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National Flood Insurance Program

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1. What happens when a community does not enforce its floodplain management ordinance?

Communities are required to adopt and enforce a floodplain management ordinance that meets minimum National Flood Insurance Program (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.

2. What is probation?

Probation is the formal notification by FEMA to a community that its floodplain management program does not meet National Flood Insurance Program (NFIP) criteria. It is an action authorized under federal regulations.

3. When can a community be placed on probation?

A community can be placed on probation 90 days after FEMA provides written notice to community officials of specific deficiencies. Probation generally is imposed only after FEMA has consulted with the community and has not been able to resolve deficiencies. The FEMA Regional Director has the authority to place communities on probation.

4. How long will probation last?

Probation may be continued for up to one year after the community corrects all program deficiencies and remedies all violations to the maximum extent possible.

5. What penalties are imposed when a community is placed on probation?

An additional $50 charge is added to the premium for each policy sold or renewed in the community. The additional charge is effective for at least one year after the community's probation period begins. The surcharge is intended to focus the attention of policyholders on the community's non-compliance to help avoid suspension of the community, which has serious adverse impacts on those policyholders.

Probation does not affect the availability of flood insurance.

6. What is suspension?

Suspension of a participating community (usually after a period of probation) occurs when the community fails to solve its compliance problems or fails to adopt an adequate ordinance. The community is provided written notice of the impending suspension and granted 30 days in which to show cause why it should not be suspended. Suspension is imposed by the Associate Director and Mitigation Directorate of FEMA.

If suspended, the community becomes non-participating and flood insurance policies cannot be written or renewed. Policies in force at the time of suspension continue in force for the policy term. Three-year policies remain in force until the next annual anniversary date of the policy.

7. What happens if a community does not participate in the National Flood Insurance Program (NFIP)?

Flood insurance under the National Flood Insurance Program (NFIP) is not available within that community. Furthermore, Section 202(a) of Public Law 93-234, as amended, prohibits federal officers or agencies from approving any form of financial assistance for acquisition or construction purposes in a Special Flood Hazard Area (SFHA).

For example, this would prohibit loans guaranteed by the Department of Veterans Affairs, insured by the Federal Housing Administration, or secured by the Rural Housing Services. Under Section 202(b) of Public Law 93-234, if a Presidentially declared disaster occurs as a result of flooding in a non-participating community, no federal financial assistance can be provided for the permanent repair or reconstruction of insurable buildings in SFHAs. Eligible applicants may receive those forms of disaster assistance that are not related to permanent repair and reconstruction of buildings.

If the community applies and is accepted into the NFIP within six months of a presidential disaster declaration, these limitations on federal disaster assistance are lifted.

8. Explain the discounts on premiums for the Community Rating System (CRS) for communities that go beyond the minimum requirements to participate in the National Flood Insurance Program (NFIP).

The National Flood Insurance Program's (NFIP) Community Rating System (CRS) recognizes community efforts beyond the NFIP minimum standards by reducing flood insurance premiums for the community's property owners. The discounts may range from 5-45%. 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.

9. What procedures must be followed for a community to participate in the Community Rating System (CRS)?

Participation in the Community Rating System (CRS) is voluntary. A community in compliance with the rules and regulations of the National Flood Insurance Program's (NFIP) may apply. The community's Chief Executive Officer must appoint a CRS coordinator to handle the application work and serve as the liaison between the community and FEMA.

The first step in the application process is for the community to obtain a copy of the CRS Coordinator's Manual, which describes the program and gives details on the eligible activities. The CRS coordinator should fill out and submit an application for participation in the CRS. The CRS will verify the information and arrange for flood insurance premium discounts.

10. How can a community acquire the CRS Coordinator's Manual and other information describing the program?

View Community Rating System (CRS) information on FEMA's website.

11. What is the National Flood Insurance Program (NFIP)?

The National Flood Insurance Program's (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 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.

12. Why was the National Flood Insurance Program established by Congress?

For decades, the national response to flood disasters was generally limited to constructing flood-control works such as dams, levees, sea-walls, and the like, and providing disaster relief to flood victims. This approach did not reduce losses, nor did it discourage unwise development. In some instances, it may have actually encouraged additional development. To compound the problem, the public generally could not buy flood coverage from insurance companies, and building techniques to reduce flood damage were often overlooked.

In the face of mounting flood losses and escalating costs of disaster relief to the general taxpayers, the U.S. Congress created the National Flood Insurance Program's (NFIP). The intent was to reduce future flood damage through community floodplain management ordinances, and provide protection for property owners against potential losses through an insurance mechanism that requires a premium to be paid for the protection.

13. How was the National Flood Insurance Program (NFIP) established and who administers it?

The U.S. Congress established the National Flood Insurance Program's (NFIP) on August 1, 1968, with the passage of the National Flood Insurance Act of 1968. The NFIP was broadened and modified with the passage of the Flood Disaster Protection Act of 1973 and other legislative measures. It was further modified by the National Flood Insurance Reform Act of 1994, signed into law on September 23, 1994.

