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Insurance Glossary

DFE

Property

Definition

Design Flood Elevation - the regulatory flood elevation adopted by a community that meets or exceeds the Base Flood Elevation. Many communities require structures to be built above the BFE by adding freeboard (typically 1-3 feet) to provide an additional margin of safety. The DFE is the minimum elevation at which new construction and substantial improvements must be built to comply with local floodplain management regulations. Building to the DFE rather than just the BFE provides better flood protection and may result in lower insurance premiums. The DFE is determined by local ordinances and varies by community.

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Related Terms

Base Flood Elevation
The computed elevation to which floodwater is anticipated to rise during a base flood (a flood with a 1% chance of occurring in any given year, also called a 100-year flood). Shown on FEMA Flood Insurance Rate Maps (FIRMs), the BFE is used to determine flood insurance premiums and building requirements. Structures built below the BFE face higher insurance costs and greater flood risk. Local building codes typically require new construction in flood zones to have the lowest floor elevated at or above the BFE. Knowing your property's BFE is crucial for flood risk assessment and insurance decisions.
Freeboard
Additional elevation above the Base Flood Elevation required by many communities as a factor of safety against higher flood levels than predicted. Freeboard compensates for uncertainties in flood calculations, wave action, and future development that may increase flood heights. Common freeboard requirements range from 1 to 3 feet above the BFE. Building with freeboard provides better flood protection and typically results in lower flood insurance premiums through the Community Rating System. Some communities mandate freeboard for new construction, while others offer it as a voluntary best practice. Freeboard is especially important in coastal areas subject to wave action.
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.
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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