National Flood Insurance Program (NFIP) Overview

This page provides essential information for the Florida Adjuster Claim Professional Exam regarding the National Flood Insurance Program (NFIP).

Fast Facts

• NFIP provides flood insurance for residential and commercial buildings and personal property, including high-risk flood zones.
• Policies available through:
  • NFIP directly (if community participates)
  • Write-Your-Own (WYO) private insurers
• Coverages and premiums set by FEMA, consistent across NFIP and WYO insurers.
• Three standard coverage forms:
  • Dwelling Form
  • General Property Form
  • Residential Condominium Building Association Policy (RCBAP)
• Eligibility:
  • Buildings: Fixed structures with two rigid walls and a secured roof.
  • Contents: Must be in a fully enclosed building.
• Coverages: Building (A), Personal Property (B), Other Coverages (C).

Why Flood Insurance?

Standard property policies exclude flood losses due to their catastrophic nature. Flood risk exists even in moderate- to low-risk zones, where over 20% of losses occur due to poor drainage, rapid rainfall, snowmelt, or mudslides.

Mortgage lenders require flood insurance in Special Flood Hazard Areas (SFHAs) and recommend it for moderate/low-risk zones.

NFIP Purpose

Established in 1968, NFIP aims to:

• Share flood loss risks nationwide.
• Reduce flood damage by restricting floodplain development.

Write-Your-Own (WYO) vs. Government Plans

95% of NFIP policies are issued by WYO insurers, who use their own branding but are fully reinsured by FEMA. Coverage and rates are identical whether purchased through NFIP or WYO.

Community Participation

Community participation in NFIP, based on Flood Insurance Rate Maps (FIRMs), is required for eligibility:

• Emergency Program: SFHA properties eligible with limited coverage.
• Regular Program: All flood zones eligible once fully mapped.

Flood Definition

NFIP defines a flood as:

• General inundation of 2+ acres or 2+ properties from:
  • Overflow of inland/tidal waters.
  • Rapid surface water runoff.
  • Mudflow.
• Collapse/subsidence of land due to erosion from water exceeding normal levels.

Coverage Forms and Eligibility

Dwelling Form

Covers 1-4 unit residences, renters, and contents in:

• Single-family homes (<50% incidental occupancy).
• 2-4 family buildings (<25% incidental occupancy).
• Condominiums, townhouses, row houses.
• Contents in nonresidential buildings.

General Property Form

Covers 5+ unit residences and nonresidential properties like:

• Apartments, dormitories, assisted-living facilities.
• Hotels, retail, farms, factories, schools, etc.
• Detached garages, commercial contents.

RCBAP Form

Covers condominium associations in regular program communities for buildings with ≥75% residential floor area.

Common Eligibility

Buildings need:

• 2+ rigid walls, secured roof, ≥51% above ground (or at/above BFE if raised).
• Resistance to flotation/collapse.

Mobile homes must be on permanent foundations in SFHAs (post-Oct 1982). Contents must be in enclosed buildings.

Ineligible: Buildings over water (post-Oct 1982), container structures, greenhouses, 50%+ below ground (unless at/above BFE).

Coverages

Coverage A: Building Property

Includes fixtures, appliances, and attached structures (e.g., awnings, elevators, permanent carpets).

Coverage B: Personal Property

Covers household items, tenant improvements (up to 10% of limit), and condo unit interiors (up to 10% of limit). Sublimit of $2,500 for valuables (e.g., jewelry, furs).

Exclusions: Money, vehicles, outdoor property, animals, etc.

Coverage C: Other Coverages

Includes:

• Debris removal (including neighbor’s debris).
• Property removal expenses (up to $1,000).
• Sandbagging (up to $1,000).
• Pollution damage (up to $10,000, general property form).
• Condo loss assessments (dwelling form).

Coverage D: Increased Cost of Compliance

Up to $30,000 for costs to comply with floodplain laws after significant flood damage.

Coverage Limits

Property Type	Coverage Limit
1-4 Family Structure	$250,000
1-4 Family Contents	$100,000
Other Residential Structures	$250,000
Other Residential Contents	$100,000
Business Structure	$500,000
Business Contents	$500,000
Renter Contents	$100,000

Deductibles

• Emergency Program: $2,000.
• Regular Program: $1,000-$10,000 (residential), up to $50,000 (nonresidential).

Loss Settlement

• Dwelling/RCBAP: Replacement cost (single-family), special loss settlement (mobile homes), actual cash value (multi-family, contents).
• General Property: Actual cash value for all.

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