National Flood Insurance Program and Other Flood Coverage
NFIP |
Homeowners and dwelling policies exclude damage caused by flood, surface water, wave, tidal water, and overflow of a body of water. Flood coverage is available through policies issued by the National Flood Insurance Program, which is part of the Federal Insurance Administration. The federal government shares in the flood exposure and costs of insurance for many insureds. Eligibility for this coverage depends on whether the community qualifies for participation in the flood program by adopting regulations governing land use in flood prone areas.
In the 1980’s the NFIP expanded its marketing efforts to reach more property owners in flood-prone areas. Private insurance companies issue policies for the government under a program called “Write Your Own”, or WYO. Private companies market and issue the policies for a fee. The balance of the premium goes into the government pool of dollars to pay claims. The WYO companies bear none of the risk because all losses are paid by the government. All WYO companies issue policies providing the same coverage and charging the same premium (with small variations in servicing fees). Companies compete in the areas of service and marketing. One hundred sixty-nine WYOs write this coverage, which amounts to 86% of flood policies. |
Other Flood Coverage |
Some flood coverage can be obtained for residential contents through inland marine policies or inland marine-style schedules attached as endorsements to homeowner’s policies. The coverage is broad enough under these forms to encompass flood losses for covered items. Some mobile home insurance companies also issue flood insurance as an additional optional coverage. |
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