Glossary of Common Flood Insurance Terms
Posted courtesy of FEMA and the National Flood Insurance Program
NOTICE: This document is for informational purposes only and is not intended to alter or replace the insurance policy. Additionally, this informational sheet is not intended to fully set out your rights and obligations or the rights and obligations of the insurance company. If you have questions about your insurance, you should consult your insurance agent, the insurance company, or the language of the insurance policy.
Act – The National Flood Insurance Act of 1968 and any amendments to it.
Actual Cash Value (ACV) – The cost to replace an insured item of property at the time of loss, less the value of physical depreciation.
Base Flood – The flood having a 1% chance of being equaled or exceeded in any given year.
Base Flood Elevation (BFE) – The elevation shown on the Flood Insurance Rate Map (FIRM) for Zones AE, AH, A1-A30, AR, AR/A, AR/AE, AR/A1-A30, AR/AH, AR/AO, V1-V30, and VE that indicates the water surface elevation resulting from a flood that has a 1% chance of equaling or exceeding that level in any given year.
Basement – Any area of the building, including any sunken room or sunken portion of a room, having its floor below ground level (subgrade) on all sides.
Breakaway wall – A wall that is not part of the structural support of the building and is intended through its design and construction to collapse under specific lateral loading forces, without causing damage to the elevated portion of the building or supporting foundation system.
Community – A political entity that has the authority to adopt and enforce floodplain ordinances for the area under its jurisdiction. In most cases, a community is an incorporated city, town, township, borough, village, or an unincorporated area of a county or parish. However, some states have statutory authorities that vary from this description.
Community Rating System (CRS) – A program developed by the FEMA Mitigation Division to provide incentives for those communities in the National Flood Insurance Program that have gone beyond the minimum floodplain management requirements to develop extra measures to provide protection from flooding.
Condominium – That form of ownership of real property in which each unit owner has an undivided interest in common elements.
Elevated Building – A building that has no basement and has its lowest elevated floor raised above the ground level by foundation walls, shear walls, posts, piers, pilings, or columns. Solid foundation perimeter walls are not an acceptable means of elevating buildings in V and VE zones.
Elevation Certificate – A certificate that verifies the elevation data of a structure on a given property relative to the ground level. The Elevation Certificate is used by local communities and builders to ensure compliance with local floodplain management ordinances and is also used by insurance agents and companies in the rating of flood insurance policies.
Emergency Program – The initial phase of a community’s participation in the National Flood Insurance Program. During this phase, only limited amounts of insurance are available under the Act.
Enclosure – That portion of an elevated building below the lowest elevated floor that is either partially or fully shut-in by rigid walls.
Federal Emergency Management Agency (FEMA) – The federal agency within the Department of Homeland Security that is tasked with responding to, planning for, recovering from, and mitigating against man-made and natural disasters.
Federal Policy Fee – A flat charge that the policyholder must pay on each new or renewal policy to defray certain administrative expenses incurred in carrying out the National Flood Insurance Program.
Flood – A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is the policyholder’s property) from one of the following:
•Overflow of inland or tidal waters
•Unusual and rapid accumulation or runoff of surface waters from any source
•Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above
Flood Disaster Protection Act (FDPA) of 1973 – Made the purchase of flood insurance mandatory for the protection of property located in Special Flood Hazard Areas.
Flood Hazard Boundary Map (FHBM) – Official map of a community issued by the Federal Insurance Administrator, where the boundaries of the flood, mudflow, and related erosion areas having special hazards have been designated.
Flood Insurance Rate Map (FIRM) – Official map of a community on which the Mitigation Division Administrator has delineated both the special hazard areas and the risk premium zones applicable to the community.
Flood Zone (Zone) – A geographical area shown on a Flood Hazard Boundary Map or a Flood Insurance Rate Map that reflects the severity or type of flooding in the area.
Floodplain – Any land area susceptible to being inundated by floodwaters from any source.
Floodplain Management – The operation of an overall program of corrective and preventive measures for reducing flood damage, including but not limited to, emergency preparedness plans, flood control works, and floodplain management regulations.
Grandfathering – An exemption based on circumstances previously existing. Under the NFIP, buildings located in Emergency Program communities and Pre-Flood Insurance Rate Map buildings in the Regular Program are eligible for subsidized flood insurance rates. Post-Flood Insurance Rate Map buildings in the Regular Program built in compliance with the floodplain management regulations in effect at the start of construction will continue to have favorable rate treatment even though higher base flood elevations or more restrictive, greater risk zone designations result from Flood Insurance Rate Map revisions.
Group Flood Insurance Policy (GFIP) – Issued by the NFIP Direct Program in response to a presidential disaster declaration. Disaster assistance applicants, in exchange for a modest premium, receive a GFIP certificate for a minimum amount of building and/or contents coverage for a 3-year policy period. An applicant may cancel the group policy certificate at any time and secure a regular Standard Flood Insurance Policy through the NFIP.
Increased Cost of Compliance (ICC) – Coverage for expenses a property owner must incur, above and beyond the cost to repair the physical damage the structure actually sustained from a flooding event, to comply with mitigation requirements of state or local floodplain management ordinances or laws. Acceptable mitigation measures are elevation, flood-proofing, relocation, demolition, or any combination thereof.
Lowest Floor – The lowest floor of the lowest enclosed area (including a basement). An unfinished or flood-resistant enclosure, usable solely for parking of vehicles, building access, or storage in an area other than a basement area, is not considered a building’s lowest floor provided that such enclosure is not built so as to render the structure in violation of requirements.
