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Probation does not affect the availability of flood insurance.
If suspended, the community becomes non-participating and flood insurance policies cannot be written or renewed. Policies in force at the time of suspension continue in force for the policy term. Three-year policies remain in force until the next annual anniversary date of the policy.
For example, this would prohibit loans guaranteed by the Department of Veterans Affairs, insured by the Federal Housing Administration, or secured by the Rural Housing Services. Under Section 202(b) of Public Law 93-234, if a Presidentially declared disaster occurs as a result of flooding in a non-participating community, no federal financial assistance can be provided for the permanent repair or reconstruction of insurable buildings in SFHAs. Eligible applicants may receive those forms of disaster assistance that are not related to permanent repair and reconstruction of buildings.
If the community applies and is accepted into the NFIP within six months of a presidential disaster declaration, these limitations on federal disaster assistance are lifted.
The first step in the application process is for the community to obtain a copy of the CRS Coordinator's Manual, which describes the program and gives details on the eligible activities. The CRS coordinator should fill out and submit an application for participation in the CRS. The CRS will verify the information and arrange for flood insurance premium discounts.
Participation in the NFIP is based on an agreement between local communities and the federal government that states if a community will adopt and enforce a floodplain management ordinance to reduce future flood risks to new construction in Special Flood Hazard Areas, the federal government will make flood insurance available within the community as a financial protection against flood losses.
In the face of mounting flood losses and escalating costs of disaster relief to the general taxpayers, the U.S. Congress created the National Flood Insurance Program's (NFIP). The intent was to reduce future flood damage through community floodplain management ordinances, and provide protection for property owners against potential losses through an insurance mechanism that requires a premium to be paid for the protection.
The NFIP is administered by the Federal Insurance and Mitigation Administration (FIMA) and the Mitigation Directorate (MT), components of FEMA, an independent federal agency.
The companies receive an expense allowance for policies written and claims processed while the federal government retains responsibility for underwriting losses. The WYO Program operates within the context of the National Flood Insurance Program's (NFIP), and is subject to its rules and regulations.
The goals of the WYO Program are:
As of October 2000, more than 100 insurance companies had signed arrangements with FIMA to sell and service flood insurance under their names.
Private insurance companies participating in the Write Your Own (WYO) Program must be licensed and regulated by states to engage in the business of property insurance in those states in which they wish to sell flood insurance.
Insurance rates also would reflect the probable higher losses that would result without local floodplain management enforcement activities.
Each identified flood-prone community must assess its flood hazard and determine whether flood insurance and floodplain management would benefit the community's residents and economy. However, a community that chooses not to participate within one year after the flood hazard has been identified and an NFIP map has been provided, is subject to the ramifications.
A community's participation status can significantly affect current and future owners of property located in Special Flood Hazard Areas (SFHAs). The decision should be made with full awareness of the consequence of each action.
About 1% of the 19,000 communities participating in the NFIP remain in the Emergency Program and FEMA hopes to convert all communities to the Regular Program of the NFIP.