Flood Insurance
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NATIONAL FLOOD INSURANCE PROGRAM
Flood damage is excluded under standard homeowners and renters insurance policies. Flood coverage, however, is available in the form of a separate policy both from the National Flood Insurance Program (NFIP) and from a few private insurers.
Congress created the NFIP in 1968 in response to the rising cost of taxpayer-funded disaster relief for flood victims and the increasing amount of damage caused by floods. The NFIP makes federally backed flood insurance available in communities that agree to adopt and enforce floodplain management ordinances to reduce future flood damage. The NFIP is self-supporting for the average historical loss year. This means that unless there is a widespread disaster, operating expenses and flood insurance claims are financed through premiums collected.
The NFIP provides coverage for up to $250,000 for the structure of the home and $100,000 for personal possessions. Private flood insurance is available for those who need additional insurance protection, known as "excess coverage,” over and above the basic policy or for people whose communities do not participate in the NFIP. Some insurers have introduced special policies for high-value properties. These policies may cover homes in noncoastal areas and/or provide enhancements to traditional flood coverage. The comprehensive portion of an auto insurance policy includes flood damage.
A 2008 poll by the Insurance Information Institute found that only 17 percent of Americans have a flood insurance policy, ranging from 15 percent in the West to 17 percent in North Central States and the South to 20 percent in the Northeast.
| - By July 2008, 91 insurance companies participated in the "Write-Your-Own" Program, started in 1983, in which insurers issue policies and adjust flood claims on behalf of the federal government under their own names.
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NATIONAL FLOOD INSURANCE PROGRAM, 1980-2007
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Losses paid |
Year |
Policies in force
at end of year |
Number |
Amount ($000) |
| 1980 | 2,103,851 | 41,918 | $230,414.3 |
| 1985 | 2,016,785 | 38,676 | 368,238.8 |
| 1990 | 2,477,861 | 14,766 | 167,919.6 |
| 1995 | 3,476,829 | 62,441 | 1,295,581.5 |
| 2000 | 4,369,087 | 16,361 | 251,719.2 |
| 2001 | 4,458,470 | 43,562 | 1,276,963.3 |
| 2002 | 4,519,799 | 25,287 | 433,603.9 |
| 2003 | 4,565,491 | 36,716 | 778,793.9 |
| 2004 | 4,667,446 | 55,669 | 2,214,303.5 |
| 2005 | 4,962,011 | 210,893 | 17,575,118.0 |
| 2006 | 5,514,895 | 24,457 | 632,688.5 |
| 2007 | 5,653,949 | 21,287 | 523,219.6 |
| Source: U.S. Department of Homeland Security, Federal Emergency Management Agency. |
| - In 2007 the average amount of flood coverage was $201,598 and the average premium was $505.
- The average flood claim in 2007 was $24,579, down from $25,869 in 2006.
- NFIP premiums written rose from $1.7 billion in 1999 to $2.9 billion in 2007.
- Flood loss payments totaled $523 million in 2007. In 2005 loss payments totaled $17.6 billion, the highest amount on record, including losses from hurricanes Katrina, Rita and Wilma.
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TOP TEN SIGNIFICANT FLOOD EVENTS, RANKED BY NATIONAL FLOOD INSURANCE PROGRAM PAYOUTS (1)
Rank |
Event |
Location |
Date |
Number of paid losses |
Amount paid
($ millions) |
Average paid loss |
| 1 | Hurricane Katrina | AL, FL, GA, LA, MS, TN | Aug. 2005 | 166,210 | $15,959 | $96,016 |
| 2 | Hurricane Ivan | AL, DE, FL, GA, LA, MD, MS, NJ, NY, NC, OH, PA, TN, VA, WV | Sep. 2004 | 27,557 | 1,567 | 56,865 |
| 3 | Tropical Storm Allison | FL, LA, MS, NJ, PA, TX | Jun. 2001 | 30,662 | 1,104 | 35,997 |
| 4 | Louisiana Flood | LA | May 1995 | 31,343 | 585 | 18,667 |
| 5 | Hurricane Isabel | DE, MD, NJ, NY, NC, PA, VA, WV | Sep. 2003 | 19,844 | 491 | 24,736 |
| 6 | Hurricane Floyd | CT, DE, FL, GA, MA, ME, MD, NH, NJ, NY, NC, PA, RI, SC, VA, VT | Sep. 1999 | 20,439 | 462 | 22,617 |
| 7 | Hurricane Rita | AL, AR, FL, LA, MS, TN, TX | Sep. 2005 | 9,462 | 461 | 48,691 |
| 8 | Hurricane Opal | AL, NC, PR, SC, TN | Oct. 1995 | 10,343 | 406 | 39,208 |
| 9 | Hurricane Hugo | GA, NC, PR, SC, VA, U.S. Virgin Islands | Sep. 1989 | 12,843 | 376 | 29,315 |
| 10 | Hurricane Wilma | FL | Oct. 2005 | 9,591 | 362 | 37,700 |
(1) Includes events from 1978 to June 30, 2008. Defined by the National Flood Insurance Program as an event that produces at least 1,500 paid losses. Stated in dollars when occurred.
Source: U.S. Department of Homeland Security, Federal Emergency Management Agency. |
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Flood insurance in force in counties in Louisiana, Mississippi and Alabama
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Related Information
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