Mandatory Purchase – Under the provisions of the Flood Disaster Protection Act of 1973, individuals, businesses, and others buying, building, or improving property located in identified areas of special flood hazards within participating communities are required to purchase flood insurance as a prerequisite for receiving any type of direct or indirect federal financial assistance (e.g., any loan, grant, guaranty, insurance, payment, subsidy, or disaster assistance) when the building or personal property is the subject of or security for such assistance.
Manufactured (Mobile) Home – A structure built on a permanent chassis, transported to its site in one or more sections, and affixed to a permanent foundation. “Manufactured (mobile) home” does not include recreational vehicles.
Mitigation Division – A division under FEMA that manages the NFIP and oversees FEMA’s mitigation programs.
Mobile Home – see entry for Manufactured Home
National Flood Insurance Program (NFIP) – A federal program enabling property owners in participating communities to purchase insurance protection against losses from flooding. This insurance is designed to provide an insurance alternative to disaster assistance to meet the escalating costs of repairing damage to buildings and their contents caused by floods.
National Flood Insurance Reform Act (NFIRA) – The purpose of the National Flood Insurance Reform Act of 1994 is to improve the financial condition of the NFIP and reduce federal expenditures for disaster assistance to flood-damaged properties. The act affects every part of NFIP, insurance, mapping and floodplain management. NFIRA also gives lenders tools with which to enforce requirements for flood insurance coverage mandated under the Flood Disaster Protection Act of 1973.
Non-Residential – Includes, but is not limited to: small business concerns, churches, schools, farm buildings (including grain bins and silos), pool houses, clubhouses, recreational buildings, mercantile structures, agricultural and industrial structures, warehouses, hotels and motels with normal room rentals for less than 6 months’ duration, and nursing homes.
Non-Special Flood Hazard Area (NSFHA) – An area in a low to moderate risk flood zone (Zones B, C, X) that is not in any immediate danger from flooding caused by overflowing rivers or hard rains. However, it’s important to note that structures within a NSFHA are still at risk.
Other Residential – Hotels and motels where the normal occupancy of a guest is 6 months or more; a tourist home or rooming house which has more than four roomers. A residential building (excluding hotels and motels with normal room rentals for less than 6 months’ duration) containing more than four dwelling units. Incidental occupancies such as office, professional private school, or studio occupancy, are permitted if the total area of such incidental occupancies is limited to less than 25 percent of the total floor area within the building.
Participating Community – A community for which the Mitigation Division Administrator has authorized the sale of flood insurance under the NFIP.
Policy – The entire written contract between the insured and the insurer. It includes: the printed policy form, the application and Declarations Page, any endorsement(s) that may be issued, and any renewal certificate indicating that coverage has been instituted for a new policy and new policy term.
Post-FIRM Building – A building for which construction or substantial improvement occurred after December 31, 1974, or on or after the effective date of an initial Flood Insurance Rate Map (FIRM), whichever is later.
Pre-FIRM Building – A building for which construction or substantial improvement occurred on or before December 31, 1974, or before the effective date of an initial Flood Insurance Rate Map (FIRM).
Preferred Risk Policy (PRP) – A policy that offers fixed combinations of building/contents coverage or contents-only coverage at modest, fixed premiums. The PRP is available for property located in B, C, and X zones in Regular Program communities that meet eligibility requirements based on the property’s flood loss history.
Probation Surcharge (Premium) – A flat charge that the policyholder must pay on each new or renewal policy issued covering property in a community that the NFIP has placed on probation under the provisions of 44 CFR 59.24.
Regular Program – The final phase of a community’s participation in the National Flood Insurance Program. In this phase, a Flood Insurance Rate Map is in effect and full limits of coverage are available under the Act.
Replacement Cost Value (RCV) – The cost to replace property with the same kind of material and construction without deduction for depreciation.
Residential Condominium Building Association Policy (RCBAP) – Policy issued to insure a residential condominium building and all units within the building, provided that the building is located in a Regular Program Community and at least 75 percent of the total floor area is residential.
Single-Family Residence – A residential single family dwelling. Incidental office, professional, private school, or studio occupancies, including a small service operation, are permitted if such incidental occupancies are limited to less than 50 percent of the building’s total floor area.
Special Flood Hazard Area (SFHA) – A FEMA-identified high-risk flood area where flood insurance is mandatory for properties. An area having special flood, mudflow, or flood-related erosion hazards, and shown on a Flood Hazard Boundary Map or a Flood Insurance Rate Map as Zone A, AO, A1-A30, AE, A99, AH, AR, AR/A, AR/AE, AR/AH, AR/AO, AR/A1-A30, V1-V30, VE, or V.
Standard Flood Insurance Policy (SFIP) – Policy issued to insure a building and/or its contents.
Submit-for-Rate – An application for flood insurance on a building for which no risk rate is published in the Flood Insurance Manual. Insurance coverage can be obtained only after the NFIP has approved the application and has established the risk premium rate.
2 to 4 Family Residence – A residential building (excluding hotels and motels with normal room rentals for less than 6 months’ duration) containing no more than four dwelling units. Incidental occupancies such as office, professional, private school, or studio space are permitted if the total area of such occupancies is limited to less than 25 percent of the total floor area within the building.
Waiting Period – The time between the date of application and the policy effective date.
Wave Height Adjustment – A measurement that is added to the base flood elevation for V Zones shown on the Flood Insurance Rate Map published prior to 1981. For coastal communities, the base flood elevation shown on Flood Insurance Rate Maps published prior to 1981 are still-water elevations, which include only the effects of tide and storm surge, and not the height of wind-generated waves.
Write Your Own (WYO) Program – A cooperative undertaking of the insurance industry and FEMA begun in October 1983. The WYO Program operates within the context of the NFIP and involves private insurance carriers who issue and service NFIP policies.
Zone – A geographical area shown on a Flood Hazard Boundary Map or a Flood Insurance Rate Map that reflects the severity or type of flooding in the area.