In the regular NFIP program, what is the lower-cost policy option called?

In the regular NFIP program, what is the lower-cost policy option called?

• A. Preferred Risk Policy (PRP)
• B. Basic Risk Policy
• C. Limited Risk Policy
• D. Standard Risk Policy

Answer: (A)

The lower-cost option is the Preferred Risk Policy. This NFIP offering is specifically for properties in low-to-moderate flood risk areas (the zones considered less risky), where rates are subsidized to make coverage more affordable. It provides the standard NFIP protections but at a lower premium than policies written for higher-risk zones. It’s not available for properties in high-risk zones, where a regular NFIP policy with higher rates would apply. In other words, the Preferred Risk Policy is the affordable choice within the NFIP for eligible locations and circumstances, whereas the other named options aren’t the NFIP form used for low-cost coverage.

The lower-cost option is the Preferred Risk Policy. This NFIP offering is specifically for properties in low-to-moderate flood risk areas (the zones considered less risky), where rates are subsidized to make coverage more affordable. It provides the standard NFIP protections but at a lower premium than policies written for higher-risk zones. It’s not available for properties in high-risk zones, where a regular NFIP policy with higher rates would apply. In other words, the Preferred Risk Policy is the affordable choice within the NFIP for eligible locations and circumstances, whereas the other named options aren’t the NFIP form used for low-cost coverage.