Flood Insurance Basics
Traditional homeowner insurance policies don’t provide coverage for floods. That is why any homeowner in a flood zone should purchase flood insurance. You might want to learn more about the National Flood Insurance Program (NFIP).
NFIP Insurance is a result of the National Flood Insurance Program (NFIP). The program was established by Congress in 1968. The program has evolved because of the devastation caused by natural disasters. The Federal Emergency Management Agency (FEMA) regulates the NFIP.
Some areas of the country have a high risk for flooding. Property located on a coast line can expect water damage from rain and winds more than a property located in the dry Arizona climate.
How Does the Program Help?
The goal of NFIP is to reduce the impact of flooding. The program encourages communities susceptible to flooding to require floodplain management strategies.
NFIP also provides affordable flood insurance to property owners in these floodplain areas. This is possible by teaming up with private insurance providers. It allows the spreading of risk associated with insuring properties in floodplain areas.
Spread the Risk Explained
It is essentially spreading the risk, so one person is not solely responsible for the insurance payment. You purchase NFIP insurance through a private insurance provider. When you file a claim, a portion is paid by the private insurance provider and a portion by the NFIP. This makes everything more affordable for the insurance providers and policyholders.
When your property is located in an NFIP flood area, you are required to obtain NFIP insurance.