National Flood Insurance Program Glossary and Basic Explanations
Common Acronyms (see below for definitions)
BFE: Base Flood Elevation
CRS: Community Rating System
EC: Elevation Certificate
FEMA: Federal Emergency Management Agency
FIRM: Flood Insurance Rate Map
NFIP: National Flood Insurance Program
PRP: Preferred-Risk Policy
SRL: Severe Repetitive Loss
SFHA: Special Flood Hazard Area
Glossary and Explanations
*Note: These are not official FEMA definitions, but have been modified from the official definitions (available online) to make them more easily understood and accessible to the general public.
100-Year-Flood (or Storm): A 100-year flood or storm is an event with significantly damaging floods that has a 1% chance of occurring in any given year. It does not mean that once a storm of that magnitude has occurred, it will not happen again for another 100 years. Over the life of a 30-year mortgage, there is a 26% chance that a property will experience a 100-year flood or storm.
Actual Cash Value: The amount of money you will be paid by the NFIP for any flood damages if you have federal flood insurance. This is equal to the value of the property before damage, including depreciation. For example, if your couch cost $3,000 when you bought it, but it had depreciated to a value of $500 at the time it was damaged, you will be paid $500. This is different than replacement cost value, which pays you the amount it costs to replace property regardless of depreciation.
Actuarial Rate: The insurance premium rate determined by assessing the probability that a structure will suffer flood damage. The Biggert-Waters and Grimm-Waters Acts remove subsidies for most properties that were not paying rates based on their risk, meaning that in the future most flood insurance policyholders will pay premium rates based on their risk, known as actuarial rates.
Base Flood Elevation (BFE): The expected height of water during a flood that has a 1% chance of occurring in any given year. The BFE is identified in the Special Flood Hazard Area, made up of A- and V-zones. The BFE is expressed on a flood map as a number of feet. Underneath each A- or V-zone designation the BFE will be marked as “EL #”, where # is a number of feet that varies by location. For example, “EL 3” means the base flood elevation is 3 feet.
The BFE is used to determine the risk of flooding for each structure in A- and V-zones by comparing the BFE to the elevation of the lowest floor of the structure.
If the structure is elevated above the BFE, it has a low risk of flooding and will receive lower flood insurance rates. If the structure is below the BFE, particularly if it has a below-grade (below ground) crawl space or basement, the risk of flooding for that structure is high and flood insurance rates will be accordingly high. The further the structure is below the BFE, the higher its rates will be. For examples, see the FEMA graphic below (from the Homeowner’s Guide To Elevation Certificates):
Community: A political entity with the authority to adopt and enforce floodplain ordinances and regulations. In Virginia this typically refers to localities. In some instances, although a town government may exist, the county may have this authority.
Community Rating System (CRS): Known as the CRS, the Community Rating System is a FEMA program that incentivizes a strong floodplain management program by offering discounts on flood insurance rates for all policyholders within that community. Communities can gain points by adopting various floodplain management activities. Total points correspond to different ratings (also known as classes), which in turn correspond to discount percentages on flood insurance. With ratings from 10 to 1 (10 being the worst rating and 1 being the best), communities can earn up to a 45% discount on flood insurance for all policyholders. For more information on the CRS, click here.
Elevation Certificate (EC): An elevation certificate determines the elevation of your structure (the lowest floor) in relation to the base flood elevation, the benchmark flood height used on Flood Insurance Rate Maps (see above for more information about base flood elevation). If the land that your structure sits on is high, an elevation certificate can also help you prove that your land is high enough that it should be classified as a lower-risk flood zone. If your property is located in an A- or V-zone and you have been paying subsidized rates, you will need an elevation certificate to determine your actual flood risk and ensure that FEMA charges you fairly and accurately as your subsidies are phased out. If your lowest floor is a basement below ground, you are likely well below base flood elevation and your rates will be high. If your lowest floor is elevated above base flood elevation, your rates will likely be low. Without an elevation certificate, you may pay more than you actually owe; therefore, obtaining an elevation certificate is very important. It may also help your community earn a discount on flood insurance for all policyholders (see information about the Community Rating System here).
