Frequently Asked Questions

The National Flood Insurance Program
Information for Prospective Buyers
Coverage Under The Standard Flood Insurance Policy
Filing a Flood Insurance Claim
General

The National Flood Insurance Program

Flood insurance covers loss of insured property resulting directly from flooding. What is a flood?

"Flood" is defined in the Standard Flood Insurance Policy (SFIP), in part, as:

A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from overflow of inland or tidal waters, from unusual and rapid accumulation or runoff of surface waters from any source, or from mudflow.

Normal runoff resulting from rain and isolated incidence of seepage in basements when general flood conditions do not exist is not covered by federal flood insurance policies. Sewer backups are covered only when they are clearly a result of a general condition of flooding.

What is the National Flood Insurance Program?

The National Flood Insurance Program (NFIP) is a federal program enabling property owners in participating communities to purchase insurance protection against losses from flooding. This insurance is designed to provide an insurance alternative to disaster assistance to meet the escalating costs of repairing damage to buildings and their contents caused by floods.

Participation in the NFIP is based on an agreement between local communities and the federal government that states if a community will adopt and enforce a floodplain management ordinance to reduce future flood risks to new construction in Special Flood Hazard Areas (SFHAs), the federal government will make flood insurance available within the community as a financial protection against flood losses. Communities must apply to the program for citizens to become eligible to buy flood insurance policies.

How was the NIFP established and who administers it?

The U.S. Congress established the NFIP with the passage of the National Flood Insurance Act of 1968. The NFIP was broadened and modified with the passage of the Flood Disaster Protection Act if 1973 (http://www.fema.gov/pdf/nfip/floodact.pdf) and other legislative measures. It was further modified by the National Flood Insurance Reform Act of 1994 (http://www.fema.gov/pdf/nfip/riegle.pdf). The NFIP is administered by the Federal Emergency Management Agency (FEMA), a component of the Department of Homeland Security.

What is a Special Flood Hazard Area (SFHA)?

In support of the NFIP, the Federal Emergency Management Agency (FEMA) has undertaken a massive effort of flood hazard identification and mapping to produce Flood Hazard Boundary Maps (FHBMs), Flood Insurance Rate Maps (FIRMs), and Flood Boundary and Floodway Maps (FBFMs). Several areas of flood hazards are commonly identified on these maps.

One of these areas is the Special Flood Hazard Area (SFHA), which is defined as an area of land that would be inundated by a flood having a 1-percent chance of occurring in any given year (also referred to as the base flood). The 1-percent-annual-chance standard was chosen after considering various alternatives. The high-risk area standard constitutes a reasonable compromise between the need for building restrictions to minimize potential loss of life and property and the economic benefits to be derived from floodplain development. Development may take place within the SFHA, provided that development complies with local floodplain management ordinances, which must meet the minimum federal requirements. Flood insurance is required for insurable structures within the SFHA to protect federal financial investments and assistance used for acquisition and/or construction purposes within communities participating in the NFIP.

What is the NFIP's Write Your Own Program?

The Write Your Own Program (WYO) allows participating property and casualty insurance companies to write and service the Standard Flood Insurance Policy in their own names. The companies receive an expense allowance for policies written and claims processed while the federal government retains responsibility for underwriting losses. The WYO Program operates within the context of the NFIP, and is subject to its rules and regulations.

A list of insurance companies that participate in the WYO Program are available on the NFIP Web site at http://www.fema.gov/business/nfip/wyo.shtm.

If your agent or insurance company is not in the WYO Program you may be referred to another agent or insurance company involved in the program.

Does the Wisconsin Office of the Commissioner of Insurance (OCI) have any jurisdiction over the NFIP in their respective states?

As established by the U.S. Congress, the sale of flood insurance under the NFIP is subject to the rules and regulations of FEMA. FEMA has elected to have state-licensed insurance companies' agents and brokers sell flood insurance to consumers. OCI holds the insurance companies' agents and brokers accountable for providing NFIP customers with the same standards and level of service that it requires of them in selling their other lines of insurance.

Private insurance companies participating in the Write Your Own (WYO) Program must be licensed and are regulated by the OCI to engage in the business of property insurance in Wisconsin in order to sell flood insurance.

Information for Prospective Buyers

Who may buy flood insurance?

