What is the purpose of the National Flood Insurance Program?

The National Flood Insurance Program (NFIP) was established primarily to address the significant protection gap in flood insurance that is often left by private insurers. Many private insurance companies do not offer flood insurance due to the high risk associated with flooding, which makes it challenging for individuals and businesses in flood-prone areas to secure coverage. The NFIP provides a federal insurance alternative that allows property owners, renters, and businesses to purchase flood insurance at reasonable rates, effectively filling the coverage gap. This program aims to reduce the dependency on federal disaster assistance for flooding while promoting sound floodplain management practices.

While regulating private flood insurance rates or offering tax incentives may seem like plausible aims, these are not the primary purposes of the NFIP. Furthermore, the program does not eliminate the need for flood insurance; rather, it supplements available insurance coverage, ensuring that more properties can be insured against flood risks.