SUBSTANTIAL IMPROVEMENT/SUBSTANTIAL DAMAGE DESK REFERENCE
FEMA P-758/MAY 2010

CHAPTER 2. THE NFIP: ROLES AND RESPONSIBILITIES

2.1. Purposes and Overview of the NFIP
The original authorizing legislation for the NFIP was passed in 1968. 
Congress expressly found that “a program of flood insurance can promote the 
public interest by encouraging sound land use by minimizing exposure of 
property to flood losses...” 

The NFIP is intended to encourage States and local governments to recognize 
and incorporate flood hazards in their land use and development decisions. In 
some communities, this is achieved by guiding development to areas with lower 
risk. When a proposal is made to develop within a flood hazard area, 
application of the criteria set forth in Federal regulation (Title 44 Code of 
Federal Regulations [CFR] Section (§) 60.3) is intended to minimize exposure 
and flood-related damage.

The NFIP is administered by FEMA, which is part of the Department of Homeland 
Security (DHS). The NFIP has three main elements:

1.	Hazard identification and mapping, in which engineering studies are 
conducted and flood maps are prepared to delineate areas that are predicted 
to be subject to flooding under certain conditions; 

2.	Floodplain management criteria, which establish the minimum 
requirements for communities to adopt and apply to development within mapped 
flood hazard areas; and 

3.	Flood insurance, which provides financial protection for property 
owners to cover flood-related damage to buildings and contents. 

Federal flood insurance is designed to provide an alternative to disaster 
assistance and disaster loans for home and business owners. Disaster 
assistance rarely comes close to covering all of the costs to repair and 
clean up. While available to qualified victims, disaster loans do not 
significantly ease the financial burden due to repayment terms. It is 
important to remember that disaster assistance is available only after floods 
have been declared major disasters by the President of the United States. In 
contrast, flood insurance claims will be paid any time damage from a 
qualifying flood event occurs. 

Another important objective of the NFIP is to break the cycle of flood 
damage. Many buildings have been flooded, repaired or rebuilt, and flooded 
again. In some parts of the country, this cycle occurs every couple of years. 
Before communities adopted floodplain management regulations, people tended 
to rebuild in the same flood-prone areas using the same construction 
techniques that did not adequately protect the structure when the first event 
occurred. On the other hand, structures built to NFIP floodplain management 
requirements experience, on average, 80 percent less damage through reduced 
frequency of inundation and severity of losses. 

By encouraging communities to guide development to lower risk areas, and by 
requiring the elevation of new buildings and certain existing buildings, one 
of the long-term objectives of the NFIP can be achieved: reducing flood 
damage and losses. Older buildings may be removed or replaced, or they may be 
upgraded or modified with techniques that lead to little or no flood damage.

The NFIP establishes distinct responsibilities for the Federal, State, and 
local levels of government. For local officials who must administer the SI/SD 
requirements of their regulations and codes, it is important to recognize how 
these established roles affect responsibilities for SI/SD. As outlined in the 
NFIP regulations:

- Communities are responsible for regulating all development in mapped flood 
hazard areas, issuing permits, and enforcing the requirements, including 
SI/SD requirements for improvements and repairs of buildings.

- States generally are responsible for providing technical assistance to 
communities, monitoring community programs, and coordinating between 
communities and the NFIP. Some States also administer regulatory programs and 
many are engaged in flood hazard mapping initiatives.

- FEMA, through administration of the NFIP, promulgates the minimum 
regulatory requirements, supports State programs, provides technical 
assistance, monitors community programs, and produces flood hazard maps.

