In the late 1960’s, the federal government created the National Flood Insurance Program (NFIP) in order to provide access to flood insurance for homes and buildings in communities that participate in the NFIP. The NFIP is managed by the Federal Emergency Management Agency (FEMA) and consists of three parts:

Part One offers flood insurance for homes, condominiums and commercial buildings in all flood zone classifications.
Part Two works with states and local municipalities to create flood maps that designate areas of high, moderate and low flood risk.
Part Three works with municipalities to incorporate flood-safe building practices into local building codes.

A primary goal of the NFIP is to identify areas of high flood risk and encourage building in a flood-safe manner to help prevent damage as well as bodily injury when a flood occurs in the area.

FEMA flood zone classifications are used to help mortgage companies determine if flood insurance is required to close on a loan. The evolution of technology has allowed FEMA flood zone classification maps to become very accurate, although errors are still possible. For example, the systems which determine the location of a home or building put the pinpoint at the center of the parcel of land or the middle of the property line along the street, neither of which may be the actual location of the home or building.

Since federal law requires flood insurance on structures that are partially or wholly in the SFHA, it is possible that the home or building may not actually be located where the pinpoint is dropped. Thus, some buyers may be improperly required to purchase flood insurance because a portion of their parcel is in the SFHA, while their home or building is not. On the other hand, this means that some buyers may mistakenly be relieved of the obligation to obtain flood insurance because while the home or building may be in the SFHA, the location where the pinpoint is dropped is not.

Therefore, all buyers should check for themselves to determine if a home or building is the subject of the flood insurance requirement.

Flood damage is the most common and costly types of natural disaster damage in the Unites States. Floods are happening more often, with more severity, and in places that do not have a history of flooding. An insurance agent who has expertise in flood risk and flood insurance can help evaluate your flood risk and help you make insurance decisions which make sense for you, your family and your business.