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How Does the National Flood Insurance Program Work?

Jason Metz

Looking for flood insurance? Then you’ll want to check out the National Flood Insurance Program (NFIP) along with options from private insurers. The NFIP was created by Congress in 1968. It provides flood insurance across the U.S. and is managed by the Federal Emergency Management Agency (FEMA).

Most residential flood insurance policies are sold through this program. There are more than 5 million flood insurance policies in-force with the NFIP nationwide. In addition to flood insurance, the NFIP also works to improve floodplain management and develops maps of flood-hazard zones.

You can find the NFIP at floodsmart.gov.

What is a FEMA flood map?

FEMA flood maps identify levels of flood risk. These maps are used to determine flood insurance rates as well as flood insurance requirements and floodplain management, such as flood control and/or structures to reduce flooding.

Flood maps are continually updated and might be changed based on factors such as:

  • Weather patterns.
  • Erosion.
  • New construction and development.

You can find out the flood risk for your address online from the FEMA Flood Map Service Center.

What does the NFIP flood insurance cover?

Flood insurance through the NFIP is broken down into two types of coverage:

  • "Building property" (includes plumbing, furnaces and other things listed below).
  • Contents.

Coverage can further be broken down into two areas: Elevated floors and areas below the lowest elevated floor, such as:

  • Basements.
  • Crawl spaces under an elevated building.
  • Enclosed areas beneath buildings elevated on full-story foundation walls (these are sometimes referred to as "walkout basements").
  • Enclosed areas under other types of buildings.

Coverage for elevated floors

Flood insurance from the NFIP covers building property up to $250,000, including:

  • Carpets permanently installed over an unfinished floor.
  • Cisterns and the water in them.
  • Detached garage that is used for limited storage or parking.
  • Electrical and plumbing systems.
  • Foundation walls, anchorage systems and staircases attached to the building.
  • Fuel tanks and the fuel in them, solar energy equipment, well water tanks and pumps.
  • Furnaces, water heaters, heat pumps and sump pumps.
  • Refrigerators, cooking stoves, and built-in appliances such as dishwashers.
  • Permanently installed paneling, wallboard, bookcases and cabinets.
  • Window blinds.

It also covers contents (meaning your belongings) up to $100,000, such as:

  • Carpets installed over wood floors.
  • Clothes washers and dryers.
  • Curtains.
  • Food freezers and the food in them.
  • Personal belongings such as clothing, furniture and electronic equipment.
  • Portable and window air conditioners.
  • Valuable items like artwork and furs (up to $2,500).

Flood insurance from the NFIP does not cover:

  • Currency, precious metals and valuable papers such as stock certificates.
  • Damage from mold, mildew or moisture that could have been avoided by the property owner or not caused by the flood.
  • Damage caused by an earth movement, even if the earth movement is caused by a flood.
  • Financial losses from business interruption.
  • Extra living expenses, also called loss of use, if you can't live at home due to a flood, such as hotel and meals.
  • Loss of use or access to an insured property.
  • Property outside the building like trees, plants, wells, septic systems, walks, decks, patios, fences, seawalls, hot tubs and swimming pools.
  • Most self-propelled vehicles, such as cars. (However, comprehensive insurance on an auto insurance policy covers flood damage to vehicles.)

Coverage for basements & areas below the lowest elevated floor

Flood insurance from the NFIP for building property and contents in a basement or area below the lowest elevated floor have limited coverage.

Building property coverage for basements includes:

  • Central air conditioners.
  • Cisterns and the water in them.
  • Drywall for walls and ceilings.
  • Electrical outlets, switches and circuit-breaker boxes.
  • Foundation walls, anchorage systems and staircases attached to the building.
  • Fuel tanks and the fuel in them, solar energy equipment and well water tanks and pumps.
  • Furnaces, water heaters, heat pumps and sump pumps.
  • Non-flammable insulation (in basements only).

Contents coverage includes:

  • Food freezers and the food in them (but not refrigerators).
  • Portable and window air conditioners.
  • Washers and dryers.

Not covered under structure or contents:

  • Carpeting, area carpets and other floor coverings such as tile.
  • Drywall for walls and ceilings (below the lowest elevated floor).
  • Some staircases and elevators.
  • Most personal property such as clothing, electronic equipment, kitchen supplies and furniture.
  • Paneling, bookcases and window treatments such as curtains and blinds.
  • Walls and ceilings not made of drywall.

Can you purchase flood insurance directly from FEMA?

You cannot purchase NFIP flood insurance directly from FEMA. You can only purchase flood insurance from a home insurance agent.

The NFIP is available to homeowners, renters and business owners whose properties are located within "NFIP-participating communities." Your home insurance agent will know if your community participates, or look up your community online through FEMA's Community Status Book.

In some cases, if your house is in a "special flood hazard," a mortgage lender might require you purchase flood insurance from the NFIP.

How much does FEMA flood insurance cost?

The average NFIP flood insurance premium was $707 per year in 2017, according to the Insurance Information Institute. But that price can vary depending on factors such as the house's flood risk, the amount of coverage and the amount of your deductible. The NFIP says that many policies cost less than $400 per year.

Every policy sold through the NFIP will have an annual surcharge, depending on the type of building and policy. Here's more from FEMA about surcharge amounts.

Is flood insurance effective immediately?

NFIP flood insurance is usually not effective immediately. Most policies have a 30-day waiting period before they go into effect, but FEMA does have exceptions, including:

  • If the building is newly designated in the high-risk Special Flood Hazard Area and you purchase flood insurance within 13 months of a flood map revision, the waiting period is reduced to one day.
  • If the flood insurance is purchased when making, increasing, extending or renewing your mortgage, there is no waiting period.
  • If you select "additional insurance" as an option on your insurance policy renewal, there is no waiting period.
  • If the property is affected by flooding on burned federal land and the policy is purchased within 60 days of the fire-containment period, the waiting period may be waived at the time of a claim.

Is all flood insurance through the NFIP?

Not all flood insurance comes through the NFIP. In some areas, NFIP policies are not available. Or homeowners simply choose to buy private insurance policies. Besides the NFIP, you can buy flood insurance in two other ways:

  • Personal private flood insurance as your primary policy.
  • “Excess” private flood insurance in addition to an NFIP policy. This option gives you supplemental flood insurance on top of an NFIP policy.

Do you have to be in a flood zone to get flood insurance?

No, you do not have to be in a flood zone to get flood insurance. If your property has lower risk for flooding, you’ll generally pay lower flood insurance rates.

Is my property in a flood zone?

You can find out if a property is in a flood zone by using the online tool at the FEMA Flood Map Service Center.