Flood Insurance Glossary & Terms

A

Actual Cash Value (ACV): The replacement cost of damaged property minus depreciation. NFIP pays ACV for contents (personal property) unless the policy includes replacement cost value coverage. ACV payments may be significantly less than what it costs to replace items at today's prices. Compare with Replacement Cost Value.
Additional Living Expenses (ALE): Coverage that pays for temporary housing and living costs when a policyholder cannot occupy their home due to a covered loss. NFIP policies do not include ALE coverage. Many private flood insurance policies do include it — this is a key distinction between the two markets.
Admitted Carrier: An insurance company that is licensed by the state insurance department in the state where it is selling policies. Admitted carriers are subject to state rate and form filing requirements and are backed by the state's guaranty fund in the event of insolvency. Contrast with Surplus Lines Carrier.
Adverse Selection: The tendency for higher-risk individuals to seek more insurance coverage than lower-risk individuals. In flood insurance, adverse selection is a structural challenge: without mandatory purchase requirements, only property owners who perceive high flood risk tend to buy policies, which increases claims costs and premiums for everyone in the program.
Alluvial Fan: A fan- or cone-shaped deposit of sediment created by streams that spread out as they exit a canyon or valley onto a flatter plain. Properties on alluvial fans can face unpredictable flood flow directions, making them unique rating challenges under both NFIP and private policies.
Annual Chance Flood: The statistical probability that a flood of a given magnitude will occur in any given year. The "100-year flood" or 1% annual chance flood has a 1-in-100 chance of occurring in any given year. The "500-year flood" has a 0.2% annual chance. These statistics are used to define flood zones on FEMA Flood Insurance Rate Maps.
Appurtenant Structure: A structure attached to and part of the insured building — such as a garage attached to a house by a breezeway. For NFIP rating purposes, an appurtenant structure that is attached to the main building is generally considered part of the insured building and rated based on the main building's characteristics.

B

Base Flood: The flood having a 1% chance of being equaled or exceeded in any given year. Also known as the 100-year flood or the 1% annual chance flood. The base flood is the regulatory flood standard used by FEMA for mapping, land use ordinances, and flood insurance rating.
Base Flood Elevation (BFE): The computed elevation to which floodwater is anticipated to rise during the base (1% annual chance) flood. BFE is shown on FEMA's Flood Insurance Rate Maps (FIRMs) for Special Flood Hazard Areas with established BFEs (AE, AH, VE zones). It is the benchmark against which a building's lowest floor elevation is compared for rating purposes. A building with its lowest floor above the BFE is considered to have positive freeboard and generally receives lower NFIP premiums.
Basement: Under NFIP rules, any area of a building that has its floor below ground level on all four sides. This is a technical definition — not the colloquial "finished basement." NFIP coverage in basements is limited to specific listed items (HVAC equipment, water heaters, washers, dryers, food freezers, air conditioners, circuit breaker boxes, etc.). Personal property stored in basements is generally not covered.
Biggert-Waters Flood Insurance Reform Act of 2012: Major NFIP reform legislation that aimed to phase out subsidized rates and transition to risk-based pricing. Many of its rate increase provisions were later modified by the Homeowner Flood Insurance Affordability Act of 2014. Together, these acts set the stage for the eventual development of Risk Rating 2.0.
Breakaway Wall: A wall constructed to collapse under wave action without causing damage to the structure above. Required in Coastal High Hazard Areas (V zones) for structures elevated on pilings or columns. The space below the lowest elevated floor in a V zone must be kept free of obstruction or have breakaway walls to allow wave passage. Having non-compliant enclosures below the BFE in a V zone results in significantly higher NFIP premiums.
Building Property Coverage: The component of an NFIP policy that covers the insured structure, including the foundation, plumbing and electrical systems, HVAC equipment, built-in appliances, and permanently installed flooring, wallboard, and cabinetry. Maximum building coverage under NFIP is $250,000 for residential structures and $500,000 for non-residential structures.

