Natural Flood Insurance Act Helps Protect Against Disaster

1. Introduction of NFIP In 1968, after the publication of the National Flood Insurance Act, the Congress of the United States created a program which is called The National Flood Insurance Program (NFIP). The purpose of the program is to protect property owners against losses from flood by purchasing insurance from the government. This insurance is designed to provide an insurance alternative to disaster assistance to meet the escalating costs of repairing damage to buildings and their contents caused by floods. (FEMA, 1986) NFIP was created to reduce federal disaster aid by requiring homeowners in floodplain areas to buy insurance that would replace government grants and loans. FEMA estimates that federal disaster aid is reduced by $100 for every $300 worth of flood insurance that is sold. (David C, John. 2003) What’s more, one important principle of NFIP is to allow people to bear the costs of their choice of places and to reduce the burden on taxpayers nationwide. 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