What You Should Know About NFIP - The National Flood Insurance Program
If you own a home, it’s important that you know about the National Flood Insurance Program (NFIP), especially if your home is in an area prone to flooding. The NFIP was created by Congress in 1968 through the National Flood Insurance Act. Program participation is based on agreements between your local community and the federal government to purchase flood insurance to help cover losses from flooding. NFIP requires flood insurance coverage in certain zones if you have a mortgage or a line of credit. It also helps regulate new construction in high floodplain areas to reduce costly flood damage.
Who is eligible for NFIP?
People residing in one of the nation’s NFIP participating communities are eligible. In certain flood areas, the home insurance premium rates are partially subsidized by the federal government. These areas are usually within a high to medium-high risk for flooding, and the amount of subsidy is based on the area’s degree of risk.
Who is in charge of the program?
The Federal Emergency Management Agency (FEMA), which is an agency of the Department of Homeland Security, runs the NFIP currently. Every five years the program must be reauthorized by Congress.
Does this mean you don’t need flood insurance?
No. If your home is located in a higher rated floodplain area, then it’s important that you carry flood insurance. Most standard homeowner’s policies do not include flood coverage. You may want to consider including flood coverage even if your home is not in one of the designated areas because flooding can still happen. Keep in mind that most flood insurance policies have a 30-day waiting period, so don’t wait until you hear on the news there may be weather causing flooding.
How does NFIP work with your flood insurance?
If your home is located in a participating community, then NFIP can provide a replacement cost of the structure. It will also help pay for some of the loss of personal property. There are caps on the amount it will cover, and will only cover the cost of the building as it was before the flood. What this means is it will cover some of the loss, and your flood insurance will help cover the amount over what NFIP pays. Without a flood insurance policy, you could end up short of covering everything you need.
Notes to keep in mind with national flood insurance
NFIP is a government-funded program that can run short of funds in times of large natural disasters. For example, a hurricane can cause many to lose their homes and NFIP may need to put out millions of dollars to help homeowners. This can lead to shortages and cause funding to be delayed. Carrying flood insurance can help keep the delays in paying for your home damages or replacement to a minimum. You also want to make certain of the flood risk rating of the location of your home and if your community is a participant in the NFIP.
Brashears Insurance
We are not just another insurance agency because we work to understand your unique lifestyle needs other agencies may overlook. Contact an agent today to explore your need to add flood insurance to your homeowner’s policy. We can offer private flood insurance through Lloyds of London or Lexington, both of which sometimes have better rates and do not require elevations certificates (not all flood zones are eligible, but it’s a great option to review). And we can get the policy issued quickly, which is good for loan transactions.
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