C

Coastal Barrier Resources Act (CBRA): Federal law that restricts federal expenditures — including flood insurance — in designated Coastal Barrier Resource System (CBRS) areas to discourage development in environmentally sensitive coastal areas. NFIP policies are generally not available for new or substantially improved structures in CBRS areas. Private flood insurance may still be available in some CBRS areas.
Community Rating System (CRS): A voluntary NFIP program that recognizes and encourages community floodplain management activities that exceed NFIP's minimum requirements. Participating communities earn credit points for activities like outreach, mapping, regulatory standards, and flood damage reduction. Properties in CRS communities receive premium discounts ranging from 5% (Class 9) to 45% (Class 1). The most active communities can dramatically reduce their residents' NFIP costs.
Contents Coverage: The component of an NFIP flood policy that covers personal property (furniture, clothing, electronics, appliances, etc.) inside the insured structure. Contents coverage must be purchased separately from building coverage under NFIP. Maximum contents coverage is $100,000. Contents are paid on an actual cash value basis, meaning depreciation reduces the payout.
Crawlspace: Under NFIP rules, an enclosed area below the lowest elevated floor of an elevated building where the interior floor grade is at or above grade on at least one side. A crawlspace that has its floor at or below grade on all four sides may be treated as a basement for rating purposes. Crawlspaces that meet specific openings requirements are rated differently than those that don't.
Coastal High Hazard Area: A SFHA subject to wave action — designated as V, VE, or V1–V30 on FIRM maps. Properties in coastal high hazard areas face the highest NFIP and private flood insurance rates due to the combined risk of inundation and wave damage. Building requirements include elevation on open foundations (pilings, piers, or columns) with freeboard above the BFE.

D

Deductible: The portion of a covered loss that the policyholder pays before the insurance policy pays. NFIP policies have separate deductibles for building and contents coverage. Higher deductibles result in lower premiums. Under NFIP, standard deductibles start at $1,000 and can be increased to $10,000 or more. Private policies offer more flexible deductible options.
Direct Servicing Agent (DSA): FEMA's internal facility that sells and services NFIP policies directly, without going through the WYO Program. The DSA acts as an alternative for policyholders who cannot obtain coverage through a WYO company or prefer to deal directly with FEMA.
Dry Flood-Proofing: A type of flood damage reduction measure that seals a structure to prevent floodwaters from entering. This may include water-tight shields for doors and windows, sealants applied to walls and floors, and valves on sewer lines. NFIP only recognizes dry flood-proofing for rating purposes for non-residential buildings. Wet flood-proofing is the required approach for most residential structures in SFHAs.

E

Elevation Certificate (EC): An administrative tool of the NFIP used to provide elevation information necessary to ensure compliance with community floodplain management ordinances, determine the proper insurance premium rate, and support a request for a LOMA or LOMR-F. An EC must be completed by a licensed land surveyor, registered engineer, or architect. The key datum measured is the lowest floor elevation relative to the North American Vertical Datum of 1988 (NAVD 88).
Elevated Building: A building that has no basement and that has its lowest elevated floor raised above ground level by foundation walls, shear walls, posts, piers, pilings, or columns. The construction of the space below the lowest floor determines the rating basis under NFIP.
Emergency Program: The initial phase of a community's participation in the NFIP, during which limited amounts of insurance coverage are available at subsidized rates while a Flood Insurance Rate Map is being prepared. A community in the Emergency Program has limited time to complete the transition to the Regular Program.
Enclosure: Under NFIP, the space below the lowest elevated floor of an elevated post-FIRM building or manufactured home. If enclosed and with usable space, it is rated more expensively than an open foundation. Enclosures that have non-compliant flood openings are rated at the highest rates for the zone.

