The Complete Flood Insurance Glossary: 60+ Terms in Plain English

The gradual premium increase schedule under Risk Rating 2.0. FEMA caps NFIP premium increases at 18 percent per year until the policy reaches the full risk-based rate. The Government Accountability Office estimates most NFIP policies will not reach their full actuarial rate until approximately 2037 — meaning 11 more years of annual increases for most policyholders.

A practice that allowed policyholders to maintain lower premium rates based on a prior flood zone designation or building code, even after flood maps were updated. Under the Biggert-Waters Act and Risk Rating 2.0, most grandfathering provisions have been eliminated or are being phased out.

NFIP coverage that provides up to $30,000 to help bring a substantially damaged or repetitively damaged building into compliance with current floodplain management regulations. This can include elevating, relocating, demolishing, or floodproofing the building. ICC is included in NFIP policies at no additional cost.

An official determination by FEMA that a property has been incorrectly included in a Special Flood Hazard Area. A LOMA uses elevation data (from an Elevation Certificate) to show that a property’s natural grade is at or above the BFE. If approved, the property is reclassified to Zone X, which can remove the lender requirement for flood insurance. We currently have approximately 38 active LOMA cases in our pipeline. A LOMA is not the same as an Elevation Certificate — the EC is a measurement, the LOMA is a legal determination from FEMA.

An official amendment to a FEMA flood map based on physical changes to the floodplain, such as construction of levees, channel improvements, or fill placed in the floodplain. Unlike a LOMA (which addresses a single property), a LOMR can change flood zone designations for multiple properties.

The lowest point of the ground level immediately next to a building. LAG is used in LOMA applications to determine whether a property qualifies for reclassification. If your LAG is at or above the BFE, you may qualify for a LOMA.

The lowest floor of the lowest enclosed area of a building, including the basement. Your lowest floor elevation relative to the BFE is the primary factor in determining your flood insurance premium under Risk Rating 2.0.

The federal program administered by FEMA that provides flood insurance to homeowners, renters, and business owners in participating communities. The NFIP has been the primary source of flood insurance since 1968. It caps residential building coverage at $250,000 and contents at $100,000. From our Georgia data, only 3 of our 71 Georgia deals are through the NFIP — the other 68 are through private carriers that offer better pricing and higher limits.

A building constructed or substantially improved after the effective date of the initial Flood Insurance Rate Map for the community. Post-FIRM buildings were built to flood standards and typically receive lower insurance rates than Pre-FIRM buildings.

A building constructed before the effective date of the initial Flood Insurance Rate Map for the community. Many Pre-FIRM buildings were not built to flood standards and face higher insurance premiums. In Connecticut and other Northeast states, historic homes in flood zones are frequently Pre-FIRM and pay $2,000 to $5,000 per year or more.

A former NFIP policy type for properties in moderate-to-low risk zones (Zone B, C, or X) that offered lower premiums. The PRP was eliminated under Risk Rating 2.0 in October 2021, replaced by individual risk-based pricing. If you search for PRP, know that it no longer exists — but Zone X coverage through private carriers starting at $100 per year provides similar or better value.

Flood insurance offered by private insurance companies rather than through the NFIP. Private carriers include companies like CatCoverage, Argenia, Neptune, Sterling Underwriters, Palomar, Wright Flood, Dual, TFIA, Superior, AON Edge, and others. From our book of 1,176 closed Zone AE residential policies, private carriers consistently offer lower premiums and higher coverage limits than the NFIP. Your lender is required to accept private flood insurance under the Biggert-Waters Act.

The master flood insurance policy for a condo building purchased by the condo association. The RCBAP covers the building structure and common areas. Individual unit owners need a separate flood insurance policy for their unit’s contents and interior improvements not covered by the RCBAP.

The cost to repair or replace damaged property using materials of similar kind and quality at current prices, without deducting for depreciation. Private flood insurance typically pays on an RCV basis for both building and contents. The NFIP pays RCV for building coverage under certain conditions but pays ACV for contents.

A property that has experienced two or more NFIP flood insurance claims of more than $1,000 each within any 10-year period. Repetitive loss properties face higher premiums and may be targeted for mitigation programs. In Findlay, Ohio — one of the most frequently flooded cities in America — repetitive loss properties pay $2,000 to $5,000 per year.

