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Flood Insurance

Published on AidPage by IDILOGIC on Jun 24, 2005

Administered by:

US Federal Government Agency (see all agencies)
Department Of Homeland Security
CFDA #: 97.022

Possible uses and use restrictions...

Under the Emergency Program of the National Flood Insurance Program (NFIP), property owners may buy flood insurance at a chargeable premium rate that is generally lower than a normal actuarial rate. Maximum amounts of such coverage available under the Emergency Program of the NFIP are: $35,000 for a single-family home (higher limits are available in Hawaii, Alaska, Guam and the U.S. Virgin Islands), $100,000 for all other residential structures, plus $10,000 per dwelling unit for any contents; for nonresidential structures, an aggregate liability for any single structure of $100,000 and for contents, $100,000 per unit. Once a detailed flood insurance risk study has been completed and the community enters the Regular Program, additional coverage on existing properties may be purchased at actuarial rates. As of March 1, 1995, the maximum coverage available under the Regular Program is: $250,000 for single-family residential structures; 250,000 times this number of condominium units for a residential condominium building, $250,000 for all other residential structures; $100,000 for contents per dwelling unit; $500,000 for non-residential structures; $500,000 for contents of non-residential structures. Effective October 1, 1983, coverage is no longer available for finished portions of basements with the exception of equipment necessary to make the building habitable, (e.g., furnaces). Properties built within identified special flood hazard areas after the effective date of the Flood Insurance Rate Map are eligible for flood insurance only at actuarial rates. Under the Flood Disaster Protection Act of 1973, effective March 2, 1974, flood insurance must be purchased as a condition of any form of Federal or federally-related financial assistance, including Federal grants, disaster assistance, and mortgage loans from federally regulated lending institutions and FHA, Farmers Home Administration, VA or guaranteed mortgages when the improved real property to which the transaction applies is located within identified special flood hazard areas where flood insurance is available. Communities having one or more identified special flood hazard areas must enter into the National Flood Insurance Program within 1 year of the official identification of their special flood hazard areas or be denied Federal financial assistance for acquisition or construction purposes within those areas. Federally regulated conventional sources (i.e., banks, savings and loan associations, or similar lending institutions) are permitted to make loans secured by improved real estate or Manufactured Housing located or to be located in the identified special flood hazard area of a nonparticipating community which has been formally identified as flood-prone for more than 1 year, but Federal disaster assistance for acquisition or construction purposes will not be available in the event of flood or flood-related property damage. The conventional lender is statutorily required to notify the borrower, before making a loan in such an area, whether Federal disaster assistance will be available to the property. The Coastal Barrier Improvement Act of 1990 amended the Coastal Barrier Resources Act of 1982 by greatly enlarging the acreage included in the designated coastal barrier resources system unit. The 1990 Act also added "otherwise protected areas." "Otherwise protected areas" are defined as an undeveloped coastal barrier within the boundaries of an area established under Federal, State, or local law, or held by a qualified organization, primarily for wildlife refuge, sanctuary, recreational or natural resource conservation purposes. The 1982 Act prohibits the sale of new flood insurance on or after October 1, 1983 for new construction or substantial improvements of structures located on any coastal barrier with the Coastal Barrier Resources System designated by this Act. The1990 Act prohibits the sale of new flood insurance on or after