Flood Insurance

Last Updated:​ May 9, 2016

Flood Insurance

Flooding in Wisconsin has caused devastating damage to property in the state. Adding to the problem is the fact that few people understand the limitations in property insurance policies on damage caused by flood and only a small number of business owners have purchased flood insurance through the National Flood Insurance Program (NFIP). The NFIP makes federally backed flood insurance available to business owners in communities that adopt and enforce floodplain management ordinances to reduce future flood damage. Community participation in the NFIP is voluntary.

Buying flood insurance is the best thing you can do to protect your business and financial security from a flood.

Policies are available in three forms: Dwelling (most homes), General Property (apartments and businesses), and Residential Condominium Building Association (condominiums).

It is important to know that if you have a federally backed mortgage on a home located in a high-risk area, federal law requires you to purchase flood insurance. Also, if you've received a federal grant for previous flood losses, you must have a flood policy to qualify for future aid.


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.

Communities that participate in the NFIP agree to adopt and enforce floodplain management ordinances to reduce further flood damage. In exchange the NFIP makes federally backed flood insurance available to homeowners, renters and business owners in these communities. Communities must apply to the program for citizens to become eligible to buy flood insurance policies.

To get secured financing to buy, build, or improve structures in Special Flood Hazard Areas (SFHA) you will be required to purchase flood insurance. Lending institutions that are federally regulated or federally insured must determine if the structure is located in a SFHA and must provide written notice requiring flood insurance.

Flood insurance is available to any property owner located in a community participating in the NFIP. All areas are susceptible to flooding, although to varying degrees; in fact, 25% of all flood claims occur in the low-to-moderate risk areas. Flooding can be caused by heavy rains, melting snow, by inadequate drainage systems, failed protective devices such as levees and dams, as well as by tropical storms and hurricanes.

In 1968, Congress created the National Flood Insurance Program. The NFIP was broadened and modified with the passage of the Flood Disaster Protection Act of 1973 and other legislative measures. It was further modified by the National Flood Insurance Reform Act of 1994. The Mitigation Division, a component of the Federal Emergency Management Agency (FEMA), manages the NFIP and oversees the floodplain management and mapping components of the program.​

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