FEMA partners with private insurance companies.
The homeowner buys a policy from the insurance company. The premium is typically determined by a property’s flood risk, as assessed by FEMA’s flood risk maps.
When a home floods, the insurance company investigates the claim, deciding how much damage there is and how much money to pay out.
The companies collect premiums, and retain a percentage to cover basic expenses. FEMA also pays the companies fees for handling claims and other activities.