- Click here for more information on elevation certificates.
- For more general information, see this Homeowner’s Guide to Elevation Certificates from FEMA.
- For a blank, fillable NFIP elevation certificate and instructions from FEMA, click here.
- Talk to your community floodplain manager or building official to find out if your locality has up-to-date information on the elevation of your structure. If not, talk to your insurance agent or your community floodplain manager for help on how to get an elevation certificate. Some will offer recommendations on the best surveyors to hire.
- If you are purchasing a new home, consider asking for an elevation certificate as part of the property survey. Combining the elevation certificate with the property survey may save money and will allow for you to ensure you are receiving an accurate flood insurance rate.
- If you have to obtain an elevation certificate, this will cost at least $300 in most cases, and up to $2,000 in some cases. However, it is necessary to obtain this document to ensure that your flood insurance rates are accurate and not over-priced. Having this document on file can also help your community earn a flood insurance rate discount for you and other policyholders in your community.
Federal Emergency Management Agency (FEMA): The Agency that operates the National Flood Insurance Program, located in the Department of Homeland Security. It is tasked with responding to, planning for, recovering from, and mitigating man-made and natural disasters. Click here for the FEMA website.
Flood Insurance Rate Map (FIRM): A Flood Insurance Rate Map, also known as a flood map, is a document (paper or digital) that delineates the boundaries of flood zones. See How to Access and Read your Flood Insurance Rate Map for more information.
Flood Zone: A geographic area on a flood map that indicates flood risk. Zones are determined by assessing the expected height of a flood that has a 1% chance of occurring in any given year (the “100-year-flood”), as well as considering potential wave heights, the distance from the nearest water body and the ground elevation. While there is only a 1% chance of a flood of such magnitude occurring every year, there is a 26% chance of such a flood occurring over the 30-year lifecycle of the average mortgage.
Zones: Click on the image below to zoom. (See the FEMA Map Service Center for official FEMA definitions)
Floodplain: The area susceptible to flooding, typically located next to a body of water.
Freeboard: Freeboard is the additional height above base flood elevation that some localities require new structures to be built to. For example, if the BFE for a new structure is 6, and the locality requires 3 feet of freeboard, the structure must be elevated 9 feet above the BFE. Higher freeboard results in significantly lower flood insurance rates because the higher a structure is elevated, the less likely it is to flood. FEMA encourages communities to adopt at least 1 foot of freeboard. Some localities require freeboard because they have been experiencing more frequent flooding at higher levels than the BFE suggests, some are anticipating changes in maps that will raise the BFE and want structures to be prepared, and some are preparing for sea level rise, among other reasons. A higher freeboard provision can gain a large number of points in the Community Rating System, which can lead to lower rates for all flood insurance policyholders. Click here for more information on freeboard.
Grandfathering (see also Subsidies): There are two types of grandfathering: continuous coverage and built-in-compliance. Grandfathering refers to premium rating based on a pre-determined level of risk that does not change with true changes in risk caused by environmental circumstances or map changes. As a result of Grimm-Waters, no future grandfathering will be permitted, but existing properties that fall under the "built-in-compliance" category may remain grandfathered. Those under the "continuous coverage" category will experience gradual rate increases until actuarial rates are achieved. Click here to learn how to determine if your property is grandfathered.
- Continuous coverage grandfathering: Typically applies to pre-FIRM (see below for definition) structures. The structure has maintained continuous flood insurance coverage, and if the property has been sold, the policy was directly transferred to the new owner. This type of grandfathering also applies to subsidized properties, so any properties falling under this category will be affected by rate changes for subsidized properties.
- Built-in-compliance grandfathering: Typically applies to post-FIRM (see below for definition) structures. Any structure that was built in compliance with floodplain regulations and codes effective at the time of construction has maintained rates based on the level of risk at the time of construction.
Lowest Floor: The lowest enclosed area of a structure, exclusive of an area used solely for parking, building access, or storage. A basement is considered a lowest floor. The elevation of the lowest floor is compared to the base flood elevation in A- and V-zones to determine flood risk. If the lowest floor is above the BFE rates are low, if it is below the BFE, rates are high.
