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Publication #DH204

How the National Flood Insurance Program (NFIP) Works1

Michael T. Olexa and Lauren Grant2

Introduction

The Federal Insurance and Mitigation Administration (FIMA), a division of the Federal Emergency Management Agency (FEMA), makes flood insurance available in areas where the appropriate public body has adopted adequate floodplain management regulations for its flood-prone areas. Community participation is voluntary, although some states require NFIP participation as part of their floodplain management program. Communities who wish to participate in the National Flood Insurance Program (NFIP) must fulfill two phases:

  1. NFIP Emergency Program

  2. NFIP Regular Program

Phase 1. NFIP Emergency Program

1. Community participation in the NFIP is promoted in two ways: the community develops interest in flood insurance, or FEMA notifies the community that it contains one or more Special Flood Hazard Areas (SFHA). Communities include in their applications resolutions or ordinances the community has adopted to regulate new construction in the SFHA. The resolutions or ordinances do not need to be burdensome, but rather add only minimal new regulation. [Note: A flood-prone community that does not apply for participation in the NFIP within one year of notification is ineligible for federal or federally-related financial assistance for acquisition, construction or reconstruction of insurable buildings in the SFHA.]

  1. After assessing the community's degree of flood risk and development potential, FEMA authorizes the sale of flood insurance in the community up to the Emergency Program limits (Table 1).

  2. If appropriate, FEMA arranges for a study of the community to determine base flood elevations and flood risk zones. Consultation with the community occurs throughout the study. Communities with minimal or no flood risk are converted to the Regular Program without a study.

  3. FEMA provides the studied community with a Flood Insurance Rate Map delineating base flood elevations and flood risk zones. The community has six months to meet the requirements, such as the adoption of base flood elevations in local zoning and building code ordinances.

  4. Once the community adopts more stringent ordinances, FEMA converts the community to NFIP's Regular Program (Phase 2).

Phase 2. NFIP Regular Program

  1. FEMA authorizes the sale of additional flood insurance in the community up to Regular Program limits (Table 2).

  2. The community implements adopted floodplain management measures.

  3. FEMA arranges for periodic community assistance visits with local officials to provide technical assistance regarding compliance with NFIP floodplain management requirements.

  4. Local officials may request flood map updates as needed. FEMA evaluates requests, encourages cost-sharing, and issues revised maps as priorities dictate.

Source for This Publication

Tables

Table 1. 

Emergency program flood insurance coverage limits

Type of Building

Building Coverage Limit

Contents Coverage Limit

Single family dwelling

$35,000*

$10,000

Other residential

$100,000*

$10,000

Non-residential

$100,000*

$100,000

* Under the Emergency Program, higher limits of building coverage are available in Alaska, Hawaii, the U.S. Virgin Islands, and Guam.

Table 2. 

Regular program flood insurance coverage limits

Type of Building

Building Coverage Limit

Contents Coverage Limit

Single family dwelling

$250,000

$100,000

Other residential

$250,000

$100,000

Non-residential

$500,000

$500,000

Footnotes

1.

This document is EDIS document DH204, formerly IFAS publication DH0436. Published June 1998, revised January 2016. It is part of The Disaster Handbook, a component of the Comprehensive Disaster Preparedness and Recovery Education Module. There are ten Disaster Handbook documents by Olexa and Walker: DH138, DH199, DH200, DH201, DH202, DH203, DH204, DH206, DH215, and DH219. Visit the EDIS website http://edis.ifas.ufl.edu.

2.

Michael T. Olexa, professor, Department of Food and Resource Economics, and director, Center for Agricultural and Natural Resource Law, UF/IFAS Extension, Gainesville, FL. Lauren Grant, student, Levin College of Law, University of Florida, Gainesville, FL.

Note: This publication is designed to provide accurate, current, and authoritative information on the subject. However, since the laws, regulations, administrative rulings, and court decisions on which it is based are subject to constant revision, portions of this publication could become outdated at any time. This publication is distributed with the understanding that the authors are not engaged in rendering legal advice or opinions, and the information contained herein should not be regarded, or relied upon, as a substitute for legal advice or opinion. For these reasons, the utilization of these materials by any person constitutes an agreement to hold harmless the authors, the Institute of Food and Agricultural Sciences, and the University of Florida for any liability claims, damages, or expenses that may be incurred by any person as a result of reference to or reliance on the information contained in this fact sheet.


The Institute of Food and Agricultural Sciences (IFAS) is an Equal Opportunity Institution authorized to provide research, educational information and other services only to individuals and institutions that function with non-discrimination with respect to race, creed, color, religion, age, disability, sex, sexual orientation, marital status, national origin, political opinions or affiliations. For more information on obtaining other UF/IFAS Extension publications, contact your county's UF/IFAS Extension office.

U.S. Department of Agriculture, UF/IFAS Extension Service, University of Florida, IFAS, Florida A & M University Cooperative Extension Program, and Boards of County Commissioners Cooperating. Nick T. Place, dean for UF/IFAS Extension.