Property owners, renters, and business people in flood hazard areas of communities that have qualified for the NFIP may purchase flood insurance. Local government officials can tell you if your community is eligible. If your community is not already in the program, local officials may wish to contact the Wisconsin Department of Natural Resources (DNR) for assistance in qualifying for participation.

Renters may buy contents-only or personal property flood insurance. Condominium coverage is also available anywhere in a qualifying community. Buildings under construction may also be eligible for coverage.

What types of property may be insured against flood loss?

Almost every type of walled and roofed building that is principally above ground and not entirely over water may be insured if it is in a participating community. In most cases, this includes manufactured (i.e., mobile) homes that are anchored to permanent foundations and travel trailers without wheels that are anchored to permanent foundations and are regulated under the community's floodplain management and building ordinances or laws. (However, this does not include converted buses or vans.) Contents of insurable walled and roofed buildings also may be insured under separate coverage.

What kinds of property are not insurable under the NFIP?

Buildings entirely over water or principally below ground, gas and liquid storage tanks, animals, birds, fish, aircraft, wharves, piers, bulkheads, growing crops, shrubbery, land, livestock, roads, machinery or equipment in the open and motor vehicles are not insurable. Most contents and finishing materials located in a basement or in enclosures below the lowest elevated floor of an elevated building constructed after the Floor Insurance Rate Map (FIRM) became effective are not covered. Information on the insurability of any special property may be obtained by contacting a property insurance agent or broker.

Are there certain buildings that cannot be covered?

Flood insurance is not available for buildings that FEMA determines have declared by a state or local zoning authority or other authorized authority to be in violation of state or local floodplain management regulations or ordinances. No new policies can be written to cover such buildings; nor can an existing policy be renewed.

New construction or substantially improved structures located within a designated Coastal Barrier Resources System (CBRS) are not eligible for flood insurance, but existing structures that pre-date CBRS designation are eligible for flood insurance coverage. These areas are located in nearly 400 communities on the Atlantic and Gulf coasts and along the Great Lakes shores, and are delineated on the communities flood maps. If, at the time of a loss, it is determined the building is located in a CBRS area, the claim will be denied, the policy canceled, and the premium refunded.

Can I buy flood insurance if my home is located in a high-risk flood area?

You can buy flood insurance no matter where you live, as long as your community participates in the NFIP, except in Coastal Barrier Resources System (CBRS) areas.

Can I get flood insurance if I'm renting a property?

If you live in a community that participates in the NFIP, you may be qualified to get flood insurance to cover the contents of your home or business.

I live in a low-risk flood zone. Do I really need flood insurance?

It is a good idea to buy flood insurance even if you live in a low- or moderate-risk area. Almost 25% of all flood insurance claims come from areas with minimal flood risk. You may qualify for the Preferred Risk Policy (a low-cost flood insurance policy). Contact your insurance agent for more information about the Preferred Risk Policy.

Is it true that only residents of high-risk flood zones need to insure their property?

Even if you live in a medium- or low-risk area, it's advisable to have flood insurance. Between 20% and 25% of the NFIP's flood insurance claims come from areas not considered to be high-risk. The NFIP has a special policy, available for as little as $119 per year, for residential properties located in low- to moderate-risk flood zones.

Can I buy flood insurance if my property was previously flooded?

It doesn't matter how many times your home, apartment, or business has been flooded. You are still eligible to purchase flood insurance, provided that your community is participating in the NFIP.

How do I buy flood insurance?

The best person to help you buy flood insurance is the agent or the insurance company from whom you obtain your homeowner's or automobile insurance. Flood insurance may be bought through any licensed property or casualty insurance agent in Wisconsin.

Some insurance companies actually issue the flood insurance policies, in partnership with the federal government, as a service and convenience for their policyholders. In those instances, the insurance company handles the premium billing and collection, policy issuance, and loss adjustment on behalf of the federal government. These insurance companies are called Write Your Own (WYO) (http://www.fema.gov/business/nfip/wyo.shtm) insurers. If your agent or insurance company is not in the WYO Program you may be referred to another agent or insurance company involved in the program. Your agent may also order the policy for you directly from the federal government.

Coverage Under The Standard Flood Insurance Policy

What flood insurance coverages are available?

There are two layers of coverage available. The first layer of coverage is emergency coverage and is available to residents of flood-prone communities as soon as the community enters the program. The rates for this emergency coverage are partially subsidized by the federal government.