F

Federal Emergency Management Agency (FEMA): The federal agency responsible for managing the National Flood Insurance Program, preparing and updating Flood Insurance Rate Maps, administering disaster relief programs, and overseeing national floodplain management policy. FEMA sits within the Department of Homeland Security and coordinates its flood activities with the Army Corps of Engineers, state agencies, and local governments.
FIRM (Flood Insurance Rate Map): The official map issued by FEMA that delineates the Special Flood Hazard Areas and risk premium zones for a given community. The FIRM is the foundation document for both the mandatory purchase requirement and NFIP premium rating. Digital FIRMs (DFIRMs) are the current standard. Property owners can search FIRMs through the FEMA Flood Map Service Center (MSC).
Flood: Under the NFIP, a flood is defined as: (1) a general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties from overflow of inland or tidal waters, unusual and rapid accumulation of surface waters, or mudflow; or (2) collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining. This definition is narrower than the colloquial meaning and excludes seepage, sewer backup not caused by flooding, and other water damage sources.
Flood Insurance Manual: The comprehensive operational and technical manual published by FEMA that governs the NFIP. The manual contains rating tables, rules for determining coverage eligibility, definitions, underwriting guidelines, and procedures for Write-Your-Own carriers. It is updated periodically and is the definitive reference for NFIP agents and adjusters.
Flood Openings: Openings in the walls of an enclosure below the lowest elevated floor that allow the automatic entry and exit of floodwaters. NFIP requires at least one square inch of opening per square foot of enclosed area (minimum two openings on different sides). Proper flood openings significantly reduce NFIP rates for elevated buildings. Engineered openings that meet NFIP's technical criteria may count as more effective than simple vents.
Flood Zone: A geographic area shown on a Flood Insurance Rate Map that reflects the severity or type of flooding in the area. FEMA flood zones range from high-risk (A and V zones) to moderate risk (shaded X) to low risk (unshaded X) to undetermined (D). Flood zone designation directly affects whether flood insurance is required and how it is priced under NFIP.
Force-Placed Flood Insurance: Flood insurance purchased by a mortgage lender on behalf of a borrower when the borrower's flood insurance lapses or is insufficient for a property in a SFHA. Force-placed insurance is typically more expensive than voluntary coverage and may not provide the same breadth of protection. Federal regulations require lenders to notify borrowers before force-placing coverage.
Freeboard: The vertical distance between the Base Flood Elevation and the lowest floor elevation of a structure. Positive freeboard (lowest floor above BFE) reduces flood insurance premiums and indicates lower flood risk. Many communities require 1–3 feet of freeboard above the BFE in their local floodplain ordinances. LiDAR elevation data is increasingly used to confirm freeboard for insurance rating purposes.

G

Grandfathering: Under NFIP's pre-Risk Rating 2.0 rules, the ability of a property to retain the flood zone designation and/or rating used prior to a map revision. With Risk Rating 2.0, NFIP no longer uses traditional grandfathering; instead, it uses individual property risk characteristics. Properties that received subsidized pre-FIRM rates may still have transition provisions limiting annual increases.

H

Hazard Mitigation Grant Program (HMGP): A FEMA program that provides grants to states and local governments to implement long-term hazard mitigation measures following a Presidential disaster declaration. HMGP funds can be used for property acquisition and demolition, elevation of structures, flood-proofing, and other mitigation projects. Up to 75% of project costs may be federally funded.
High Water Mark: The physical mark left on a structure or landscape by floodwaters at their highest level. High water marks are important evidence in flood claims and are documented by adjusters. The height of the high water mark relative to the first floor is a key measure used to calculate NFIP claim payments for building damage.

I

Increased Cost of Compliance (ICC): Coverage provided by NFIP that pays the cost to bring a substantially damaged or repetitively flooded building into compliance with local floodplain ordinances. ICC pays up to $30,000 for elevation, flood-proofing, relocation, demolition, or a combination of these mitigation measures. ICC is automatically included in all NFIP building policies.
Inundation: The covering of normally dry land by floodwater. Inundation can result from overflow of rivers and streams, storm surge, heavy precipitation, or failure of flood control infrastructure. Inundation depth and duration are key factors in determining flood damage severity.

L

Letter of Map Amendment (LOMA): An official amendment to the flood map issued by FEMA that removes a structure and/or parcel of land from a designated SFHA when it has been determined that the area is at or above the BFE. A LOMA can remove the mandatory flood insurance purchase requirement for federally-backed mortgages. LiDAR elevation data and a land surveyor's certification are the primary evidence in a LOMA request.
Letter of Map Revision (LOMR): An official revision to the flood map issued by FEMA based on structural works (e.g., levees, floodwalls) or other changes that affect flood hazards. A LOMR changes the flood zone or BFE shown on the map for a specific area. LOMRs are typically initiated by communities or developers, not individual property owners.
LiDAR (Light Detection and Ranging): A remote sensing technology that uses laser pulses emitted from aircraft to measure ground surface elevations with high accuracy. LiDAR can generate 3D topographic data with vertical accuracy of 10–20 centimeters. Private flood insurance carriers increasingly use LiDAR data to price policies using ground-truth elevation information rather than relying solely on FEMA's FIRM-based flood zone designations. Where LiDAR coverage exists, it can sometimes substitute for or supplement a traditional Elevation Certificate.
Lowest Floor Elevation (LFE): The elevation of the lowest floor of a building, as defined for NFIP rating purposes. For most buildings, this is the top of the concrete slab or the lowest habitable floor. For elevated buildings with enclosures, the lowest floor may be the floor of the enclosure. The LFE relative to the BFE is a critical rating factor under pre-Risk Rating 2.0 NFIP rules.

