National Flood Insurance Program: Glossary and Explanations in Ordinary Language
Glossary and Explanations in Ordinary Language
We’ve translated FEMA’s explanations of key terms into ordinary language, and provided additional context to make them more accessible to members of the general public.
The official FEMA definitions of these terms are to be found on the National Flood Insurance Program Terminology Index webpage.
Common Acronyms
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
SRL: Severe Repetitive Loss
SFHA: Special Flood Hazard Area
Glossary and Explanations in Ordinary Language
100-Year Flood/ Storm
A 100-year flood/ storm is a weather event with significantly damaging floods that has a 1% chance of occurring in any given year. It does not mean that a storm of this magnitude happens once every 100 years. This means that even after such a storm occurs, another storm of a similar magnitude could happen again at any time.
Statistically speaking, over the duration of a 30-year mortgage, there is a 26% chance that a property will experience a 100-year flood or storm.
Actual Cash Value
Actual Cash Value (ACV) is the amount you will be paid by the National Flood Insurance Program (NFIP) for any flood damages if you have federal flood insurance. ACV is calculated as the value of the property before the damage, minus depreciation. For example, if you bought a couch for $3,000, but it had depreciated to a value of $500 at the time of the flood, you would be paid $500. This differs from Replacement Cost Value (RCV), which pays the amount it costs to replace the property without considering depreciation.
Actuarial Rate
The Actuarial Rate is the insurance premium determined by evaluating the likelihood that a structure will experience flood damage. The many Congressional reforms to the NFIP, and the Risk Rating 2.0 overhaul of the old rating methodology, have changed the way the NFIP rates risk. Now, the NFIP is acting more like a private insurance company, which means flood insurance policyholders are paying premium rates that reflect their true risk, or actuarial rates.
Base Flood Elevation
Base Flood Elevation (BFE) is the anticipated height of water during a flood with a 1% chance of occurring in any given year. The BFE is specified in Special Flood Hazard Areas, which include A- and V-zones, and is expressed on flood maps as a number of feet. Each A- or V-zone designation will show the BFE as “EL #,” where “#” represents the specific elevation in feet, varying by location. For example, “EL 3” indicates a base flood elevation of 3 feet.
The BFE is crucial for assessing flood risk for structures in A- and V-zones by comparing the BFE to the elevation of the structure's lowest floor.
If a structure is elevated above the BFE, it has a lower risk of flooding and may qualify for lower flood insurance rates. Conversely, if a structure is below the BFE, especially if it has a below-grade crawl space or basement, the flood risk is higher, leading to higher flood insurance rates. The further a structure is below the BFE, the higher its insurance rates will be. For examples, see the FEMA graphic below (from the Homeowner’s Guide To Elevation Certificates).
Community
A Community is a political entity with the authority to adopt and enforce floodplain ordinances and regulations. In Virginia, this typically refers to localities. However, in some cases, even if a town government is present, the county may hold this authority.
Community Rating System
The Community Rating System (CRS) is a FEMA program that incentivizes strong floodplain management by offering annual discounts on flood insurance rates for all policyholders within a community. Communities earn points by adopting various floodplain management activities, with the total points determining the community's rating, also known as its class. These ratings range from 10 to 1, with CRS participation beginning at class 9 and 1 being the highest. The rating corresponds to the percentage discount on flood insurance, with communities potentially earning up to a 45% discount for all policyholders.
For more information on the benefits of localities participating in the CRS program, review the Wetlands Watch Report “Flood Protection Pay-Offs: A Local Government Guide to the Community Rating System.” Report and executive summary may be found here.
For more information on Virginia’s CRS Workgroup, which is hosted by Wetlands Watch, visit our CRS homepage.
Elevation Certificate
An Elevation Certificate (EC) is a document that determines the elevation of your structure's lowest floor in relation to the base flood elevation (BFE), which is the benchmark flood height used on Flood Insurance Rate Maps. If your structure is located on high ground, an elevation certificate can help you demonstrate that your land qualifies for a lower-risk flood zone classification. If your property is in an A- or V-zone and you have been paying subsidized rates, you will need an elevation certificate to accurately determine your actual flood risk and ensure that FEMA charges you fairly as your subsidies are phased out. If your lowest floor is a basement below ground level, you are likely well below the BFE, resulting in higher insurance rates. Conversely, if your lowest floor is elevated above the BFE, your rates will likely be lower. Without an elevation certificate, you may end up paying more than necessary, making it an important document to obtain. Additionally, having an elevation certificate may help your community earn a discount on flood insurance for all policyholders.
