The National Flood Insurance Program (NFIP) is a flood insurance provider managed by the Federal Emergency Management Agency (FEMA). Because it’s a government-run provider, it’s often the option of last resort when homeowners need flood insurance but can’t purchase it through the private market.
What is the National Flood Insurance Program?
The National Flood Insurance Program (NFIP) is a nationally run flood insurance provider. Homeowners insurance doesn’t cover floods, so the program is intended to be an option that fills that gap. It’s managed by FEMA to reduce the socio-economic impact of floods.
More than 5 million homeowners in over 23,000 vulnerable communities have flood coverage through the NFIP. Overall, the program protects nearly $1.3 trillion in property, as of 2024.
Why was the National Flood Insurance Program created?
The NFIP was established by the National Flood Insurance Act of 1968. The purpose was to reduce the financial burden of floods in communities across the United States. One part of the act establishes a flood insurance program, one part produces a flood risk map, and one enforces floodplain management standards for the most at-risk communities.
In accordance with the act, insurance policies underwritten by the NFIP are subsidized by FEMA. Its purpose was to help the most at-risk communities have access to affordable flood insurance. It also encourages the communities it works with to adopt flood mitigation measures through floodplain management. This might be city drainage work, levy maintenance, or homeowner education.
Mortgage companies typically require flood insurance on homes and buildings in Special Flood Hazard Areas, as designated by FEMA’s flood maps. That’s because these areas are more likely to face floods, and flooding is super expensive. According to FEMA, just an inch of water can cause $25,000 in restoration work.
What does an NFIP policy cover?
The NFIP underwrites flood insurance policies through a network of insurance agents. It covers losses resulting from a rise in water from external sources, like ocean storm surge, overflowing rivers and lakes, or heavy rain that doesn’t drain properly. Flood insurance also covers the accumulation of water from melting snow.
These policies cover the structure and the contents of the home up to $250,000 and $100,000 respectively.
The policy has a 30-day waiting period before coverage takes effect, though it can be waived to meet loan requirements for a new home purchase. In that instance, the policy becomes effective the day after purchase.
What doesn’t an NFIP policy cover?
While the NFIP flood policy covers a rise in water from external sources, it doesn’t cover all rises in water. Sewer backups are not covered unless they are part of a bigger flooding issue. Isolated flooding on one person’s property may not be covered, either. The NFIP doesn’t cover loss of use, either.
Is the NFIP the only option for flood insurance?
No. Many homeowners mistakenly think that the only flood insurance available is through the National Flood Insurance Program. In fact, many private insurance companies like Kin offer private flood insurance. In many cases, it’s cheaper, too.
Private flood insurance also tends to be more robust than that offered by the NFIP. Whereas the NFIP limits coverage to $250,000 for the structure and $100,000 for contents, private flood insurance often has full property coverage. That means the structure’s flood coverage matches Coverage A in the homeowners insurance policy.
If your home’s replacement cost exceeds $250,000, an NFIP policy may leave you underinsured in the event of a total loss. The same is true for the $100,000 property coverage limit. Many consider the NFIP a mitigation policy: it’s better than nothing, but it’s not the ideal coverage.
Kin vs. NFIP
We’re happy to offer flood insurance in Florida and Louisiana. Instead of buying a separate flood policy through the NFIP, you can simply add our flood coverage to your homeowners policy.
Here are some other key differences between our coverage and the NFIP’s.
|
Kin |
NFIP |
|
|
Rebuild cap |
Matches coverage A |
$250,000 |
|
Availability |
Florida & Louisiana |
50 states |
|
Elevation certificate required |
Optional |
Yes |
|
Waiting period |
None in Florida |
30 days |
|
Lender accepted |
Yes |
Yes |
|
Building coverage |
Replacement cost |
Replacement cost |
|
Contents coverage |
Replacement cost |
Actual cash value |
|
Loss of use |
Yes |
No |
|
Loss avoidance coverage |
Yes |
No |
|
Debris removal |
Yes |
Yes |
|
Available for seasonal homes |
Yes |
Additional cost |
Is private flood insurance better than NFIP?
Whether one insurance policy is better than another really depends on your particular situation. While there are cases where an NFIP policy is a good choice, a private flood insurer may be less expensive, or it may provide broader coverage. The best way to know what works for you is to compare quotes and coverage.
If you’re a homeowner in Florida or Louisiana, give us a call at 855-717-0022 to see what sort of flood insurance options are available from Kin.
