National Flood Insurance Program
Cascade County participates in the National Flood Insurance Program (NFIP), a federal program enabling property owners in participating communities to purchase flood insurance on eligible buildings and contents, whether they are in or out of a floodplain. This community participates in the NFIP, making federally backed flood insurance available to its property owners.
The NFIP insures most walled and roofed buildings that are principally above ground on a permanent foundation, including mobile homes, and buildings in the course of construction. Property owners can purchase building and contents coverage from any local property and casualty insurance agent. To find a local insurance agent that writes flood insurance in your area visit www.floodsmart.gov.
Mandatory Purchase Requirement
Pursuant to the Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994, the purchase of flood insurance is mandatory for all federal or federally related financial assistance for the acquisition and/or construction of buildings in Special Flood Hazard Areas (SFHAs). An SFHA is defined as any A or V flood zone on a Federal Emergency Management Agency (FEMA) Flood Insurance Rate Map (FIRM).
The mandatory purchase requirement also applies to secured loans from such financial institutions as commercial lenders, savings and loan associations, savings banks, and credit unions that are regulated, supervised, or insured by federal agencies, such as the Federal Reserve, the Federal Deposit Insurance Corporation, the Comptroller of Currency, the Farm Credit Administration, the Office of Thrift Supervision, and the National Credit Union Administration. It further applies to all loans purchased by Fannie Mae or Freddie Mac in the secondary mortgage market.
Federal financial assistance programs affected by the laws include loans and grants from agencies such as the Department of Veterans Affairs, Farmers Home Administration, Federal Housing Administration, Small Business Administration, and FEMA disaster assistance.
How it Works
When making, increasing, renewing, or extending any type of federally backed loan, lenders are required to conduct a flood zone determination using the most current FEMA FIRM to determine if any part of the building is located in an SFHA. If the building is in an SFHA, the federal agency or lender is required by law to provide written notification to the borrower that flood insurance is mandatory as a condition of the loan. Even though a portion of real property on which a building is located may lie within an SFHA, the purchase and notification requirements do not apply unless the building itself, or some part of the building, is in the SFHA. However, lenders, on their own initiative, may require the purchase of flood insurance even if a building is located outside an SFHA. Up to 25% of all NFIP flood losses arise from outside SFHAs (B, C, and X Zones).
Under federal regulations, the required coverage must equal the amount of the loan (excluding appraised value of the land) or the maximum amount of insurance available from the NFIP, whichever is less. The maximum amount of coverage available for a single-family residence is $250,000 and for non-residential (commercial) buildings is $500,000. Federal agencies and regulators, including government-sponsored enterprises, such as Freddie Mac and Fannie Mae, may have stricter requirements.
Flood Coverage Facts
- Standard property insurance policies do not cover flood damage.
- A structure in a flood hazard area has a 26 percent chance of flood damage during a 30-year mortgage, as compared to a 10 percent chance of fire.
- The entire building can be lost with a single flood.
- Most property insurance policies do not cover damage caused by flooding. In most cases, there is a 30-day waiting period after you purchase a flood policy before coverage is in effect, so don't wait to secure a flood policy until a flood is threatening.
The NFIP insure buildings, including mobile homes, with two (2) types of coverage: building and contents. Building coverage is for the walls, floors, insulation, furnace, and other items permanently attached to the structure. Content coverage may be purchased separately, if the contents are in an insurable building.
Community Rating System
The Community Rating System (CRS) is a voluntary program administered by the Federal Emergency Management Agency (FEMA). CRS provides lower insurance premiums under the NFIP due to advanced local floodplain management activities. Cascade County currently maintains a CRS Class 8 rating which automatically reduces flood insurance premiums.
Increased Cost of Compliance (ICC) Coverage
If a flood damages your property, you may be required by law to bring your home or building up to floodplain management standards. If you have NFIP insurance and the County has declared the building to be substantially damaged, NFIP may provide up to $30,000 of the cost to elevate, floodproof, demolish, or relocated your building in order to comply with floodplain standards. ICC coverage is in addition to the coverage you receive to repair flood damages. However, the total payout on a policy may not exceed $250,000 for residential buildings and $500,000 for nonresidential buildings. Claims for ICC coverage should be initiated through your insurer.