Once a flood rate map is completed, a second layer of coverage is available at actual rather than subsidized rates. Insurance under the regular program is only available to communities that have passed required ordinances and have undergone studies by the Army Corps of Engineers.

Does the NFIP apply a deductible to losses?

A minimum deductible is applied separately to a building and its contents, although both may be damaged in the same flood. Higher deductibles are available. Contact your insurance agent for more information on specific amounts of available deductibles. Higher deductibles are available, please note that choosing a higher deductible will reduce your premium, but must be approved by your mortgage lender. For more information about deductibles, contact your insurance agent or company.

Flood Insurance Coverages

The following coverage limits are available under the Dwelling Form and the General Property Form of the Standard Flood Insurance Policy. Coverage limits under the Residential Condominium Building Association Policy are listed in the NFIP Flood Insurance Manual.

Flood Insurance Coverages

What is the Preferred Risk Policy (PRP)?
(http://www.floodsmart.gov/floodsmart/pages/flood_policies/preferred_risk_policies.jsp)

A policy offering nine coverage combinations for both building and contents (or contents-only for renters) at a fixed premium. As of May 1, 2004, Preferred Risk Policies are available for residential or commercial buildings located in B, C, and X Zones that meet eligibility requirements based on entire flood loss history.

Does insurance under the program provide coverage at replacement cost?

Only for single-family dwellings and residential condominium buildings, if several criteria are met. Replacement cost coverage is available for a single-family dwelling, including a residential condominium unit that is the policyholder's principal residence and is insured for at least 80% of the unit's replacement cost at the time of the loss, up to the maximum amount of insurance available at the inception of the policy term.

Replacement cost coverage does not apply to manufactured (i.e., mobile) homes smaller than certain dimensions specified in the policy. Losses are adjusted on a replacement cost basis for residential condominium buildings insured under the Residential Condominium Building Association Policy (RCBAP).

The principal residence and the 80% insurance to value requirements for single-family dwellings do not apply to the RCBAP. However, coverage amounts less than 80% of the building's full replacement cost value at the time of loss will be subject to a coinsurance penalty.

Contents losses are always adjusted on an actual cash value basis. If the replacement cost conditions are not met, the building loss is also adjusted on an actual cash value basis. Actual cash value means the replacement cost of an insured item of property at the time of loss, less the value of physical depreciation as to the item damaged.

Are there limitations on the amount of insurance available for certain types of property?

Items such as artwork, photographs, collectibles, memorabilia, rare books, autographed items, jewelry, watches, gems, articles of gold, silver, or platinum and furs are limited to $2,500 coverage in the aggregate. This limitation does not apply to other items that are personal property or household contents usual or incidental to the occupancy of the building as a residence. For other limitations under the Standard Flood Insurance Program see the current policy or contact a property insurance agent.

Does a flood insurance policy reimburse me for any actions I take to prevent flood damage?

A flood insurance policy also reimburses you for actions you take to prevent flood damage. For example, costs for moving insured contents, in imminent danger of flooding, to a safe location are reimbursed up to $1,000 with no deductible. Other costs, such as for sandbags, plastic sheeting and lumber, pumps, fill for temporary levees, and wood to save the building can be reimbursed up to a limit of $1,000 with no deductible.

Does the flood insurance dwelling policy provide additional living expenses, if the insured dwelling is flood damaged and cannot be occupied while repairs are being made?

No. The policy only covers direct physical flood damage to the dwelling and does not provide additional living expenses.

NOTE: Loss or damage occurring as a result of a flood, such as explosion, fire, theft, looting, etc., may be covered under your existing property insurance policy. You should contact your agent should such loss occur as a result of a flood.

What is covered in my basement?

Flood insurance covers your home's foundation elements and equipment that is necessary to support the structure (for example: a furnace, water heaters, circuit breakers).

It is important to note that some items in your basement are covered under building coverage (like a furnace, hot water heater and circuit breaker), and others are covered under contents coverage (for example: your washer and dryer, or your freezer and the food in it).

The NFIP encourages people to purchase both building and contents coverage for the most complete protection. Flood insurance does not cover basement improvements, such as finished walls, floors, ceilings, or personal belongings that may be kept in a basement. See the Standard Flood Insurance Policy (SFIP) Forms (http://www.fema.gov/business/nfip/sfip.shtm) for a complete list of what's covered.

Is sewer backup covered under a flood insurance policy?