For more information, see FEMA’s Homeowner’s Guide to Elevation Certificates.
For a blank, fillable NFIP Elevation Certificate and instructions from FEMA, click here.
Federal Emergency Management Agency (FEMA)
The Federal Emergency Management Agency (FEMA) is the agency responsible for operating the National Flood Insurance Program (NFIP) and is part of the Department of Homeland Security. FEMA's primary roles include responding to, planning for, recovering from, and mitigating the impacts of both man-made and natural disasters. In addition to managing disaster response and recovery efforts, FEMA works to enhance community resilience and preparedness through various programs, including floodplain management, emergency planning, and disaster mitigation initiatives. FEMA’s website is here.
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 flood zone is a geographic area on a FEMA flood map that indicates the level of flood risk. These zones are determined by evaluating factors such as the expected height of a flood with a 1% chance of occurring in any given year (often referred to as the “100-year flood”), potential wave heights, proximity to the nearest water body, and ground elevation. Please note that although 100-year floods have a 1% chance of occurring in any particular year, there is a 26% chance of such a flood occurring over the 30-year lifespan of an average mortgage.
Zones
Click on the image below to zoom. Check out the FEMA Map Service Center for official FEMA definitions.
Floodplain
A floodplain is an area that is susceptible to flooding, typically located next to a body of water.
Freeboard
Freeboard is the additional height above the base flood elevation (BFE) that some localities require new structures to be built to. For example, if the base flood elevation (BFE) for a new structure is 6 feet and the locality requires 3 feet of freeboard, the structure must be elevated to 9 feet above the BFE. Higher freeboard leads to significantly lower flood insurance rates because the more a structure is elevated, the less likely it is to flood. FEMA recommends that communities adopt at least 1 foot of freeboard. Some localities mandate freeboard due to experiencing more frequent and severe flooding than the BFE suggests, anticipating future map updates that may raise the BFE, or preparing for sea level rise, among other reasons.
Incorporating a higher freeboard provision can earn a substantial number of points in the Community Rating System (CRS), which can result in lower flood insurance rates for all policyholders within the community.
For more information on freeboard, click here.
Grandfathering
Grandfathering is a term used to describe premium rating based on a pre-determined level of risk that remains unchanged, even if actual risk increases due to environmental changes or map updates. There are two types of grandfathering: continuous coverage and built-in-compliance. Under the Grimm-Waters Act, future grandfathering is no longer permitted, but existing properties that fall under the "built-in-compliance" category may remain grandfathered. Properties under the "continuous coverage" category will experience gradual rate increases until they reach actuarial rates.
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.
Click here to learn how to determine if your property is grandfathered.
Lowest Floor
Lowest Floor is the lowest enclosed area of a structure, excluding areas used solely for parking, building access, or storage. A basement is considered the lowest floor. The elevation of the lowest floor is compared to the base flood elevation (BFE) in A- and V-zones to assess flood risk. If the lowest floor is above the BFE, flood insurance rates are lower; if it is below the BFE, rates are higher.
Mandatory Purchase Requirement
Mandatory Purchase Requirement is a regulation that requires any homeowner located in a Special Flood Hazard Area (A- and V-zones) with a federally-backed mortgage (which includes nearly all mortgages) to purchase flood insurance as a condition of the loan.
National Flood Insurance Program (NFIP)
National Flood Insurance Program (NFIP) is a federal program administered by the Federal Emergency Management Agency (FEMA) that provides flood insurance to property owners, renters, and businesses in participating communities. Established in 1968, the NFIP aims to reduce the financial impact of flooding by offering federally-backed insurance policies in exchange for communities implementing and enforcing floodplain management regulations. The program also works to reduce future flood damage through its emphasis on promoting sound land use and building practices in flood-prone areas. By insuring against flood risks, the NFIP plays a critical role in fostering community resilience and facilitating recovery after flood events.