Mandatory Purchase Requirement: Any homeowner located in a Special Flood Hazard Area (A- and V-zones) that owns a federally-backed mortgage (nearly all mortgages) is required to purchase flood insurance as a stipulation on the loan.
National Flood Insurance Program (NFIP): The Program, operated by the Federal Emergency Management Agency, that offers federal flood insurance.
Non-Residential: Direct FEMA definition: Includes, but is not limited to: small business concerns, churches, schools, farm buildings (including grain bins and silos), pool houses, clubhouses, recreational buildings, mercantile structures, agricultural and industrial structures, warehouses, hotels and motels with normal room rentals for less than 6 months' duration, and nursing homes.
Post-FIRM: Any structure built after the date on which the first Flood Insurance Rate Map became effective, or December 31, 1974, whichever is later. To find out when the cutoff date is for your locality, check this list provided by FEMA (the second column, “Init FIRM Identified”), and then verify that date with your community floodplain manager or insurance agent. These structures are typically more up-to-code than pre-FIRM structures because they were built when more codes and regulations were established and applicable. However, depending on when the structures were built, they may be out of compliance with current codes and regulations because these may have been updated since construction was completed. Flood risk and therefore flood insurance rates are typically lower for post-FIRM properties because they have been built in a more flood-resilient manner than pre-FIRM properties.
Pre-FIRM: Any structure built prior to the date on which the first Flood Insurance Rate Map became effective, or December 31, 1974, whichever is later. To find out when the cutoff date is for your locality, check this list provided by FEMA (look at the second column, “Init FIRM Identified”), and then verify that date with your community floodplain manager or insurance agent. Pre-FIRM houses were built at a time when many building codes and floodplain regulations were not established or applicable, so these houses are typically not up-to-code (unless they have been substantially changed and were required to come up to code by law – click here for more information on substantial changes). Flood risk and, therefore, flood insurance rates are typically higher for pre-FIRM properties because they have been built in a less flood-resilient manner than post-FIRM properties.
Preferred-Risk Policy (PRP): A policy that offers fixed combinations of building/contents coverage or contents-only coverage at modest, fixed premiums for low-risk properties. The PRP is available for properties located in the low-risk B, C, and X zones that meet eligibility requirements based on the property's flood loss history.
Repetitive Loss: A structure that has filed two claims over a ten-year period averaging at least 25% of the structural value OR a structure that has been paid two or more claims of $1,000 over a ten-year period since 1978. Repetitive loss properties represent approximately 1% of all NFIP policies, but 25-30% of all NFIP claims.
Severe Repetitive Loss (SRL): A property that has undergone four or more claims, each worth $5,000 or greater and totaling $20,000 or more; or a structure that has undergone two or more claims where the losses totaled more than the value of the property. SRL properties have historically made up 1% of the properties insured under the NFIP, but accounted for 25-30% of losses. These properties cost the NFIP an average of $200 million annually.
Special Flood Hazard Areas (SFHAs): SFHAs are flood zones with the highest risk of flooding. These zones are likely to experience flooding from a 100-year-flood (which has a 1% chance of occurring any given year, and a 26% chance of occurring over the life of a 30-year mortgage). On a FIRM, A-Zones and V-Zones fall into the SFHA category, which includes zones A, AO, A1-A30, AE, A99, AH, AR, AR/A, AR/AE, AR/AH, AR/AO, AR/A1-A30, V1-V30, VE, or V. Any property with a federally-backed mortgage located in the SFHA must purchase flood insurance. See Flood Zone for more information.
Subsidies: Structures located in A- and V-zones (the Special Flood Hazard Area) that are considered “pre-FIRM” (see above) and have not undergone substantial structural changes (that caused the structure to be brought up to code) have been receiving subsidized flood insurance rates. There is currently a set premium for all pre-FIRM subsidized properties that is not based on risk. There are very different risk levels among these properties, so some property owners are paying more than they should with the subsidized rate, and many are paying less. With the flood insurance reforms, all subsidized properties will gradually have their premiums raised until actuarial, risk-based rates are achieved. Click here to learn more about subsidies.