National Flood Insurance Policy: What exactly is it?

Many residents of the U.S aren’t aware, but floods are the number one natural disaster in the United States, and from 2008 to 2012 the average flood claim amounted to nearly $42,000. And from 2003 to 2012, total flood insurance claims averaged nearly $4 billion per year. Flood insurance is not required by the federal government, but anybody can be vulnerable to them, both physically and financially. In truth, people outside of high risk flood areas file nearly 25% of all NFIP insurance claims and receive one third of Federal Disaster Assistance for flooding issues. In 2012, the NFIP paid more than $7.7 billion in flood insurance claims to all policy holders.

Having flood insurance on your property is important, especially if you live in a high-risk area around a river or stream. Being prepared is always the best option in this situation, because if you are more prepared, the more money and time you will save in the long run. The NFIP is a program that helps property owners in participating communities purchase insurance protection against flood losses. This insurance provides an insurance alternative to disaster assistance, therefore meeting the costs of repairing damage to buildings and their contents that have been damaged by flood waters. Not every community is involved with the NFIP, and it is based on an agreement between local communities and the Federal Government that states that the community will adopt and implement a floodplain management ordinance. This will reduce the chance of future flood risks to new construction in “Special Flood Hazard Areas”, and the Federal Government will then make insurance available in the community as a financial protection against flooding.

To combat flood losses and catapulting costs of disaster relief to the taxpayers, the U.S congress created the NFIP (National Flood Insurance Policy). This was meant to reduce any further flood damage from occurring throughout the community floodplain, and provide protection to property owners. The insurance mechanism created requires a premium to be paid in order for the flood loss protection.

Follow this link to see flood insurance explained more thoroughly, and what you can do to receive this policy for your home or business!

The NFIP was established on August 1st, 1968. This occurred only after the National Flood Insurance Act of 1968. The NFIP was then broadened and altered with the passage of the Flood Disaster Protection Act of 1973. It was then further modified by the National Flood Insurance Reform Act of 1994, and the Flood Insurance Reform Act of 2004. The NFIP is overseen by FEMA (Federal Emergency Management Agency), and is a component of the U.S Department of Homeland Security.

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