Flood Insurance Basics

In 1968, Congress created the National Flood Insurance Program (NFIP) in response to the rising cost of taxpayer funded disaster relief for flood victims and the increasing amount of damage caused by floods. The Federal Emergency Management Agency (FEMA) manages the NFIP, and oversees the floodplain management and mapping components of the Program.

Nearly 20,000 communities across the United States and its territories participate in the NFIP by adopting and enforcing floodplain management ordinances to reduce future flood damage. In exchange, the NFIP makes Federally backed flood insurance available to homeowners, renters, and business owners in these communities.

Getting Started:

FEMA Flood Insurance: The Right Choice - NFIP Facts for Midwest Residents A good overall summary of flood insurance.

Common Questions:

• Doesn't my Homeowners Policy cover flooding?

  No. In most cases, flood damage is NOT covered by homeowners' policies.

• Who CAN Get Flood Insurance?

  Anyone who lives in a community that participates in the National Flood Insurance Program (NFIP) can buy flood insurance. More than 93% of all Minnesotans live in a community enrolled in NFIP.
  
  NOTE: It is NOT NECESSARY for your property to be mapped in a high flood risk area (1% annual chance or "100-year" floodplain) in order to be eligible to purchase flood insurance.

• Who is REQUIRED to get flood insurance?

  Property owners are required to purchase flood insurance if the insured structure is located within the high flood risk area (1% annual chance or "100-year" floodplain) and if the property has a mortgage or loan on it from a federally regulated institution. This includes most types of mortgages, home equity loans, etc.
  
  NOTE: Flood insurance is mandatory if the STRUCTURE is in the high flood risk area. It is NOT mandatory if just unimproved land is in the high flood risk area, however, a lender may have a policy of requiring flood insurance.

• How do I find out whether my community is enrolled in the National Flood Insurance Program (NFIP)?

  FEMA's list of communities participating in the NFIP
  (Participating communities are listed first, on pages 1-12, then non-participating communities where high flood risk has been mapped are listed on pages 13-15).

  List of Minnesota communities and whether they participate in the NFIP
  (Alphabetical list includes communities that do not have mapped high risk areas, and who do not participate in the NFIP, so are not in the FEMA list in the above link)

• What are the effects of a community NOT participating in the NFIP?

  Effects of Non-Participation in the National Flood Insurance Program
  
  Enrollment in the National Flood Insurance Program (NFIP)
  (scroll to 2nd section)

• My community doesn't participate in the National Flood Insurance Program. Can I still get flood insurance?

  If you live in a community that is not enrolled in the NFIP and want to purchase flood insurance, you will have to search for an agent or company willing to underwrite a private policy. Those policies are usually much more expensive than the policies available through the NFIP. Alternatively, you could contact your local officials and urge them to enroll your community in the NFIP (see link to the process above).

• How Much Does Flood Insurance Cost?

  In Minnesota, the average annual premium is $665 (as of July 2008), but can range from $119 annually for building & contents coverage through a Preferred Risk Policy outside of the high flood risk area to even tens of thousands of dollars for non-compliant post-FIRM structures (built after FEMA Flood Insurance Rate Map showed area as high flood risk).
  
  The main factors are your level of risk, the amount of coverage you need, the elevation of your lowest floor compared to the calculated 1% annual chance ("100-year") flood, and whether your structure was built (or substantially improved) before (pre-) or after (post-) the FEMA first Flood Insurance Rate Map (FIRM) mapped the area as a high flood risk area.
  
  See www.floodsmart.gov for a "One-Step Flood Risk Profile". This profile will help you ...

  1. determine whether you are in a high, medium or low flood risk area
  2. give you estimates of flood insurance premiums for your situation
  3. find an insurance agent

  Rate Comparison Information Sheet
  (June 2008)

• My county is getting a new FEMA Flood Insurance Rate Map (FIRM). How will that affect me?

