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Flood insurance glossary

100-year flood: The term "100-year flood" is something of a misnomer. Instead of meaning that a flood will occur once every 100 years, the term indicates that there is a one percent chance the base flood elevation will be equaled or exceeded each year. Areas where there is a one percent annual chance of flooding are also sometimes referred to as the "base flood."

The National Flood Insurance Program (NFIP) uses the 100-year flood to designate Special Flood Hazard Areas (SPHA) and determine flood insurance needs. Structures located within SPHAs have a 26 percent chance of sustaining flood damage during the course of a 30-year mortgage.

Actual cash value: Price to replace an insured piece of property minus the cost of physical depreciation.

Base flood: Also known as the "100-year flood," properties located in the base flood area have a one percent chance of seeing the flood elevation equaled or exceeded each year.

Base flood elevation: The water surface elevation expected during the base flood. The base flood elevation can be found on Flood Insurance Rate Maps (FIRMs) and can also impact flood insurance premiums.

Community Rating System: Provides incentives for communities to exceed floodplain management requirements and implement additional flood protection strategies.

FEMA: The Federal Emergency Management Agency. A part of the Department of Homeland Security, this agency is responsible for managing all aspects of readiness for and recovery from man-made and natural disasters.

FIRM: Flood Insurance Rate Maps. These are the official maps used to determine flooding risk and flood insurance premiums. FIRM also designate Special Flood Hazard Areas in a community.

Flood: A flood occurs when two or more acres, or two or more properties, of normally dry land are partially or completely inundated as a result of one of the following:

  • An overflow of inland water or tidal waters
  • Rapid accumulation of surface water runoff from any source
  • Flow of mud
  • Wave or current erosion resulting in the collapse or subsidence of land along the shoreline of a lake or similar body of water

Flood Disaster Protection Act (FDPA): This act made it mandatory for properties located within Special Flood Hazard Areas have flood insurance.

Flood Hazard Boundary Map (FHBM): These official maps show flood and mudflow boundaries. In addition, they indicate erosion areas that may pose special hazards.

Flood insurance: Insurance offered through the National Flood Insurance Program (NFIP) to protect structures against water and mud damage sustained during a flooding incident. Standard homeowners insurance will not pay for flood damage, but property owners who live in a community that participates in the NFIP floodplain management program are eligible to buy flood insurance regardless of their flood risk. Flood insurance may be purchased for rental properties, condominiums and business facilities. However, those located within a community that does not participate with the NFIP or residents of an area designated as a "coastal barrier resource system" may have difficulty locating flood insurance coverage.

Floodplain: Refers to any land area that may be inundated by floodwaters.

Floodplain management: The overall process of preventing and reducing flood damage. Floodplain management practices may include creating emergency preparedness plans, controlling flood waters through the use of levees or other means and developing construction requirements for properties located in a floodplain.

Mandatory flood insurance: Certain properties are required by law to maintain flood insurance. The Flood Disaster Protection Act of 1973 mandates that any individual or organization building or improving upon property located in a Special Flood Hazard Area must purchase flood insurance. The insurance is required in order for property owners to be eligible for direct or indirect federal financial aid such as loans, grants, subsidies or disaster assistance.

National Flood Insurance Program (NFIP): This federal program provides property owners in participating communities the opportunity to purchase flood insurance regardless of their property's flood risk.

Participating community: Communities where the sale of flood insurance, through the NFIP, has been authorized by the Mitigation Division Administrator.

Preferred risk policy (PRP): A flood insurance policy that is only available for properties located in zones designated B,C, and X. These plans generally feature affordable, fixed premiums that may cover contents-only or offer a combination of building and contents coverage.

Regular program: A community enters the regular program as the final phase of its participation in the National Flood Insurance Program. At this point, a Flood Insurance Rate Map has been finalized and put into effect and flood insurance coverage is fully available.

Replacement value: Price to replace an insured piece of property using the same materials and construction; physical depreciation is not deducted from the replacement cost.

Special Flood Hazard Area: A high-risk area with a one percent annual chance of having a water surface elevation equal to or exceeding the base flood. Flood insurance is mandatory in these FEMA-identified high-risk flood areas. Special Flood Hazard Areas are designated on maps as Zones 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): A flood insurance policy that provides coverage for the structure and/or the contents.

Zone: Areas shown on a Flood Hazard Boundary Map or a Flood Insurance Rate Map. Zone rankings reflect the type and severity of the flooding risk for that area.

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