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1 [1] (April 22, 2025)

handle is hein.crs/bfintthe0001 and id is 1 raw text is: Congressional Research Service Inforrning the legislative debate since 1914 S Updated April 22, 2025 A Brief Introduction to the National Flood Insurance Program The National Flood Insurance Program (NFIP) is the primary source of flood insurance coverage for residential properties in the United States. The NFIP has two main policy goals: (1) to provide access to primary flood insurance, thereby allowing for the transfer of some of the financial risk of property owners to the federal government; and (2) to mitigate and reduce the nation's comprehensive flood risk through the development and implementation of floodplain management standards. A longer-term objective of the NFIP is to reduce federal expenditure on disaster assistance after floods. As a public insurance program, the goals of the NFIP are different from the goals of private- sector insurance companies. It encompasses social goals to provide flood insurance in flood-prone areas to property owners who otherwise would not be able to obtain it and to reduce the government's cost after floods. The NFIP also engages in many noninsurance activities in the public interest: it identifies and maps flood hazards, disseminates flood-risk information through flood maps, requires community land-use and building-code standards, contributes to community resilience by providing a mechanism to fund rebuilding after a flood, and offers grants and incentive programs for household- and community-level investments in flood-risk reduction. Over 22,000 communities in 56 states and jurisdictions participate in the NFIP, with over 4.7 million policies providing over $1.3 trillion in coverage. The program collects $4.3 billion in annual premium revenue. Floods are the most common and costly natural disaster in the U.S. NFIP Claims After a Flood Flood damage is not covered by homeowners insurance; homeowners and renters must buy a separate flood insurance policy, usually from the NFIP. A disaster declaration is not required to claim after a flood. NFIP policyholders can file a claim as soon as it is safe to return to the property to document the damage. In many cases, FEMA has authorized advanced payments on claims. NFIP policyholders should contact their insurance agent to file a claim, not FEMA. Structure of the NFIP The NFIP is managed by the Federal Emergency Management Agency (FEMA) through its subcomponent, the Federal Insurance Directorate. A core design feature of the NFIP is that communities are not required to participate in the program by any law or regulation, but instead participate voluntarily in order to obtain access to NFIP flood insurance. Communities that choose to participate in the NFIP are required to adopt land use and control measures with effective enforcement provisions and to regulate development in the floodplain. FEMA has set forth in federal regulations the minimum standards required for participation in the NFIP; however, these standards have the force of law only because they are adopted and enforced by a state or local government. Legal enforcement of the floodplain management standards is the responsibility of the participating NFIP community, which can elect to adopt higher standards as a means of mitigating flood risk. In addition, FEMA operates a program, called the Community Rating System, to incentivize NFIP communities to adopt more rigorous floodplain management standards. NFIP flood insurance policies are sold only in participating communities and are offered to both property owners and renters and to residential and nonresidential properties. NFIP policies have relatively low coverage limits, particularly for nonresidential properties or properties in high-cost areas. The maximum coverage for single-family dwellings (which also includes single-family residential units within a 2-4 family building) is $100,000 for contents and up to $250,000 for building coverage. The maximum available coverage limit for other residential buildings is $500,000 for building coverage and $100,000 for contents coverage, and the maximum coverage limit for nonresidential business buildings is $500,000 for building coverage and $500,000 for contents coverage. Flood Mapping and Mitigation The NFIP approaches the goal of reducing comprehensive flood risk primarily by requiring participating communities to collaborate with FEMA to develop and adopt flood maps called Flood Insurance Rate Maps (FIRMs). An area of specific focus of the FIRM is the Special Flood Hazard Area (SFHA). The SFHA is defined by FEMA as an area with a 1% or greater risk of flooding every year. FIRMs provide the basis for identifying properties whose owners are required to purchase flood insurance and establishing floodplain management standards that communities must adopt and enforce as part of their participation in the NFIP. There is no consistent, definitive timetable for revising and updating FIRMs for a particular community. Generally, FIRMs may require updating after significant new building development in or near the flood zone, changes to flood- protection systems, or environmental changes in the community. Statutory guidelines set out the procedure for developing new FIRMs for a community. For example, FEMA is required to conduct extensive communication and outreach efforts with the community during the mapping process, which includes several review and comment periods of 30 to 90 days. Communities and individuals also have legal recourse to appeal the FIRM updating process. After a FIRM is finalized and adopted by a community, it can still be revised to correct for errors in map accuracy. To correct these inaccuracies, FEMA allows individuals and communities to request letters amending a FIRM. FEMA also operates a Flood Mitigation Assistance Grant Program (FMA) that is funded through revenue collected by the NFIP. FMA grants are only available to communities that participate in the NFIP, to reduce or eliminate flood https://crsreport

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