2.2. The Community’s Role
The NFIP regulations contained in 44 CFR § 59.22 and § 60.3 outline the 
responsibilities that communities must accept in order to become and remain 
eligible to participate in the NFIP. The key responsibilities include:

- Designate an agency that is charged with the responsibility to administer 
floodplain management requirements
- Determine whether proposed development activities are located in SFHAs
- Review development proposals to ensure compliance with the requirements of 
applicable floodplain management regulations and building codes
- Require that new subdivisions and development proposals with more than 50 
lots or larger than five acres include BFEs
- Issue or deny permits for floodplain development
- Inspect all development in SFHAs to ensure compliance
- Maintain records of issued permits, elevation data, inspections, and 
enforcement actions
- Assist in the preparation and revision of floodplain maps
- Help residents obtain information on flood hazards, floodplain map data, 
and compliant construction measures 
For existing buildings that are located in SFHAs, community responsibilities 
include the following, in addition to the requirements above:
- Determine whether proposed improvements are “substantial improvements;” 
substantial improvement of buildings triggers requirements for permits and 
compliance.
- Determine whether work necessary to restore a damaged building to its pre-
damage condition constitutes repair of “substantial damage;” repair of 
substantially damage buildings triggers requirements for permits and 
compliance.

Chapter 3 describes the NFIP SI/SD requirements and definitions. Chapter 4 
outlines making SI/SD determinations; Chapter 5 outlines community 
responsibilities that are specifically related to administering these 
requirements. Chapter 6 includes factors to be considered when determining 
SI/SD and illustrations of substantial improvement and substantial damage. 
More guidance on administering and enforcing all aspects of local floodplain 
management regulations is found in FEMA 480, NFIP Floodplain Management 
Requirements: A Study Guide and Desk Reference. Chapter 7 suggests actions 
that communities can take to prepare for disasters, methods communities can 
use to obtain the costs to restore the structure and the market value of the 
structure before the damage occurred to make a substantial damage 
determination, and also describes a tool that communities can use to 
facilitate collecting data to make substantial damage determinations, FEMA’s 
Substantial Damage Estimator.

2.3. The State’s Role

Each State’s governor has designated an NFIP State Coordinating Agency. This 
agency, often referred to as the NFIP State Coordinator’s Office, is 
specifically charged with being a link between Federal, State, and local 
governments. The NFIP State Coordinator stays current on NFIP issues and can 
advise communities on specific provisions and any State requirements. 

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Some States have their own floodplain management statutes and regulations, 
and some administer regulatory programs pertaining to flood hazards. State 
requirements related to work on existing buildings must be satisfied in 
addition to local requirements.
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While the explicit role of the NFIP State Coordinator may vary among States, 
the NFIP regulations [44 CFR § 60.25] outline the following key 
responsibilities:

- Encourage and provide assistance for communities to qualify for 
participation in the NFIP
- Guide and assist communities to develop, implement, and maintain floodplain 
management regulations
- Provide technical assistance to communities
- Participate in training opportunities 
- Assist in the delineation of flood-prone areas
- Notify FEMA of problems with community programs, if such problems cannot be 
resolved through technical assistance

2.4. The Federal Role

Several Federal agencies have programs and responsibilities that relate to 
flooding, managing flood hazards, and responding to flood events. Only FEMA’s 
role is directly pertinent to the purpose of this Desk Reference. 

Located at FEMA Headquarters in Washington, DC, the Flood Insurance and Mitigation Administration (FIMA) 
implements the three main elements of the NFIP (flood hazard identification, 
floodplain management, and flood insurance). The Directorate sets National 
policy, issues interpretations, enrolls communities in the NFIP, researches 
floodplain construction practices, and administers the flood hazard mapping 
and flood insurance elements of the program. Specifically, FEMA develops 
publications to help States and participating communities fulfill their 
responsibilities and to provide guidance to property owners, architects, 
engineers, and others proposing to develop in the floodplain.

FEMA implements its program responsibilities through 10 Regional Offices. 
Each Regional Office has a Mitigation Division that works with States and 
communities on matters related to the NFIP. Each Regional Office covers four 
to eight States and territories; together they work with over 21,000 
participating communities. The responsibilities of the Regional Offices 
include:

- Assist the NFIP State Coordinating Agencies
- Advise local officials responsible for administering floodplain management 
regulations
- Assess community compliance with the minimum NFIP criteria
- Answer questions from design professionals, builders, and the public
- Provide information about flood insurance and respond to questions from 
citizens
- Maintain and revise flood hazard maps and data
- Provide information and training on many aspects of the NFIP, including 
administration of the SI/SD requirements
- Work with States and communities to resolve identified problems with 
community programs