Flood Insurance and SFHA Reductions

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A reduction in disaster assistance is made for facilities located in the 100-year floodplain when damaged by flooding, whether or not the applicant has the facility insured by a National Flood Insurance Program (NFIP) standard flood insurance policy. This reduction is the maximum amount of insurance proceeds the applicant would have received if the facility had been fully covered by an NFIP standard flood insurance policy. This reduction is made separately for buildings and contents.

The items that may be eligible for disaster assistance include:

 Reasonable deductible limited to the minimum available under the NFIP in the applicant’s first claimed FEMA assistance if the cost accrued is to the applicant

 Depreciation (i.e., differences between FEMA eligible costs and final loss valuations used by insurers)

 The cost of damages that exceed the limits of a standard NFIP policy

 Items not covered by a standard NFIP policy.

A FEMA flood insurance Specialist determines the amount of the reduction. This Specialist will evaluate the NFIP policy and the damaged facility and contents to determine the maximum amount of insurance coverage available for that facility. The applicant also must obtain and maintain flood insurance in the amount of eligible damages for the future as a condition of receiving the Federal grant.


 If the insurance is not maintained, the facility will receive no assistance in the next disaster event of the same type.

  If the estimate for the repair of disaster-related damage is less than  

$5,000, the insurance purchase requirement is waived.

 If the disaster is a flood, the applicant must obtain and maintain flood insurance, even if the facility is not located in a floodplain

 If the assistance for permanent work received exceeds the amount available in an NFIP standard flood insurance policy, the applicant is required to obtain and maintain additional insurance so that the full amount of the FEMA eligible damages is covered by insurance.

The reduction is not taken if a Private Nonprofit (PNP) facility is located in a community that does not participate in the NFIP. However, the community must join the NFIP within six months after the disaster and the PNP must purchase the required insurance. If the community does not join, the PNP is not eligible for assistance.


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