The NFIP is administered by the Federal Insurance and Mitigation Administration (FIMA) and the Mitigation Directorate (MT), components of FEMA, an independent federal agency.

14. What is the National Flood Insurance Program's (NFIP) Write Your Own (WYO) Program?

The Write Your Own (WYO) Program, begun in 1983, is a cooperative undertaking of the insurance industry and the Federal Insurance and Mitigation Administration (FIMA). The WYO Program allows participating property and casualty insurance companies to write and service the Standard Flood Insurance Policy in their own names.

The companies receive an expense allowance for policies written and claims processed while the federal government retains responsibility for underwriting losses. The WYO Program operates within the context of the National Flood Insurance Program's (NFIP), and is subject to its rules and regulations.

The goals of the WYO Program are:

• Improve service to NFIP policyholders through the infusion of insurance industry knowledge


• Increase the NFIP policy base and the geographic distribution of policies


• Provide the insurance industry with direct operating experience with flood insurance

As of October 2000, more than 100 insurance companies had signed arrangements with FIMA to sell and service flood insurance under their names.

15. Do the state insurance regulators have any jurisdiction over the National Flood Insurance Program in their respective states?

As established by the U.S. Congress, the sale of flood insurance under the National Flood Insurance Program (NFIP) is subject to the rules and regulations of Federal Insurance and Mitigation Administration (FIMA). FIMA has elected to have state-licensed insurance companies' agents and brokers sell flood insurance to consumers. State regulators hold the insurance companies' agents and brokers accountable for providing NFIP customers with the same standards and level of service that the states require of them in selling their other lines of insurance.

Private insurance companies participating in the Write Your Own (WYO) Program must be licensed and regulated by states to engage in the business of property insurance in those states in which they wish to sell flood insurance.

16. How does the National Flood Insurance Program (NFIP) benefit property owners, taxpayers, and communities?

Through the National Flood Insurance Program (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.

17. What is the definition of a community?

A community, as defined for the National Flood Insurance Program's (NFIP) purposes, is any state, area, or political subdivision, or any Indian tribe, authorized tribal organization, Alaska native village, or authorized native organization that has the authority to adopt and enforce floodplain management ordinances for the area under its jurisdiction. In most cases, a community is an incorporated city, town, township, borough, or village, or an unincorporated area of a county or parish. However, some states have statutory authorities that vary from this description.

18. Why is participation in the National Flood Insurance Program (NFIP) on a community basis rather than on an individual basis?

The National Flood Insurance Act of 1968 allows the Federal Insurance and Mitigation Administration (FIMA) to make flood insurance available only in those areas where the appropriate public body has adopted adequate floodplain management regulations for its flood-prone areas. Individual citizens cannot regulate building or establish construction priorities for communities. Without community oversight of building activities in the floodplain, the best efforts of some to reduce future flood losses could be undermined or nullified by the careless building of others. Unless the community as a whole is practicing adequate flood hazard mitigation, the potential for loss will not be reduced sufficiently to affect disaster relief costs.

Insurance rates also would reflect the probable higher losses that would result without local floodplain management enforcement activities.

19. Is community participation mandatory?

Community participation in the National Flood Insurance Program (NFIP) is voluntary, although some states require NFIP participation as part of their floodplain management program.

Each identified flood-prone community must assess its flood hazard and determine whether flood insurance and floodplain management would benefit the community's residents and economy. However, a community that chooses not to participate within one year after the flood hazard has been identified and an NFIP map has been provided, is subject to the ramifications.

A community's participation status can significantly affect current and future owners of property located in Special Flood Hazard Areas (SFHAs). The decision should be made with full awareness of the consequence of each action.

20. What is the National Flood Insurance Program's Emergency Program?

The Emergency Program is the initial phase of a community's participation in the National Flood Insurance Program (NFIP) and was designed to provide a limited amount of insurance at less than actuarial rates. A community participating in the Emergency Program either does not have an identified and mapped flood hazard or has been provided with a Flood Hazard Boundary Map (FHBM), and the community is required to adopt limited floodplain management standards to control future use of its floodplains.

About 1% of the 19,000 communities participating in the NFIP remain in the Emergency Program and FEMA hopes to convert all communities to the Regular Program of the NFIP.

21. What is the National Flood Insurance Program's (NFIP) Regular Program?

A community participating in the Regular Program of the National Flood Insurance Program (NFIP) is usually provided with a Flood Insurance Rate Map (FIRM) and a detailed engineering study, termed a Flood Insurance Study (FIS). Under the Regular Program, more comprehensive floodplain management requirements are imposed on the community in exchange for higher amounts of flood insurance coverage.