What is the National Flood Insurance Program (NFIP)? The NFIP is a Federal program enabling property owners in participating communities to purchase insurance protection against losses from flooding. This insurance 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 if a community will adopt and enforce a floodplain management ordinance to ordinance to reduce future flood risks to new construction in Special Flood Hazard Areas, the Federal Government will make flood insurance available within the community as a financial protection against flood losses.

-What is a Special Flood Hazard Area (SFHA)?  In support of the NFIP, FEMA has undertaken a massive effort of flood hazard identification and mapping to produce Flood Hazard Boundary Maps (FHBMs), Flood Insurance Rate Maps (FIRMs), and Flood Boundary and Floodway Maps (FBFMs). Several areas of flood hazards are commonly identified on these maps. One of these areas is the Special Flood Hazard Area (SFHA), which is defined as an area of land that would be inundated by a flood having a 1-percent chance of occurring in any given year (also referred to as the base or 100-year flood). The 1-percent annual chance standard was chosen after considering various alternatives. The 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 the 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 the SFHA to protect Federal financial investments and assistance used for acquisition and and/or construction purposes within communities participating in the NFIP.

-How does the NFIP benefit property owners? Taxpayers? Communities?  Through the NFIP, property owners in participating communities are able to insure against flood losses. By employing wise floodplain management, a participating community can protect its citizens against much of the devastating financial loss resulting from flood disasters. Careful local management of development in the floodplains results in construction practices that can reduce flood losses and the high costs associated with flood disasters to all levels of government.

-What happens when a community does not enforce its floodplain management ordinances?  Communities are required to adopt and enforce a floodplain management ordinance that meets minimum NFIP requirements. Communities that do not enforce these ordinances can be placed on probation or suspended from the program. This is done only after FEMA has provided assistance to the community to help it become compliant. -Explain the discount on premiums that can be obtained in communities that qualify for the Community Rating System (CRS) because they have floodplain management programs that go beyond the minimum requirements to participate in the NFIP. The NFIP's Community Rating System (CRS) recognizes community effort beyond the NFIP minimum standards by reducing flood insurance premiums for the community's property owners. The discounts may range from 5 to 45 percent. The discounts provide an incentive for new flood mitigation, planning and preparedness activities that can help save lives and protect property in the event of a flood.

-Is the purchase of flood insurance mandatory?  The Flood disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994 mandate the purchase of flood insurance as a condition of Federal or Federally related financial assistance for acquisition and or construction of buildings in SFHAs of and community. The purchase of flood insurance on a voluntary basis is frequently prudent even outside of SFHAs.

The Acts prohibit Federal agency lenders, such as the Small Business Administration (SBA) and the United States Department of Agriculture's (USDA) Rural Housing Service, and Government-Sponsored Enterprises for Housing (Freddie Mac or Fannie Mae) from making, guaranteeing, or purchasing a loan secured by improved real estate or mobile home (s) in an SFHA, unless flood insurance has been purchased, and is maintained during the term of the loan.

-What if I disagree with my lender's determination that I am in a Flood Hazard Zone?  Property owners may not contest the requirement if the lending institution has established the requirements as part of its own standard lending practices. However, if a lending institution is requiring the insurance to meet mandatory flood insurance purchase requirements, the property owner and lender may jointly request that FEMA review the lending institutions determination. This request must be submitted within 45 days of the date that the lending institution notified the property owner that the building or manufactured home is in the SFHA and flood insurance is required. In response, FEMA will issue a Letter of Determination Review (LODR). The LODR does not result in an amendment or revision to the NFIP map. It is only a finding as to whether the building or manufactured home is in the SFHA shown on the NFIP map. The LODR remains in effect until the NFIP map panel affecting the subject building or manufactured home is revised.

-What flood losses are covered? The Standard Flood Insurance Policy (SFIP) Forms contain complete definitions of the coverage they provide. Direct physical losses by "flood" are covered. Also covered are losses resulting from flood-related erosion caused by waves or currents of water activity exceeding anticipated cyclical levels, or caused by severe storm, flash flood, abnormal tidal surge, or the like, which result in flooding, as defined. Damage caused by mudslides (i.e., mud flows) as specifically defined in the policy forms, is covered.

-How can property owners or renters find out if they are eligible to purchase flood insurance?  NFIP coverage is available only in participating communities. Almost all of the nations communities with serious flooding potential have joined the NFIP. To learn if a community is participating in the NFIP, contact a property insurance agent, a broker, or a community official, or call the NFIP toll-free number 1-800-427-4661.

-How can a property owner determine if the property is in a Special Flood Hazard Area (SFHA)?  FEMA publishes maps indicating a community's flood hazard areas and degree of risk in those areas. Flood insurance maps usually are on file in local governmental offices within the community, such as the planning and zoning, engineering, or clerks office. A property owner may consult these maps to find out if the property is in an SFHA. A FEMA publication entitled "Guide to Flood Maps" will also help individuals identify particular properties. Maps can be order from a toll-free telephone number from the FEMA Map Service Center at 1-800-358-9616. Delivery is usually within 2 to 4 weeks. There is a minimal charge for maps for most users, so it is advisable to call for detailed information. Map information is also available from the web at:

http://www.esri.com/data/online/fema/femadata.html

For general program information, or inquiries about the laws, regulations, or administrative policies related to the National Flood Insurance Program contact:

Federal Emergency Management Agency Federal Insurance Administration 500 C Street, S.W Washington, D.C. 20472

Or on the web at http://fema.gov/nfip/

To order a copy of "FIA-2, Answers to Questions About the National Flood Insurance Program," or any other FEMA publication contact:

FEMA Distribution Facility 8231 Stayton Drive Jessup, Maryland 20794 1-800-480-2520