M

Mandatory Purchase Requirement: The federal requirement that property owners in SFHAs with federally-backed mortgages purchase and maintain flood insurance. Lenders subject to this requirement include banks, credit unions, and mortgage companies regulated by federal agencies. Failure to maintain required coverage can trigger force-placement of insurance at the borrower's expense.
Map Service Center (MSC): FEMA's online portal (msc.fema.gov) where property owners and agents can look up the current effective Flood Insurance Rate Map for any property in the United States, download FIRM panels, and access Letters of Map Change. The MSC is the authoritative source for flood zone determination.
Mudflow: A river of liquid and flowing mud on the surfaces of normally dry land areas as when earth is carried by a current of water. Under NFIP, mudflow is a covered cause of loss if it is caused by or results from a flood. Mudflow is distinct from mudslide or land movement, which is typically excluded.

N

NAVD 88 (North American Vertical Datum of 1988): The official vertical datum used for elevation measurements in the United States and Canada. All NFIP Elevation Certificates and modern FIRM maps are referenced to NAVD 88. It is important to confirm that both your Elevation Certificate and your FIRM panel use the same datum when comparing BFE and lowest floor elevation.
National Flood Insurance Program (NFIP): The federal program created by the National Flood Insurance Act of 1968 that makes flood insurance available to property owners in participating communities. The NFIP is managed by FEMA and serves approximately 4–5 million policyholders. It provides an alternative to disaster assistance for flood losses and requires communities to adopt and enforce floodplain management regulations as a condition of program participation.
Non-Participating Community: A community that is not a member of the NFIP, typically because it has not adopted the minimum floodplain management standards required for participation. Property owners in non-participating communities cannot purchase NFIP policies and are ineligible for certain federal disaster assistance. Private flood insurance may still be available in non-participating communities.

P

Preferred Risk Policy (PRP): A lower-premium NFIP policy available to eligible buildings located in moderate-to-low risk flood zones (B, C, and X). Under Risk Rating 2.0, the PRP designation has been replaced with individually risk-rated policies, but properties in lower-risk zones generally still receive lower rates.
Pre-FIRM Building: A structure built before the first FIRM (Flood Insurance Rate Map) for its community was in effect — generally before 1974 for many communities, though this date varies. Pre-FIRM buildings may have been built below the BFE without violating any ordinance and historically received subsidized NFIP rates. Risk Rating 2.0 has accelerated the phase-out of pre-FIRM subsidies.
Private Flood Insurance: Flood insurance sold by private insurance companies outside of the NFIP. Private flood policies may be offered by admitted or surplus lines carriers and often provide higher coverage limits, broader coverage terms, replacement cost contents, loss of use coverage, and shorter waiting periods compared to NFIP. The private flood market has grown substantially since 2016, driven in part by the Biggert-Waters reforms and improved flood modeling technology including LiDAR.
Proof of Loss (POL): A signed and sworn statement that a policyholder submits to their insurance company after a loss to formally document the claim amount. Under the NFIP's Standard Flood Insurance Policy, a Proof of Loss must typically be submitted within 60 days of the loss date. Failure to submit a timely POL can jeopardize a claim.

R

Regulatory Floodway: The channel of a river or other watercourse and the adjacent land areas that must be reserved to discharge the base flood without cumulatively increasing the water surface elevation more than a designated height. The floodway is the most hazardous portion of the floodplain. Development in the regulatory floodway is severely restricted.
Repetitive Loss Property: A structure that has had two or more NFIP claims of at least $1,000 each within any rolling 10-year period. Severe Repetitive Loss (SRL) properties have had four or more claims exceeding $5,000 each or two claims exceeding the property's market value. SRL properties are subject to increased NFIP rates and may be eligible for mitigation grant funding.
Replacement Cost Value (RCV): The cost to repair or replace damaged property without deduction for depreciation. Under NFIP, building coverage for post-FIRM primary residences is paid on an RCV basis if the coverage is at least 80% of the building's full replacement cost (or the maximum available NFIP coverage). Contents under NFIP are not paid on RCV; however, many private flood policies offer contents RCV as an endorsement.
Risk Rating 2.0: FEMA's current NFIP pricing methodology, implemented in phases starting October 2021. Risk Rating 2.0 uses property-specific risk factors — including multiple flood hazard types, first floor height, distance to water, replacement cost value, and foundation type — rather than the previous system that relied primarily on flood zone and elevation relative to BFE. Many policyholders saw significant premium changes under Risk Rating 2.0, with some receiving decreases and others (particularly owners of high-value homes in flood zones) seeing substantial increases.

