Which entity issues and handles claims for NFIP direct policies?

The National Flood Insurance Program (NFIP) is a federal program established to provide flood insurance to property owners, renters, and businesses in participating communities. The correct choice indicates that the federal government is responsible for both issuing and handling claims for these direct policies. This is because NFIP is administered by the Federal Emergency Management Agency (FEMA), which operates the program on behalf of the federal government.

Under NFIP, policyholders purchase flood insurance directly from the federal government rather than through private insurance companies. Additionally, the federal government sets all the terms and conditions related to these policies, including coverage limits and premium pricing. This centralized approach ensures consistency in flood insurance availability and claims processing across various states and localities.

The other options do not accurately represent the structure of the NFIP; private insurance companies may sell backup policies or serve as write-your-own (WYO) insurers, but they do not directly handle claims without federal government oversight. State insurance departments primarily oversee state-specific insurance regulations and companies but do not manage NFIP policies. Local municipalities may have roles in floodplain management, but they do not issue NFIP policies or handle claims directly.