Non-Residential
Non-Residential is a classification defined by FEMA that includes a broad range of structures not intended for residential use. This category encompasses, 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 buildings, warehouses, hotels and motels with normal room rentals for less than six months, and nursing homes. These structures are distinguished from residential buildings in terms of their use, occupancy, and sometimes the specific insurance coverage requirements under programs like the National Flood Insurance Program (NFIP).
Post-FIRM
Post-FIRM refers to any structure built after the date when the first Flood Insurance Rate Map (FIRM) became effective in a community, or after December 31, 1974, whichever is later. To determine the specific cutoff date for your locality, you can consult this list provided by FEMA (refer to the second column, “Init FIRM Identified”), and verify this date with your community floodplain manager or insurance agent. Post-FIRM structures are generally more up-to-code than pre-FIRM structures because they were constructed under more stringent codes and regulations that were established after the introduction of the FIRM. However, depending on when these structures were built, they may no longer comply with current codes and regulations, as these may have been updated since the time of construction. Typically, flood risk and therefore flood insurance rates are lower for post-FIRM properties because they are built to be more flood-resilient than pre-FIRM properties.
Pre-FIRM
Pre-FIRM refers to any structure built before the date when the first Flood Insurance Rate Map (FIRM) became effective in a community, or before December 31, 1974, whichever is later. To determine the specific cutoff date for your locality, consult the list provided by FEMA (refer to the second column, “Init FIRM Identified”), and verify this date with your community floodplain manager or insurance agent. Pre-FIRM structures were constructed at a time when many building codes and floodplain regulations were either not established or not applicable, so these buildings are typically not up to current code standards—unless they have undergone substantial changes that legally required them to be brought up to code. Flood risk, and consequently flood insurance rates, are generally higher for pre-FIRM properties because they were built with less flood resilience compared to post-FIRM structures.
Repetitive Loss
Repetitive Loss is a classification for a structure that has either filed two claims within a ten-year period, with each claim averaging at least 25% of the structure's value, or a structure that has received two or more claims totaling at least $1,000 over a ten-year period since 1978. Although repetitive loss properties account for approximately 1% of all National Flood Insurance Program (NFIP) policies, they represent 25-30% of all NFIP claims.
Severe Repetitive Loss (SRL)
Severe Repetitive Loss (SRL) is a designation for a property that has either experienced four or more claims, each valued at $5,000 or more, with a cumulative total of at least $20,000, or a property that has had two or more claims where the total losses exceed the property's value. Historically, SRL properties have constituted 1% of the properties insured under the National Flood Insurance Program (NFIP), yet they account for 25-30% of total losses. These properties cost the NFIP an average of $200 million annually.
Special Flood Hazard Areas (SFHAs)
Special Flood Hazard Areas (SFHAs) are the FEMA flood zones with the highest risk of flooding. These areas are prone to flooding from a 100-year flood, which has a 1% chance of occurring in any given year and a 26% chance of occurring over the life of a 30-year mortgage. On a Flood Insurance Rate Map (FIRM), SFHAs include A-Zones and V-Zones, specifically 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. Properties located in an SFHA with a federally-backed mortgage are required to purchase flood insurance. For more information, see the entry on Flood Zones.
Subsidies
Subsidies refer to the reduced flood insurance rates provided to structures located in A- and V-zones (Special Flood Hazard Areas) that are classified as "pre-FIRM" and have not undergone substantial structural changes that would bring them up to current code standards. These pre-FIRM properties have been receiving a set premium that is not based on their actual flood risk. As a result, there is a wide range of risk levels among these properties, with some owners paying more than they should and many paying less under the subsidized rate. With recent flood insurance reforms, all subsidized properties will gradually see their premiums increase until they reach actuarial, risk-based rates.
Substantial Cumulative Damage
Substantial Cumulative Damage refers to a property that has sustained flood-related damage where the cumulative total of payments received under the National Flood Insurance Program (NFIP) equals or exceeds the property's fair market value.
Substantial Damage
Substantial Damage is defined as damage sustained by a structure, from any cause, where the cost of restoring the structure to its pre-damage condition equals or exceeds 50% of the structure's fair market value prior to the damage.
Zones
Click on the image below to zoom. Check out the FEMA Map Service Center for official FEMA definitions.