What is FEMA Flood Insurance

What is FEMA Flood Insurance?

The Federal Emergency Management Agency (FEMA) Flood Insurance, also known as the National Flood Insurance Program (NFIP), is a program that allows home and business owners in flood-prone areas to get flood insurance with the U.S. government. This program is based on a partnership between FEMA and local communities in which NFIP is approved in exchange for community-based projects that seek to manage and reduce the risk of future flooding. FEMA Flood Insurance covers more than 5.5 million properties in the US as of 2010.

Flooding is a constant threat in many areas of the continental United States. For many decades, the government tried to regulate floods by building dams and providing disaster relief, which did little to mitigate the loss of property owners who found themselves in the midst of a flood. FEMA Flood Insurance was founded as a result of a desire to improve flood management by involving communities in the process, and also served to provide public insurance, as private insurance companies would rarely provide coverage in high-risk areas. FEMA Flood Insurance and NFIP were introduced by Congress in 1968 through the National Flood Insurance Act. It has since been modified several times by subsequent laws and now falls under the remit of the Department of Homeland Security along with the rest of FEMA.

FEMA Flood Insurance uses flood insurance tariff cards (FIRMs) to identify the areas that may be covered. Using calculations based on past flood activity in the region, these maps divide the landscape into segments based on flood risk. Areas with high risk or those with a flood probability of more than 1% in a given year are given special consideration. Communities that wish to qualify for FEMA flood insurance must agree that all future developments in flood risk areas will be carried out under careful management to reduce the risk of flooding. Communities that fail to honor agreements can be suspended or expelled from the program if no changes are made.

Some critics suggest that FEMA flood insurance can actually increase the risk of flood loss and unfairly burden the taxpayer. Running flood management programs does not necessarily guarantee that floods will not cause damage, and some properties in risk areas have received repeated insurance benefits after periodic floods. Critics also suggest that the program actually encourages communities to develop in risk areas by promising insurance against loss of property.