The National Flood Insurance Act of 1968 was enacted by Congress to help owners of property in flood-prone areas by subsidizing flood insurance and by taking land-use and land-control measures to improve future management for floodplain areas. The Army Corps of Engineers has prepared detailed maps that identify specific flood-prone areas throughout the country.
To finance property with federal or federal-related mortgage loans, owners in flood-prone areas known as special flood hazard areas (SFHAs) are required to obtain flood insurance.
The Federal Emergency Management Agency (FEMA) administers the flood insurance program.
Homeowners’ insurance policies always exclude floods, so flood coverage must always be purchased as a totally separate policy.
Flood Insurance Policies are only issued by the Government. Policies are written annually and can be purchased from the National Flood Insurance Program (NFIP — A government Agency), or the designated servicing companies in each state.
Flood Insurance: What’s Covered and What’s Not
FEMA defines a flood as “a general and temporary condition of partial or complete inundation of two or more acres of normally dry land or two or more properties from an overflow of inland or tidal waves, an unusual and rapid accumulation or runoff of surface waters, mudflows or mudslides on the surface of normally dry land, or the collapse of land along the shore of a body of water.”
The physical damage to a building or personal property directly caused by a flood is covered by flood insurance policies. Flood policies exclude coverage for losses such as swimming pools, cars, money, animals, groundcover, or underground systems.
Policies are of two types: replacement cost value (RCV) or actual cost value (ACV). Deductibles and premiums vary accordingly.
