National Flood Insurance Program

National Flood Insurance Program
source
Agency name	National Flood Insurance Program
Formed	August 1, 1969
Jurisdiction	United States
Headquarters	Washington, D.C.
Parent agency	Federal Emergency Management Agency

National Flood Insurance Program is a program run by the Federal Emergency Management Agency (FEMA) that provides flood insurance to homeowners, renters, and businesses in participating communities. The program was created to provide affordable flood insurance to people in flood-prone areas, where private insurance companies were often unwilling to offer coverage, as seen in the aftermath of Hurricane Betsy and the subsequent Congressional hearings led by Senator Russell Long. The program works with communities to adopt and enforce floodplain management regulations, which help mitigate the effects of flooding, as recommended by the National Academy of Sciences and the American Society of Civil Engineers. By participating in the program, communities can reduce their flood risk and provide their residents with access to affordable flood insurance, as demonstrated by the experiences of New Orleans, Louisiana, and Galveston, Texas.

Introduction

The National Flood Insurance Program (NFIP) was established by the Congress of the United States in 1968, with the passage of the National Flood Insurance Act of 1968, signed into law by President Lyndon B. Johnson. The program is administered by the Federal Emergency Management Agency (FEMA), which is part of the United States Department of Homeland Security, and works closely with other agencies, such as the National Oceanic and Atmospheric Administration (NOAA) and the United States Army Corps of Engineers. The NFIP provides flood insurance to homeowners, renters, and businesses in participating communities, which must adopt and enforce floodplain management regulations to reduce their flood risk, as outlined in the Flood Control Act of 1936 and the Water Resources Development Act of 1986. The program also provides funding for flood mitigation projects, such as the construction of levees and floodwalls, as seen in the Mississippi River and Tributaries Project.

History

The NFIP was created in response to the growing problem of flooding in the United States, which had been exacerbated by urbanization and the destruction of natural floodplains, as noted by the National Research Council and the Environmental Protection Agency. In the 1960s, a series of devastating floods, including the Columbia River Flood and the Rio Grande Flood, highlighted the need for a national flood insurance program, as discussed by Senator Mike Mansfield and Representative Hale Boggs. The program was established by the National Flood Insurance Act of 1968, which was signed into law by President Lyndon B. Johnson on August 1, 1969, and has since been amended several times, including by the Flood Control Act of 1972 and the National Flood Insurance Reform Act of 1994. Today, the NFIP provides flood insurance to over 5 million policyholders in more than 22,000 communities across the United States, including Florida, Louisiana, and Texas, which are among the most flood-prone states, as reported by the National Hurricane Center and the National Weather Service.

Eligibility_and_Coverage

To be eligible for NFIP coverage, a community must participate in the program and adopt and enforce floodplain management regulations, as outlined in the Floodplain Management Regulations and the National Flood Insurance Program Regulations. The community must also provide FEMA with information about its flood risk and mitigation efforts, as required by the National Flood Insurance Act of 1968 and the Flood Control Act of 1972. Policyholders can purchase flood insurance to cover their homes, businesses, and personal property, with coverage limits ranging from $250,000 to $500,000, as specified in the National Flood Insurance Program Policy Forms and the Flood Insurance Manual. The NFIP also offers coverage for condominiums and townhouses, as well as for renters and businesses, as described in the National Flood Insurance Program Condominium Policy and the National Flood Insurance Program Commercial Policy.

Policy_Types_and_Rates

The NFIP offers several types of policies, including standard flood insurance policies and preferred risk policies, which are designed for properties in low-to-moderate flood risk areas, as defined by the Flood Insurance Rate Map (FIRM) and the National Flood Hazard Layer. The program also offers grandfathered policies for properties that were built before the adoption of floodplain management regulations, as allowed by the National Flood Insurance Reform Act of 1994 and the Biggert-Waters Flood Insurance Reform Act of 2012. Policy rates are based on a variety of factors, including the property's location, elevation, and flood risk, as determined by the Flood Insurance Rate Map (FIRM) and the National Flood Hazard Layer, which are developed by FEMA in cooperation with the National Oceanic and Atmospheric Administration (NOAA) and the United States Geological Survey (USGS).

Claims_and_Payouts

When a policyholder files a claim, the NFIP works with the policyholder to determine the amount of damage and provide payment for covered losses, as outlined in the National Flood Insurance Program Claims Manual and the Flood Insurance Claims Process. The program has a maximum payout limit of $250,000 for residential properties and $500,000 for commercial properties, as specified in the National Flood Insurance Program Policy Forms and the Flood Insurance Manual. The NFIP also provides funding for flood mitigation projects, such as the construction of levees and floodwalls, as seen in the Mississippi River and Tributaries Project and the Sacramento River Flood Control Project. In recent years, the NFIP has paid out billions of dollars in claims, including $16 billion in response to Hurricane Katrina and $8 billion in response to Hurricane Sandy, as reported by the Congressional Budget Office and the Government Accountability Office.

Criticisms_and_Controversies

Despite its importance, the NFIP has faced criticism and controversy over the years, including concerns about its financial sustainability, as noted by the Congressional Budget Office and the Government Accountability Office. The program has also been criticized for its treatment of policyholders, particularly in the aftermath of Hurricane Katrina, when many policyholders experienced delays and difficulties in receiving payment for their claims, as reported by the National Flood Insurance Program Review and the Flood Insurance Reform Coalition. Additionally, the NFIP has faced criticism for its role in encouraging development in flood-prone areas, as noted by the National Academy of Sciences and the Environmental Protection Agency. In response to these criticisms, FEMA has implemented reforms, including the Biggert-Waters Flood Insurance Reform Act of 2012 and the Homeowner Flood Insurance Affordability Act of 2014, which aim to improve the program's financial sustainability and treatment of policyholders, as described in the National Flood Insurance Program Reform Plan and the Flood Insurance Reform Implementation Plan.