FEMA’s current methodology for calculating NFIP flood insurance premiums, implemented in October 2021. Risk Rating 2.0 prices individual propertiesbased on specific risk factors including distance to flood source, elevation, foundation type, building characteristics, and flood history — instead of the old system that relied primarily on flood zone designation. This is why two properties in the same Zone AE can pay dramatically different premiums.

A geographic area identified by FEMA as having a 1 percent or greater annual chance of flooding. SFHAs include Zones A, AE, V, and VE. If your property is in an SFHA and you have a federally backed mortgage, your lender requires flood insurance. From our CRM, approximately 80 percent of our deals are for properties in SFHAs.

The standardized policy form used for all NFIP flood insurance policies. There are three forms: Dwelling (for residential), General Property (for commercial), and RCBAP (for condo buildings). The SFIP defines what is and is not covered.

Damage from any source where the cost of restoring the building to its before-damage condition equals or exceeds 50 percent of the building’s market value. A substantially damaged building must be brought into compliance with current floodplain management regulations before it can be rebuilt — which may require elevating the structure.

Any reconstruction, rehabilitation, addition, or other improvement of a building where the cost equals or exceeds 50 percent of the building’s market value. Like substantial damage, substantial improvement triggers the requirement to bring the building into compliance with current flood codes.

The time between purchasing a flood insurance policy and when coverage becomes effective. The NFIP has a standard 30-day waiting period. However, there are exceptions: no waiting period when flood insurance is required in connection with a new mortgage closing, and a 1-day waiting period for map revision increases. Private carriers may offer shorter waiting periods, sometimes 10 to 15 days. If you are closing on a home and need flood insurance immediately, contact us — the loan closing exception eliminates the wait.

The partnership between FEMA and private insurance companies that allows those companies to sell and service NFIP policies. Companies like Wright Flood participate in the WYO program. They sell NFIP policies but FEMA sets the rates and bears the risk. A WYO policy is still an NFIP policy — it is not private flood insurance.

A high-risk flood zone where FEMA has not determined the Base Flood Elevation. Common in areas where detailed flood studies have not been completed, including many North Georgia mountain communities. Without a BFE, premiums can be higher than necessary because FEMA uses default assumptions. Getting an Elevation Certificate for a Zone A property is critical because it provides actual data. From our CRM, Zone A residential premiums range from $289 to $3,500.

A high-risk flood zone where FEMA has determined the Base Flood Elevation. This is the most common high-risk designation. Properties in Zone AE with federally backed mortgages are required to carry flood insurance. From our 1,176 closed Zone AE residential policies, premiums range from $100 per year (through CatCoverage with favorable elevation) to $31,723 per year (through Wright Flood for high-risk coastal property). The median Zone AE residential premium is approximately $550 per year.

A high-risk zone for areas of shallow flooding, usually areas of ponding, with an average depth of 1 to 3 feet. Treated similarly to Zone AE for insurance requirements.

A high-risk zone for areas of shallow flooding, usually sheet flow on sloped terrain, with average depths of 1 to 3 feet.

A high-risk zone for areas that were previously protected by a flood control system (such as a levee) that is being restored. Flood insurance is required but may be available at a reduced rate.

An area where FEMA has not performed a flood hazard analysis and no flood risk data is available. Flood insurance is not federally required but is available. If your property is in Zone D, getting a flood determination and Elevation Certificate is recommended.

A high-risk coastal zone where FEMA has identified significant risk from storm-driven wave action but has not determined specific BFEs. Similar to Zone A but for coastal areas.

A high-risk coastal zone where FEMA has determined both the BFE and the expected wave heights. This is the highest-risk and typically highest-cost flood zone. Properties in Zone VE face storm surge and wave action. From our Virginia CRM data, Zone VE residential premiums range from $2,884 to $8,108 per year.

A moderate-to-low risk flood zone. Flood insurance is not required by lenders but is strongly recommended. More than one in three flood insurance claims come from Zone X areas. After Hurricane Harvey, over 70 percent of flooded homes were outside high-risk zones. From our CRM, Zone X residential policies through private carriers cost $100 to $500 per year. At $100 per year through CatCoverage, this is some of the most affordable insurance protection available.