---
title: what the community rating system changes on a flood policy
canonical_url: https://ensurance.app/guide/what-the-community-rating-system-changes-on-a-flood-policy
markdown_url: https://ensurance.app/guide/what-the-community-rating-system-changes-on-a-flood-policy.md
subtitle: "a town's floodplain work sets one discount for every eligible policy. the land that earns it is often someone else's"
category: ecosystem-services
---

# what the community rating system changes on a flood policy

*a town's floodplain work sets one discount for every eligible policy. the land that earns it is often someone else's*

The **Community Rating System** (CRS) is FEMA's voluntary program that discounts National Flood Insurance Program premiums in communities whose floodplain management goes past the NFIP minimum. FEMA scores the community, assigns a class from 10 to 1, and the discount follows the class: 5% at Class 9, rising in 5% steps to 45% at Class 1.

That discount lands on a building's flood policy. The building did not earn it. The town did, and part of what the town earned is land: floodplain kept open, often on someone else's deed.

For an owner reading an operating statement, the flood premium is an insurance expense. A discount that lasts is a lower expense, and a lower expense is higher net operating income. This post covers where the discount comes from, what it touches and what it doesn't, and who holds the ground underneath it.

:::johnson
**the discount belongs to the town. the floodplain belongs to someone.** — Every eligible NFIP policy in a CRS community gets the class the community earned. Part of that class is open floodplain that nobody on the policy pays to keep.

[see risk resilience →](/risk-resilience.ensurance?from=guide)
:::

## what the community rating system is

CRS sits on top of the NFIP. A community that already meets the program's floodplain rules can apply to do more, and FEMA credits the extra work in four categories: public information, mapping and regulation, flood damage reduction, and flood preparedness. Outreach, higher building standards, buyouts of flood-prone buildings, warning systems, and preserved open space all earn **credit points**. Points set the class.

Every community starts at Class 10, with no discount. A class is not permanent. FEMA's flood insurance manual says a community's classification "may change depending on the level of continued floodplain management efforts," and a change reaches each policy at its next renewal.

## the fema table

| crs class | credit points | premium discount |
|---|---|---|
| 1 | 4,500+ | 45% |
| 2 | 4,000–4,499 | 40% |
| 3 | 3,500–3,999 | 35% |
| 4 | 3,000–3,499 | 30% |
| 5 | 2,500–2,999 | 25% |
| 6 | 2,000–2,499 | 20% |
| 7 | 1,500–1,999 | 15% |
| 8 | 1,000–1,499 | 10% |
| 9 | 500–999 | 5% |
| 10 | 0–499 | 0 |

That is FEMA's table. Read it with three limits.

**The SFHA line moved.** Under FEMA's older rating method, the full class discount went to policies in the **Special Flood Hazard Area** (SFHA), the A and V zones on a flood map. Class 1 meant up to 45% there. Standard-rated policies outside the SFHA got 10% in Classes 1–6 or 5% in Classes 7–9, and Preferred Risk Policies got no CRS credit at all. Under Risk Rating 2.0, flood zone is no longer a rating variable, so FEMA now applies the class discount to the full-risk premium of every Regular Program policy in a participating community, inside or outside the SFHA. A policy that began as a Preferred Risk Policy gets no CRS discount until it has reached its full-risk premium.

**Some policies are out.** FEMA excludes Emergency Program policies, Group Flood Insurance Policies, provisionally rated policies, and buildings with floodplain-management violations. If a declarations page shows no discount in a CRS community, check those first.

**It comes off the premium, not the bill.** The percentage applies to the premium. The Reserve Fund Assessment, the Federal Policy Fee, and the HFIAA surcharge sit outside it. A 45% class never takes 45% off the total amount due.

## the building that stored no water

The class covers the whole community. The warehouse whose roof and lot shed every drop into the street gets the same percentage as the office beside the preserved floodplain. That is by design: the town earns the class, and the town spreads it.

Look at what earns it. CRS Activity 420, **open space preservation**, credits a community for land in its regulatory floodplain kept free of buildings and fill, scaled by how much of that floodplain is preserved. Extra credit goes to open space that stays in, or is restored to, its natural state. A natural floodplain stores floodwater, slows the peak, traps sediment, and recharges groundwater. The points are the town's paperwork for that.

That is the living system on the policy: the floodplain meadow, the bottomland wetland, the riparian forest that takes the water before the streets do.

A watershed scientist would add two cautions. CRS points are an administrative score, not a hydrograph; a town can earn points for outreach and warnings that store no water at all. And a wetland farther up the watershed, outside the community's regulatory floodplain, can cut the flood without adding a point to that town's class.

| on the flood policy | what sets it | the living system behind it |
|---|---|---|
| CRS discount | the community's class, from credit points | floodplain kept open, with extra credit when it stays natural |
| full-risk premium | the building's modeled flood risk | how often and how deep water reaches the building, which floodplain storage upstream and next door changes on the ground |
| assessments, fees, surcharges | statute | none |

## who holds the floodplain

The open acres that earn points belong to someone: a parks department, a county, a land trust, a farm family with a restriction on the deed. On their books, the land shows upkeep — invasive control, fencing, monitoring, taxes — and, where development rights were given up, value they no longer hold.

