Flood Damage Insurance: How NFIP Works

Many homeowners purchase flood damage insurance as a way to protect their homes in the case of a flood. The National Flood Insurance Program is a government program that is designed to help citizens purchase flood insurance. Here are the basics of The National Flood Insurance Program and how it works.

What Is the National Flood Insurance Program?

The National Flood Insurance Program is a program that was enacted in 1968 that allows the federal government to sell flood insurance directly to consumers. This program was developed to assist those that are in communities that are subject to frequent flooding and to help eliminate flood damage nationwide.

How It Works

Part of the program deals with interactions with consumers who want flood insurance. The other part of the program actually deals with the communities in which these people live. In order to qualify for the program as a consumer, you must live in a community that adheres to the guidelines set forth by The National Flood Insurance Program.

The National Flood Insurance Program charges a premium to its customers and is designed to support itself with these premiums. However, any deficits in the budget caused by flood damage are picked up by tax dollars.