The catastrophic nature of floods is too large a risk for the private insurance industry to profitably provide coverage at an affordable price. The National Flood Insurance Reform Act of 1968 made federal flood insurance available to communities that participate within the National Flood Insurance Program (NFIP).
The NFIP allows participating insurance companies to write and service flood insurance policies in their own name while the federal government retains responsibility for underwriting losses. Because these policies are regulated by the NFIP and because the federal government has established a modest maximum allowable processing fee, the flood insurance rates offered by different insurance companies should be comparable. However, different coverage amounts and rating errors, as well as the location and design of the structure, can result in substantial insurance premium differences.
To participate within the NFIP, communities are required to implement minimum floodplain development standards and enforce them. These standards help make flood insurance actuarially feasible. The City of Eugene has been participating in the NFIP since September of 1986. Structures constructed prior to the creation of the floodplain hazard maps, known as pre-FIRM structures, are currently charged lower premiums, as they were built before the flood risk was known.
Insurance Resources and Upcoming Changes
More detailed information about flood insurance coverage can be found on the FEMA and NFIP websites. The NFIP can be reached directly at 800-427-4661. They can also provide assistance locating local insurance agents who offer flood insurance.
It is recommended that anyone who owns a property within the floodplain do their own due diligence. FEMA has dedicated many webpages to the topic of flood insurance.