National Flood Insurance Program

What Does National Flood Insurance Program Mean?

The National Flood Insurance Program (NFIP) is a U.S. government initiative administered by the Federal Emergency Management Agency (FEMA). The program offers flood insurance to property owners and provides education and assistance to help reduce flood damage in areas prone to flooding. Homes with federally backed mortgages in high-risk flood zones are required to carry coverage, while owners in lower-risk areas can decide for themselves whether they need flood insurance.

Insuranceopedia Explains National Flood Insurance Program

The NFIP collaborates with private insurance companies to offer flood insurance to business owners and residents with properties located in floodplains—areas prone to flooding. In exchange, policyholders must comply with FEMA-enforced standards for constructing structures in these floodplains.

Insurance premiums are not determined by the state but are instead based on factors such as the type of structure being insured and its flood risk. Flood risk can vary quite a bit even between neighboring properties, which is why flood insurance rates by ZIP code often look so different from one address to another.