Flood Insurance

Federally subsidized hazard insurance protecting home owners against property damage from flooding. Coverage is mandatory when lenders make federally insured or guaranteed mortgages to home buyers purchasing property in designated flood hazard areas. Flood insurance coverage, obtained from private insurers, is available only to residents of communities participating in the National Flood Insurance Program, administered by the Federal Emergency Management Agency.

An insurance policy that covers property damage due to natural flooding. Flood insurance is offered by private insurers but is subsidized by the federal government. See Federal Emergency Management Agency (FEMA).
Example: Abel owns a home within an area defined as a 100-year Floodplain. If the local community is participating in a special federal program, Abel may purchase flood insurance to cover damage from periodic flooding.