Flood insurance does not cover sewer backup since flooding is defined as the inundation of normally dry land by the overflow or rise of inland waters or the accumulation of stormwater runoff. Sewer backup is also not covered under your homeowner's insurance policy.

Sewer backup coverage is an endorsement available through most insurance companies, but it may not be offered to property owners when purchasing coverage if you don't ask for it.

What is the flood insurance policy term?

Flood insurance coverage is available for a 1-year term.

Is there a minimum premium for a flood insurance policy?

There is a minimum premium for all flood insurance policies. Because the minimum premium is subject to change, anyone interested in purchasing a flood insurance policy should contact a local property insurance agency or company that writes flood insurance coverage to obtain the current minimum premium amount.

Is there a waiting period for flood insurance to become effective?

There is normally a 30-day waiting period before flood insurance goes into effect. There are two basic exceptions:

• If the initial purchase of flood insurance is in connection with the making, increasing, extending, or renewing of a loan, there is no waiting period. The coverage becomes effective at the time of the loan, provided the application and presentment of premium are made at or prior to loan closing.
• If the initial purchase of flood insurance is made during the 13-month period following the revision or update of a Flood Insurance Rate Map for the community, there is a 1-day waiting period.

In addition to the two basic exceptions, FEMA has issued a policy decision specifying the following four exceptions:

• The 30-day waiting period will not apply when there is an existing insurance policy and an additional amount of flood insurance is required in connection with the making, increasing, extending, or renewing of a loan, such as a second mortgage, home equity loan, or refinancing. The increased amount of flood coverage will be effective as of the time of the loan closing, provided the increased amount of coverage is applied for and the presentment of additional premium is made at or prior to the loan closing.
• The 30-day waiting period will not apply when an additional amount of insurance is required as a result of a map revision. The increased amount of coverage will be effective at 12:01 a.m. on the first calendar day after the date the increased amount of coverage is applied for and the presentment of additional premium is made.
• The 30-day waiting period will not apply when flood insurance is required as a result of a lender's determining a loan that does not have flood insurance coverage should be protected by flood insurance. The coverage will be effective upon the completion of an application and the presentment of payment of premium.
• The 30-day waiting period will not apply when an additional amount of insurance offered in the renewal bill is being obtained in connection with the renewal of a policy.

What is the maximum that can be collected for a loss under the NFIP policy?

An insured will never be paid more than the value of the covered loss, less deductible, up to the amounts of insurance purchased. Therefore, purchasing insurance to value is an important consideration. The amount of insurance you need should be discussed with your insurance agent or broker.

Can flood insurance be canceled at the request of the insured with a refund of premium?

Flood insurance can be canceled, and a refund can be issued, only in certain circumstances, because all of the premium is fully earned on the first day of the policy term. Premium will be refunded on a pro-rata basis when the policyholder no longer owns or has an insurable interest in the insured property, provided no claim has been paid or is pending. There are other limited cancellation provisions for the refunding of premium. To discuss cancellation criteria and procedures, policyholders should contact the insurance agent who wrote the policy or call the NFIP toll-free at 1-888-379-9531, TTY: 1-800-427-5593.

Is there a "grace period" for an insured under the NFIP policy conditions?

All policies expire at 12:01 a.m. on the last day of the effective term, but you remain covered for 30 days after the expiration of the policy. Claims for losses that occur in this grace period will be honored, provided that the full renewal premium is paid by the end of the 30-day period. Coverage also remains in force for any mortgagee named in the policy for 30 days after written notice to the mortgagee of the expiration of a policy.

What is the requirement for purchasing flood insurance after receiving disaster assistance?

The National Flood Insurance Reform Act requires individuals in SFHAs who receive disaster assistance after September 23, 1994, for flood disaster losses to real or personal property to purchase and maintain flood insurance coverage for as long as they live in the dwelling. If flood insurance is not purchased and maintained, future disaster assistance will be denied. If the structure is sold, the current owner is required to notify the buyer of the house of the need to purchase and maintain flood insurance. If the buyer is not notified, suffers uninsured flood losses, and receives federal disaster assistance, the seller may be required to repay the federal government any federal disaster assistance the buyer received.

Will damage-preventing measures I've taken in my home be reimbursed by my flood insurance policy?

Some will be. When your insured home is in eminent danger of being flooded, you may receive up to a $1,000 reimbursement for your damage-preventing expenses. Things like renting storage space to protect your belongings, buying sandbags and lumber to make a barricade, and renting pumps are all things that qualify for reimbursement. No deductible is applied to this coverage.

