Flooding in North Carolina, South Carolina, and Tennessee caused massive damage in areas that were not typically associated with flooding issues which has led some homeowners to consider purchasing a federal flood insurance policy. 

Unfortunately, according to Insurify, coverage from the National Flood Insurance Program (NFIP) may not be available to everyone that would like a policy.

According to the Federal Emergency Management Agency, or FEMA, there are currently, 2,279 communities across the nation that do not participate in a voluntary program that provides insurance from flood damage which means that property owners in these areas cannot purchase federally backed flood insurance policies. 

Many of the non-participating communities have small populations and are rural while other communities may have a very low risking of flooding, although that may change in the future as the true risk of flooding becomes a bit clearer. 

Chad Berginnis, executive director of the Association of State Floodplain Managers, or ASFPM, told Insurify that areas that do not participate in NFIP typically have “have horrible, inadequate flood maps.” Berginnis continues, “FEMA’s limited mapping budget goes to areas with risk, and your areas of higher risk are going to be bigger. In smaller communities, you’re going to have old, approximate flood data.”

“We have 3.5 million miles of streams, rivers, and coastlines in the country. We’ve mapped 1.2 million miles of them. We’ve only mapped a third of our floodplains,” said Berginnis in the Insurify article.

The NFIP Explained

The NFIP which was created in 1968 with the National Flood Insurance Act is managed by FEMA. The NFIP sells flood insurance to homeowners, renters and business directly or via over 50 insurance companies that work with FEMA to sell flood insurance. 

Communities that participate in the NFIP must agree to specific conditions to regulate residential and commercial development in any floodplains within the boundaries of the community. A community that doesn’t meet these regulations cannot participate in the NFIP.

In communities that participate in the NFIP, any property is eligible for flood insurance, even if it falls outside a floodplain. The NFIP currently underwrites roughly 5 million policies in 22,600 communities that are located in all 50 states and six U.S. territories. 

Roughly one-third of all NFIP claims originate in areas that are not located in the high-risk flood zones, making flood insurance a good idea even in areas that don’t commonly flood. Flooding is the most common natural disaster and ends up causing the most expensive damage.

Why do some communities not participate?

According to Berginnis, communities may opt out of the NFIP for numerous reasons. A few common reasons:

• Some communities have no identified floodplains within their boundaries
• Community may have flood zones that are already off limits for development
•  Local government officials may consider the costs of meeting NFIP requirements for participation too costly or limiting 

“Essentially, joining the [NFIP] is a very simple and straightforward proposition,” Berginnis said in the Insurify article. “Typically, the community passes a resolution of intent to join the program. That’s something the [town] council could do, literally at their next meeting. Then, they adopt a set of regulations and standards that include designating someone to be the floodplain manager,” he continued.

Once a community decides to participate in the program, it is up to local officials to administer the program and enforce the regulations they adopted regarding floodplains.

“We’ve kind of made it easy in this country, in my opinion, for communities to participate, and remove all obstacles for them participating,” Berginnis said in the Insurify article. “They just need the political will to do it.”

What are the consequences of non-participation?

Homeowners in communities that have chosen not to participate cannot purchase federally backed flood insurance, they will need to purchase it in the private market, if it is available. Many private insurers do not write coverage in areas that don’t participate in the NFIP. 

In addition, residents in non-participating areas cannot use federally backed mortgages or loans from the Department of Veterans Affairs, Federal Housing Administration, or Rural Housing Services, if they want to buy or build a house in a Special Flood Hazard Area, or SFHA.

Non-participating communities can also experience major issues if their community is hit by massive flood damage, as homeowners in Western North Carolina recently discovered. These communities are unable to secure financial assistance from the federal government to repair or rebuild structures in SFHAs.

North Carolina is excellent example

While most of communities in North Carolina are part of the NFIP, 27 aren’t and one of them experienced major flood damage due to Hurricane Helene. Even in communities that were part of the NFIP, most homeowners were not carrying flood insurance coverage.

As an example, Asheville, which has a population of 95,500, was hit with 10 inches of rain that caused massive flooding. Unfortunately, there were only 447 NFIP policies in force in the area leaving many homeowners uncovered. 

Moving forward, as climate change results in more frequent and more severe storms, communities may reconsider their participation in the NFIP. Homeowners looking to protect their home in areas that are not participating in the NFIP may need to find coverage in the private market. 

Regardless of whether your community participates in the NFIP or not, the risk of flooding will only increase as climate change results in more severe weather. Experts recommend homeowners consider putting a flood insurance policy in place if there is any chance of their home flooding. 

“Do not delude yourself to think it can’t happen again, or it won’t happen again. It will,” Berginnis said in the Insurify article. “And it could happen next week, it could happen next month, it could happen a year from now—the same extreme event.”