  Converting a standard rated policy to a PRP
  (For properties shown in high flood risk areas that will be re-mapped to medium or low flood risk - August 2005)
  
  NFIP Map and Zone Grandfather Rules
  (For properties shown in medium or low flood risk areas that will be re-mapped to high flood risk - January 2008)

• How can I find out the level of flood risk on my property?
  1. Go to the "One-Step Flood Risk Profile" at www.floodsmart.gov to find your level of risk on the official FEMA Flood Insurance Rate Map (FIRM) for your community. Not all communities have a FIRM. Areas with lower flood risk, and that were not anticipated to have much development when maps were done in the 1970s and 1980s were not mapped.
  2. Then, even if the FIRM (the FEMA floodplain map) shows your property in the low flood risk area, think about any small ponds or streams near or on your property, or areas that don't drain well. Keep in mind that FEMA only maps streams that drain at least one square mile and larger basins.
  3. Think about how your property drains (or is drained upon!). Many unmapped areas get flooded when there are very intense rains, or floods larger than the 1% annual chance flood (or "100-year flood"). Floods can happen almost anywhere! We've had several isolated areas of 12-15 inches of rain in Minnesota in the last 20 years. See a summary of storms since 1970 with more than 6-inches of rain in a 24-hour period in Minnesota.
• Can't I just get disaster assistance if a flood occurs?

  Not necessarily. Federal disaster assistance is only available if the President of the United States formally declares a disaster in that county. Even if your county is declared, most disaster assistance is in the form of a loan that you have to repay, with interest, in addition to your mortgage loan that you still owe on the damaged property. If your home is flooded and disaster assistance isn't offered, you'll have to shoulder the damage costs alone.
  
  The Benefits of Flood Insurance versus Disaster Insurance
  (FEMA Publication F-217 - August 2004)
  
  More on the federal disaster process ... (under construction)

• My property is protected by a levee. Does this mean that I don't need flood insurance?

  NO! Flood insurance still provides important protections for the property owner. Levees are artificial structures that are designed to protect against floods of certain magnitudes. It is always possible for a flood to exceed the design magnitude, resulting in overtopping of the levee and flooding behind it. In addition, levees are artificial structures requiring regular maintenance: they can and do fail.

  Emergency Levees
  Many levees were constructed at the time of flooding with available materials, and were never certified to meet the federal standards for protection from the 1% annual chance (or "100-year") flood. They were not high enough, or were not constructed with the types of materials or methods needed to be able to meet the standards for certification. Areas behind these emergency levees will be shown as high flood risk areas. It's as if these levees don't exist when it comes to the mandatory flood insurance requirements.
  
  Some of these emergency levees are eligible for PL 84-99 "Non-Federal Flood Control Works Inspection Program" (PL-84-99), which is administered by the U.S. Army Corps of Engineers. Through this program, the Corps assists with regular inspections and recommendations to the community on operations and maintenance. These levees can provide important flood protection, especially when properly maintained, but the properties behind these levees will still be considered to be in the high flood hazard area (1% annual chance flood area).

  Certified Levees
  If a levee has been accredited as providing satisfactory protection against the 1% annual chance flood event, FEMA considers property behind the levee to be out of the floodplain for insurance purposes and any affected property owners would be able to purchase flood insurance at reduced rates. Such levees are included on Flood Insurance Rate Maps, with the affected area mapped as Outside of the Floodplain (Zone X on the maps) but shaded to indicate the area's flooding potential in the event of levee failure; such maps also display a note warning of the consequences of levee overtopping or failure.
  
  These levees are aging. Many were built in the 1960s, or earlier. As FEMA updates the flood risk mapping for a county, the levees are being re-evaluated to verify they still meet the certification standards in 44 CFR Section 65.10 (the federal regulations that lay out the technical standards).

  FEMA fact sheets concerning levees and flood insurance:

  • The NFIP and Levees: Frequently Asked Questions
    (January 2008)
  • Living Behind Levee Systems: Information for Property Owners
    (July 2008)
  • Levees and Flood Insurance: Information for Insurance Industry Professionals
    (January 2008)
  • Levees and Flood Insurance: Information for Mortgage Lenders
    (January 2008)

More Information:

• Additional information on what flood insurance covers coming soon.
• Additional Flood Insurance Information for State and Local Officials
• Additional flood insurance information for insurance agents coming soon.

Go to www.floodsmart.gov for more information on flood insurance.