When is flood insurance required by law?

Flood insurance is required by law in some instances. To get federally secured financing to buy, refinance, build, repair, reconstruct or improve structures in Special Flood Hazard Areas (SFHAs) you will be required to purchase flood insurance. This includes most types of mortgage loans, as well as FHA and VA loans.

May a lender purchase flood insurance coverage on behalf of the borrower?

Yes. If after a lender notifies a borrower of the need for flood insurance and the borrower refuses to respond, the lender must purchase the coverage on behalf of the borrower and may pass the costs of obtaining the coverage on to the borrower.

Filing a Flood Insurance Claim

How do I file a claim for flood loss?

You should immediately report any flood loss to the insurance company or agent who wrote the policy. A claims adjuster will be assigned the loss and you must file a "proof of loss" within 60 days of the date of loss. If your policy is with a Write Your Own Company (WYO) you must follow the company's claim procedures. The 60-day time limit for filing a proof of loss remains the same.

What is a "proof of loss"?

A proof of loss is a sworn statement made by you that substantiates the insurance claim and is required to be submitted to the NFIP or WYO company within 60 days of the loss. A printed form usually is available from the adjuster assigned to the claim.

What is a "loss in progress"?

A loss in progress occurs when actual flood damage to a building or its contents started before the inception of the policy.

Is a loss in progress covered?

The NFIP does not cover damage caused by a loss in progress under any of the flood insurance policies.

What is the maximum that can be collected for a loss under the NFIP policy?

An insured will never be paid more than the value of the covered loss, less deductible, up to the amounts of insurance purchased. Therefore, purchasing insurance to value is an important consideration. The amount of insurance a property owner needs should be discussed with your insurance agent or broker.

General

Will federal disaster assistance pay for flood damage?

Before a community is eligible for disaster assistance, it must be declared a federal disaster area. Federal disaster assistance declarations are issued in less than 50% of flooding incidents. The premium for an NFIP policy, averaging a little more than $350 a year, is less expensive than interest on federal disaster loans.

Furthermore, if you are uninsured and receive federal disaster assistance after a flood, you must purchase flood insurance to remain eligible for future disaster relief.

Does the NFIP cover flooding resulting from hurricanes, or the overflow of rivers, or tidal waters?

The NFIP covers flooding that can be caused by any one of the following: 1) the overflow of inland or tidal waters; 2) the unusual and rapid accumulation or runoff of surface waters from any source, such as heavy rainfall; 3) the incidence of mudslides, caused by flooding, which are comparable to a river of liquid and flowing mud; and 4) the collapse or destabilization of land along the shore of a lake or other body of water, resulting from erosion or the effect of wave or water currents exceeding normal, cyclical levels.

Is wind-driven rain considered flooding?

No. Rain entering through wind-damaged windows, doors, or in a hole in a wall or the roof, resulting in standing water or puddles, is considered windstorm, rather than flood damage. Federal flood insurance only covers damage caused by the general condition of flooding typically caused by storm surges, wave wash, tidal waves, mudslides (i.e., mudflow), or the overflow of any body of water above normal, cyclical levels.

What is mitigation insurance?

Mitigation is the ongoing effort to lessen the impact disasters have on people and property. Mitigation involves keeping homes away from floodplains, engineering bridges to withstand earthquakes, creating and enforcing effective building codes to protect property from hurricanes and more. For more information on mitigation contact the federal Emergency Management Agency (FEMA) at (312) 408-5500 (in Chicago) or (202) 566-1600 (in Washington, DC) or on FEMA's Web site at http://www.fema.gov/about/divisions/mitigation.shtm.

Remember: When a loss occurs, you may file a claim with your agent. Most adjusting services brought into your community following a flood also can provide proof-of-loss forms if you need to file a flood insurance claim. The claim forms must be filed with the NFIP within 60 days.

For general information on the flood insurance program, you may call or write:

Regional Offices

National Flood Insurance Program (NFIP)
Bureau & Statistical Agent
18008 Wolf Road, Ste. 123
Orland Park, IL 60467-5407
(708) 326-3072 Phone
(708) 326-3074 Fax
http://www.fema.gov/business/nfip/

Federal Emergency Management Agency (FEMA)
536 S. Clark St. Sixth Floor
Chicago, IL 60605
(312) 408-5500 Phone
http://www.fema.gov