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Understanding the Unique Facets of Flood Insurance: Participating Communities in the Regular Program

Two requirements must be met before owners or lessees can avail themselves of the flood coverage offered by NFIP

The structure must be in a participating community (currently over 21,000); and
The community must have transitioned into the Regular Program.

A participating community is one that: 1) has been notified by FEMA through the Federal Insurance and Mitigation Administration (FIMA) that there are flood-prone areas within the community (usually resulting from previous floods); 2) has been notified of the location of those areas by publication of a Flood Hazard Boundary Map (FHBM); 3) within one year of notification agrees to join NFIP; and 4) agrees to participate in the development of local flood plain management guidelines. Being labeled a participating community is the first step toward becoming a regular program community.

Immediately following a community's decision to participate with NFIP, the emergency program is made available to residents and businesses within the community. During the emergency program phase, very limited amounts of coverage are available:

Property Type	Structure Maximum	Contents Maximum
1 to 4 Family Residences	$35,000	$10,000
Other Residential Structures	$100,000	$100,000
Non-Residential Structures	$100,000	$100,000

Regular Program

Moving from the emergency program to the regular program requires completion of a more detailed flood insurance study (FIS) by FIMA (not FEMA) and the Army Corps of Engineers, more clearly defining the community's flood hazards. Simultaneously, the community, in conjunction with FEMA, is developing and codifying the flood plain ordinances and laws to regulate construction and maintenance in the various flood zones and flood ways.

After the flood insurance studies are completed and FEMA is satisfied with the locally adopted flood plain management ordinances, the community moves to the regular program. Once the community enters the regular program, the higher limits presented previously become available.

Flood Plain Management in the Regular Program

Flood plain management is the responsibility of the local community. Reviewing and updating existing laws are solely the duty of the participating community; FEMA does not take part in this process. However, if the community fails to comply with its own flood plain management requirements, FEMA may place the community on probation for one year.

During the probationary year, a $50 surcharge is tacked onto every flood policy within in that community: 1) to help finance the increased risk the community is presenting the program and 2) as a political move to encourage policy holders to call the community officials to push for resolution of the problems to end the probation.

The community is no longer considered a “participating community" because they are not considered to be working with FEMA to mitigate losses. If deficiencies are not corrected within the one year probation period, the community is suspended and no NFIP-backed flood policies can be written or renewed.

Community Rating System (CRS)

NFIP participating communities have the option to participate in the Community Rating System (CRS), a voluntary program implemented by NFIP in 1990. Any participating community in full compliance with the minimum floodplain management requirements can apply to join the CRS.

To qualify for any available CRS discounts, the community must undertake and execute measures beyond those contained within the minimum floodplain management requirements. The CRS uses rate credits to recognize and encourage community and state activities that go beyond the minimum required by the

NFIP to:

Reduce and avoid flood damage to insurable property. The CRS encourages communities to map and provide regulatory flood data for all their flood hazards. Standards higher than those set out in the minimum criteria of the NFIP are generally required.
Strengthen and support the insurance aspects of the NFIP. Communities are encouraged to implement mapping and information programs that help assess individual property risk and reduce repetitive flood losses and make their residents aware of their flood risk
Foster comprehensive floodplain management. Communities are encouraged to use all available tools to implement comprehensive local floodplain management programs with concerns beyond the protection of insurable property. This comprehensive approach includes planning, public information, regulations, financial support, open space protection, public works activities, emergency management, and other appropriate techniques.

Before a community can be recognized in the insurance rating system, local floodplain management activities must be described, measured, and evaluated by the CRS. A community receives a CRS classification based upon the total credit for its activities. Ratings range from 1 to 10 based on the points earned. A CRS rating of “1" receives the most credit and a CRS rating of “10" results in no credit.

CRS Class	Premium Reduction
	In SFHA	Outside SFHA
1	45%	10%
2	40%	10%
3	35%	10%
4	30%	10%
5	25%	10%
6	20%	10%
7	15%	5%
8	10%	5%
9	5%	5%
10	None	None

Properties located outside SFHAs are subject to lower discount percentages because the premiums are already lower due to the location/rating zone. Preferred Risk Policies are not eligible for CRS premium discounts because these policies are already discounted.

Flood Series

This is one of a series of flood articles discussing and detailing the unique facets of the NFIP flood program. To continue researching the unique facets of the NFIP, visit any or all the links provided:

Read the entire series here.

Resources

First Published: August 23, 2021