Flood Insurance Policy Terms and Definitions

Federal Emergency Management Agency

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Flood Insurance Policy Terms and Definitions

The following flood insurance policy terms and definitions will hopefully help to make the whole thing a little clearer for you to understand. Do you speak the language of flood insurance . . . .? Well, you will in a minute!

Actual Cash Value (ACV) – just like home or car insurance, the insured item will be replaced by the actual cash value at the time of the incident less the value of any physical depreciation.

Base Flood – this one’s a little more specific to flood insurance, it means that the flood has 1% chance of being exceeded or being equaled during a given year.

Base Flood Elevation (BFE) – this refers to the elevation which is shown on the FIRM (Flood Insurance Rate Map) for the various risk zones, and simply means that the flood water has, again, a 1% chance of being equal to or exceeding the level.

Basement – cellar, crypt, vault, lower ground floor . . . got it?

Community Rating System (CRS) – an incentive program for communities in the NFIP to help reduce the risks of flooding in the area, promote flood insurance and develop extra measures against the floods.

Deductibles – back to general insurance “speak” now, the higher your deductible the lower your premium, but the more money you have to pay out yourself when you make a claim. Some mortgage lenders actually set a maximum ceiling of the amount of deductible you may have.

Elevated Building – this doesn’t necessarily mean a house on a hill with panoramic views, it simply means that the lowest level of the building is raised above the ground.

Elevation Certificate – proves that your building is elevated! These are used by builders, communities and insurance agencies to help determine the flood rating of each building and area.

Federal Emergency Management Agency – FEMA.

Flood – hello! Have you even read any of the other pages?

Flood Disaster Protection Act (1973) FDPA – means that if your property is in a designated area then it is mandatory for you to have flood insurance.

Flood Hazard Boundary Map (FHBM) – the official community map showing lots of flood data for your area.

Flood Insurance Rate Map (FIRM) – shows the different flood risk zones in each community or area for insurance purposes.

Floodplain – is an area of land which has a high chance of being flooded, you know, the flat land close to the river banks which is the first to “get it” when the waters rise too high . . . that’s just one example, there are lots more types of flooding.

Mandatory Purchase – if your property is within a high risk area then it may be mandatory for you to have flood insurance (your mortgage lenders might make sure of that!)

National Flood Insurance Program (NFIP) – this federal program means that if you live in a participating community then you can get great flood insurance deals to help combat the cost of repairing and replacing buildings and property.

Non-residential – pretty self explanatory but I thought it was worth a mention. Flood insurance is also available for small businesses, recreational buildings, churches, warehouses, nursing homes, hotels etc. etc.

Post FIRM Building – remember FIRM? Well, scan up the page a little then . . . okay, this means any building which was constructed after the end of December 1974 (or underwent major construction surgery), ie after the official date of the first FIRM (Flood Insurance Rate Map) . . . there, I’ve reminded you again.

Pre FIRM Building – see if you can guess . . . I’m not doing all the work for you.

Preferred Risk Policy (PRP) – available in some eligible properties located in moderate to low risk zones (B, C and X) offering great flood insurance at low, low prices (sounds like one of those cheesy commercials doesn’t it)?

Special Flood Hazard Area (SFHA) – an area identified by FEMA as being at a high risk of flooding making flood insurance mandatory.

Standard Flood Insurance Policy (SFIP) – is what you have to have if you’re not eligible for a PRP.

Zone – it’s not often you get a “Z” word in these things is it . . . I know we’ve been talking about zones a lot, high risk zones, coastal zones, moderate to low risk zones so you know what it means already, but I just liked the idea of having a list from A right through to Z.

 

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