What Is Flood Insurance?

The National Flood Insurance Program (NFIP), a collaboration between the federal government, the property and casualty insurance industry, and local communities, plays a critical role in providing flood insurance protection. Managed by the Federal Emergency Management Agency (FEMA), the NFIP is the nation’s largest single-line insurance program, covering over five million policyholders with nearly $1.3 trillion in coverage against flood risks.

Through the Write Your Own (WYO) program and partnerships with over 50 insurance companies, the NFIP enables private insurers, including each insurance company, to sell and service policies that FEMA underwrites, reaching a large network of policyholders.

The effectiveness of the NFIP is further enhanced by participating communities that adopt and enforce floodplain management ordinances, which aids in the mitigation of flood damage.

Participating Communities and Property Owners

To participate in the NFIP, a community must:

Participation in the NFIP is voluntary, but it’s strongly encouraged to ensure federal flood insurance is available to residents.

If communities do not join the NFIP after being identified as flood-prone for one year, withdraw, or are suspended, residents may not be able to purchase flood insurance, and the community may be ineligible for federal disaster relief.

Understanding Your Flood Risk

The NFIP works with communities to establish and enforce floodplain management regulations, helping individuals and businesses understand their flood risk. Traditionally, the NFIP’s flood risk assessment depended on a property’s elevation and its location within a 100-year floodplain to estimate risk. However, the introduction of Risk Rating 2.0 has transformed the NFIP’s approach, allowing for more tailored assessments and leading to rate changes for insurance policyholders.

Even properties outside FEMA’s high-risk flood zone designations are still susceptible to flooding, making flood insurance a wise investment in many cases.