Flood is among the top natural calamities affecting US today. While no home is practically declared as totally free from flooding, structures built in low-lying inundated areas, near rivers and dams and other flood-prone areas, are obviously the nearest candidates for flood damage. These damages amount to billions of dollars lost in properties, including damages on house structure and personal belongings and notwithstanding incalculable grief from health hazards and deaths associated with such calamity.

Flood insurance is the insurance coverage against flood damage to properties. Unfortunately, home insurance does not cover flood damage. This is mainly because the number of claimants far exceeds the premiums and the insurance companies are unable to cover their costs.

Since many insurance companies do not provide insurance against flood damage, the Federal Government started National Flood Insurance Program or the NFIP. NFIP is operated by Federal Emergency Management Agency (FEMA).

National Flood Insurance Program (NFIP)

The main aim of NFIP is to provide flood insurance and to protect people from future flood damage through the implementation of floodplain management.

NFIP is implemented in many communities. According to NFIP data, more than 20,400 communities participate in NFIP. These communities have to implement the directives given in Floodplain Management. In turn, NFIP provides flood insurance to all homes and buildings in those communities.

Floodplain Management contains directives to prevent future flood damage. These directives may include certain building requirements, zoning and sub-division. Floodplain Management also identifies certain areas called Special Flood Hazard Areas. New construction in these areas has to be approved by FEMA.

Flood Damage Insurance Policies

NFIP provides two kinds of insurance policies - Standard Flood Insurance Policy and Preferred Risk Policy.

Standard Flood Insurance Policy insures residential buildings, commercial buildings and condominiums in participating communities. Normally the coverage limit is $250,000 for residential structures and $100,000 for residential contents. Business structure and content may have a coverage limit of $500,000.

Preferred Risk Policy is for homes and buildings in low-to-moderate risk zone. This option is considerably inexpensive compared to the Standard Flood Insurance Policy.

Factors for Determining Flood Insurance Premium

The following are some of the factors considered for determining the flood insurance premium.

* The community in which the home structure or building is located.

* Status of the community - Regular or Emergency.

* Date when the structure was constructed.

* Amount of insurance needed.

* Location category of the building; whether it is in a high-risk, low-risk or moderate-risk zone.

* Deductible requested by the owner of the building.

* Cost of replacement or reconstruction of the building.

* Number of levels or floors in the building.

* Pre-FIRM or Post-FIRM: If the Date of Construction or the Date of Improvement is on or before December 31, 1974, then it is Pre-FIRM. Else, it is Post-FIRM.

* Need for Elevation Certificate.

Apart from flood insurance, a few simple steps can reduce flood damage. These include having an emergency or evacuation plan, storing valuables in safe areas, cleaning debris from the gutter and being alert to weather conditions. Flood Insurance along with these simple steps will facilitate easy recovery from flood damage.