National Flood Insurance Program

Created in 1968, the national flood insurance program provides a mean for property owners to protect their property from a financial point.

A city or town has to participate in the national flood insurance program before a property owner can take advantage of what the program has to offer. The program is open to home and condo owners, renters of homes or condo’s, and commercial owners and renters.

Cities and towns that participate in the national flood insurance program agree to adopt and enforce ordinances that meet or exceed the Federal Emergency Management Administration requirements to reduce the risk of flooding. Such flood insurance is available through casualty and property insurance agents. The national flood insurance program sets the rates and the rates do not vary from agent to agent or insurance company to insurance company.

The rates depend on certain factors that include age and type of construction of the building and the level of risk of the building. Two types of insurable property are protected under the national flood insurance program and they are building and the contents. The national flood insurance program does not cover the land portion of the property.

The building coverage includes the building itself and the foundation in addition to installed carpeting over an unfinished floor, dishwashers, refrigerators and cook stove as well as any other built in appliance, the water heater and furnace, electrical and plumbing systems and central air conditioning equipment.

The content coverage includes furniture, electronic equipment, clothing and curtains, portable dishwashers, microwaves and removable window air conditioners, carpeting not included under building coverage and clothes washers and dryers.

Buildings and homes located in what is considered a high-risk area with a mortgage from a federally insured or regulated lending element are required to have flood insurance under the national flood insurance program. A high-risk area is any area considered to have at least a 1% chance or greater of flooding in any given year. That equates to a 26% chance of flooding during the course of a 30 year mortgage.

Buildings and homes located in what is considered moderate to low-risk flood areas with mortgages from federally insured or regulated lenders are not required to have flood insurance. However, a lender can mandate flood insurance be in place as a condition of a mortgage. If a homeowner cancels the flood insurance before the mortgage is paid, the lender can rightfully demand full payment of the remaining mortgage.

Homeowners in a moderate to low-risk area are eligible for flood insurance at a preferred rate. Homeowners in high risk areas are eligible for flood insurance through a standard policy and a standard flood insurance rate. Calculations for flood insurance premiums are based on the lowest habitable floor in the building to the elevation requirement on the flood insurance map, as well as the flood zone, location of the building contents, the number of floors in the building, the building occupancy and the year the structure was built.