National Flood Insurance Program
Our community, covering the Unincorporated Areas of Cumberland County, participates in the National Flood Insurance Program (NFIP). The NFIP makes federally backed flood insurance available for all buildings, whether they are in a SFHA or not. Flood insurance covers direct losses caused by surface flooding, including a river flowing over its banks, a lake or ocean storm, and local drainage problems.
The NFIP insures buildings, including mobile homes, with two types of coverage, structural and contents. Structural coverage is for the walls, floors, insulation, furnace, and other items permanently attached to the structure.Contents coverage may be purchased separately provided the contents are in an insurable building.
There is a 30-day waiting period before NFIP coverage takes effect. Contact your insurance agent for more information on rates and coverage.
Mandatory Purchase Requirement
The mandatory purchase requirement applies to all forms of federal or federally related financial assistance for buildings located in a Special Flood Hazard Area (SFHA). This requirement affects loans and grants for the purchase, construction, repair, or improvement of any publicly or privately owned building in the SFHA, including machinery, equipment, fixtures, and furnishings contained in such buildings.
Financial assistance programs affected include loans and grants from agencies such as the Department of Veterans Affairs, USDA-Rural Development, Federal Housing Administration, Small Business Administration, and Federal Emergency Management Agency.
The requirement also applies to secured mortgage loans from financial institutions, such as commercial lenders, savings and loan associations, savings banks, and credit unions that are regulated, supervised or insured by Federal agencies such as the Federal Deposit Insurance Corporation and the Office of Thrift Supervision. It also applies to all mortgage loans purchased by Fannie Mae or Freddie Mac in the secondary mortgage market.
How it Works
Before a loan or other financial assistance from one of the affected agencies or lenders can be secured, the location of the building must be determined with respect to the SFHA. If the structure is located in the SFHA, shown as one or more zones that begin with the letter "A" on the FIRM or FBFM, the agency or lender is required by law to require the recipient to purchase a flood insurance policy on the building.
The requirement is for structural coverage equal to the amount of the loan (or other financial assistance) or the maximum amount available, whichever is less. The maximum amount available for a single-family house is $250,000.
The mandatory purchase requirement does not affect loans or financial assistance for items that are not covered by a flood insurance policy, such as vehicles, business expenses, landscaping, and vacant lots. It does not affect loans for buildings that are not in the SFHA, even though a portion of the lot may be flood prone. While not mandated by law, a lender may require a flood insurance policy as a condition of a loan for a property in any zone on a Flood Insurance Rate Map (FIRM) or a Flood Boundary and Floodway Map (FBFM).