Nothing on any flood policy pays them. The discount reaches every eligible building in town. The host gets the same percentage as everyone else, if the host insures a building at all. Whatever the host collects off that ground is a lease, like a [hunting lease](/guide/what-a-hunting-lease-actually-is?from=guide) or a grazing lease, not a check from the buildings that carry the discount.

That gap is the subject of the income side of this series: [how landowners get paid for ecosystem services](/guide/how-landowners-get-paid-for-ecosystem-services?from=guide).

## what the discount does to net operating income

**Net operating income** (NOI) is income after operating expenses, and flood insurance is an operating expense. A lower premium the market believes will hold raises NOI, and commercial value tracks NOI at whatever cap rate the market is using. A lower operating bill is a higher property value, as long as the bill stays lower.

Three things decide how much of that reaches an owner.

1. **The NFIP layer.** NFIP caps a non-residential building at $500,000 of building coverage and $500,000 of contents. The CRS discount is part of NFIP pricing. Excess and private flood coverage above that limit is priced by private carriers, who may or may not credit the town's class.
2. **The lease.** On a triple-net lease, the tenant usually reimburses the premium, so the discount reaches the tenant first. The owner still feels it: in the occupancy cost a tenant will accept at renewal, and in every month a space sits empty and the owner pays the premium alone.
3. **The durability.** A class is re-earned. If the open floodplain behind the points is filled, built on, or cleared, the points can go with it, and the discount resets at the next renewal. An appraiser reading the insurance line should ask what the class rests on.

For the wider insurability problem, from losing coverage to documenting mitigation, see [flood insurance is disappearing](/guide/flood-insurance-disappearing-how-to-become-insurable?from=guide).

## where ensurance fits

The floodplain exists whether or not anyone buys a certificate. It already changes the policy. What it lacks is a payor on the side of the buildings that benefit.

***Ensurance*** funds the living system. It is not the discount, and it is not the NOI. A **specific certificate** funds the present condition of a named place, here the floodplain acres that hold water and carry points. It does not replace the NFIP, it does not file the town's CRS application, and it does not promise a premium cut. The community still earns the class. The owner who benefits can fund the land that earns it.

Flood storage is one of the flows the protocol tracks under Risk Resilience: [risk-resilience.ensurance](/risk-resilience.ensurance?from=guide). The next post is the ask: [how a property owner pays for nature-based solutions on another parcel](/guide/how-a-property-owner-pays-for-nature-based-solutions-on-another-parcel?from=guide).

## sources

[FEMA — Community Rating System](https://www.fema.gov/floodplain-management/community-rating-system) — class table, credit points, discounts of 5% to 45%, and the discount applied to the full-risk premium of all Regular Program policies, including outside the SFHA

[FEMA — NFIP Flood Insurance Manual, April 2024](https://agents.floodsmart.gov/sites/default/files/media/document/2025-09/fema_nfip_flood-insurance-manual_042024.pdf) — four CRS categories, uniform community discount, ineligible policies, class changes applied at renewal, assessments and fees outside the discounted premium

[FEMA — Explaining the CRS Discount in Risk Rating 2.0](https://asfpm-library.s3.us-west-2.amazonaws.com/RR2.0_FactSheet_CRS.pdf) — the older SFHA and non-SFHA split, Preferred Risk Policy treatment

[FEMA — NFIP types of coverage](https://agents.floodsmart.gov/topics/selling-flood-insurance/coverage) — $500,000 building and $500,000 contents limits for non-residential buildings

[NOAA Digital Coast — How to Map Open Space for Community Rating System Credit](https://coast.noaa.gov/digitalcoast/training/crs.html) — Activity 420 open space credit and extra credit for natural open space, per the 2025 Coordinator's Manual

## the series

**the expense side**

1. [what net operating income actually counts](/guide/what-net-operating-income-actually-counts?from=guide)
2. [what commercial property operating expenses already include](/guide/what-commercial-property-operating-expenses-already-include?from=guide)
3. [what a stormwater utility fee is paying for](/guide/what-a-stormwater-utility-fee-is-paying-for?from=guide)
4. [what the community rating system changes on a flood policy](/guide/what-the-community-rating-system-changes-on-a-flood-policy?from=guide)
5. [how a property owner pays for nature-based solutions on another parcel](/guide/how-a-property-owner-pays-for-nature-based-solutions-on-another-parcel?from=guide)

**the income side**

1. [what a hunting lease actually is](/guide/what-a-hunting-lease-actually-is?from=guide)
2. [what agrivoltaics pays for twice](/guide/what-agrivoltaics-pays-for-twice?from=guide)
3. [what cash rent is already pricing](/guide/what-cash-rent-is-already-pricing?from=guide)
4. [what stormwater credit trading pays the host](/guide/what-stormwater-credit-trading-pays-the-host?from=guide)
5. [how landowners get paid for ecosystem services](/guide/how-landowners-get-paid-for-ecosystem-services?from=guide)