S

Special Flood Hazard Area (SFHA): The land area covered by the floodwaters of the base flood — i.e., the 1% annual chance flood. SFHAs are shown on FIRM maps as A zones and V zones. Properties in SFHAs with federally-backed mortgages are subject to the mandatory flood insurance purchase requirement.
Standard Flood Insurance Policy (SFIP): The NFIP's standard policy form, issued in three versions: the Dwelling Form (for 1–4 family residential structures), the General Property Form (for non-residential and larger residential buildings), and the Residential Condominium Building Association Policy (RCBAP). All WYO carriers must use the SFIP and cannot alter its terms.
Storm Surge: An abnormal rise of water above the normal tide level caused by a storm's strong onshore winds and reduced atmospheric pressure. Storm surge is the leading cause of loss of life and property damage in coastal hurricane events. Properties in V zones are most vulnerable to storm surge damage, and this risk is reflected in their significantly higher NFIP and private flood premiums.
Substantial Damage: Damage of any origin sustained by a structure in a Special Flood Hazard Area whereby the cost of restoring the structure to its before-damaged condition equals or exceeds 50% of the market value of the structure before damage occurred. A substantially damaged building must be brought into compliance with current floodplain management regulations before it can be repaired — this is when ICC coverage becomes critical.
Surplus Lines Carrier: An insurance company that is not licensed in the state where it is writing business but is authorized to sell non-standard or specialty coverage that admitted carriers will not offer. Surplus lines carriers are subject to less state regulatory oversight than admitted carriers and are not backed by state guaranty funds in the event of insolvency. Many private flood policies are written through the surplus lines market, particularly for high-risk or high-value properties.

T

Topographic Survey: A survey that measures and maps the contours of the ground surface, including elevation data. A topographic survey by a licensed land surveyor is the traditional method of determining a property's elevation for Elevation Certificate purposes. High-resolution LiDAR aerial surveys are increasingly being used as an alternative or supplement to traditional topographic surveys for flood insurance rating and LOMA applications.

U

Underinsurance: A condition in which the amount of insurance coverage on a property is less than its full replacement value or actual risk exposure. Underinsurance is common among flood insurance policyholders, particularly those whose home value exceeds NFIP's $250,000 building coverage cap. Private flood insurance with higher limits is the primary solution for underinsured homeowners.

V

V Zone: See Coastal High Hazard Area. V zones (V, VE, V1–V30) are the highest-risk flood zone designations on FEMA FIRMs. They represent coastal areas subject to both flooding and wave action during the base flood. NFIP and private flood premiums in V zones are substantially higher than in A zones for comparable elevation differentials.
Velocity Zone: Another term for a Coastal High Hazard Area (V zone). The "V" designation on FIRM maps stands for the velocity of wave action, which distinguishes these zones from the A zones where flooding occurs without significant wave action.

W

Waiting Period: The time between when a flood insurance policy is purchased (or renewed) and when coverage takes effect. The standard NFIP waiting period is 30 days. Exceptions include: policies purchased as a condition of a loan at loan closing (no waiting period), policies required as a result of a map revision (1-day waiting period), and renewals with no lapse. Many private flood carriers offer 10–14 day waiting periods, which is a key competitive advantage over NFIP.
Wet Flood-Proofing: A flood damage reduction approach that minimizes flood damage by allowing floodwaters to enter a structure while protecting the structural integrity of the building and reducing damage to contents. This typically involves elevating or relocating utilities, using water-resistant materials, and designing enclosures to allow easy removal of deposited sediment. Wet flood-proofing is the required approach for residential enclosures below the BFE.
Write-Your-Own (WYO) Program: The arrangement under which FEMA authorizes participating private insurance companies to issue and service Standard Flood Insurance Policies (SFIPs) using their own policy forms, in their own name, and collect premiums. The insurance company retains a portion of premiums for expenses and profit, while FEMA bears all claims costs. Over 50 insurance companies participate in the WYO Program, making NFIP policies widely accessible through the standard insurance distribution system.

X

X Zone (Shaded and Unshaded): Moderate-to-low risk flood zones on FEMA FIRMs. Shaded X zones (formerly Zone B) are areas between the 1% and 0.2% annual chance flood, or areas of 1% annual chance flooding with less than one foot of depth. Unshaded X zones (formerly Zone C) are areas of minimal flood hazard above the 0.2% annual chance flood level. Flood insurance is not required by law in X zones but is strongly recommended — about 25% of all NFIP flood claims come from X zones. Private flood insurance in X zones is often very affordable.

Flood Insurance Glossary & Terms

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