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Insurance Glossary

CRS

Property

Definition

Community Rating System - a voluntary incentive program that recognizes and rewards communities for exceeding minimum National Flood Insurance Program floodplain management requirements. Communities that participate in CRS implement additional flood mitigation activities and receive discounted flood insurance rates for their residents. CRS classes range from 10 (no discount) to 1 (45% discount), with each class improvement providing a 5% premium reduction in Special Flood Hazard Areas and 10% in preferred risk areas. Activities that earn CRS credit include enhanced mapping, public information programs, drainage system maintenance, and higher regulatory standards. Over 1,500 communities participate in CRS, providing millions of dollars in annual premium savings.

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Related Terms

NFIP
The National Flood Insurance Program is a federal program created by Congress in 1968 to provide flood insurance to property owners, renters, and businesses. Managed by FEMA, the NFIP makes flood insurance available in communities that adopt and enforce floodplain management regulations to reduce future flood damage. Standard homeowners insurance does not cover flood damage, making NFIP policies essential for properties in flood-prone areas. The program offers up to $250,000 in building coverage and $100,000 in contents coverage.
Community Rating System
A program administered by FEMA that provides flood insurance premium discounts to residents of communities that implement floodplain management practices beyond NFIP minimum requirements. Communities earn points through activities in four categories: public information, mapping and regulations, flood damage reduction, and warning and response. Points determine the community's CRS class (1-10), with each class providing a 5% premium discount in Special Flood Hazard Areas. Class 1 communities receive a 45% discount. The program encourages communities to reduce flood risk, protect natural floodplain functions, and facilitate accurate insurance rating. CRS communities must recertify annually and undergo detailed verification every few years.
Flood Insurance
Insurance coverage that protects against losses from flooding, which is specifically excluded from standard homeowners and renters insurance policies. Flood insurance covers direct physical losses caused by flooding, including overflow of inland or tidal waters, unusual accumulation of surface water, mudflow, and collapse of land along a body of water. Available primarily through the National Flood Insurance Program (NFIP) or private insurers, with a typical 30-day waiting period before coverage takes effect. Essential for properties in flood zones but recommended for all properties since 25% of flood claims come from low-risk areas.
Actual Cash Value
The repayment value for indemnification due to loss or damage of property; in most cases it is replacement cost minus depreciation.
Depreciation
The decrease in value of property over time due to wear, tear, age, or obsolescence.
Replacement Cost
The cost to replace damaged or destroyed property with new property of similar kind and quality, without deduction for depreciation.
Homeowners Insurance
Insurance coverage that protects your home and personal property against damage, theft, and liability claims.
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