What is the definition of National Flood Insurance Program?
The National Flood Insurance Program is a federal-sponsored program that allows homeowners and businesses to buy flood insurance.
Insurance companies are unwilling to issue policies for people and businesses that live in flood-prone areas, since those who buy flood insurance are usually those with a high risk of losses for flood insurance.
As a solution, the National Flood Insurance Program was formed. What it does is to create a pool of insurance companies. When an application for flood insurance comes up, it assigns an insurance company to issue the policy. All insurance companies that are licensed in that state are required to be part of the pool.
It is designed to help mitigate federal responsibility when a disaster (like a major flooding) strikes.
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