If you are trying to learn more about flood insurance coverage requirements then you’ve come to the right place.
Most likely you are in the middle of purchasing a home and found out that your lender requires you to carry flood insurance for the home you are purchasing.
Now, you’ve got questions swirling around your head about flood insurance, requirements and more.
In this article we hope to demystify flood insurance so that you have a better understanding about flood insurance, it’s requirements and how much flood insurance you will need.
Is Flood Insurance Required?
According to Fannie Mae, determining if your home requires flood insurance is pretty straight forward.
Flood insurance coverage is required if the property is located in either
It’s worth reading the full page if you want to learn more but for the sake of this article let’s take a look at the simple chart that breaks down how to tell if flood insurance is required.
What Flood Zones Require Flood Insurance?
Flood zones are defined to assist community floodplain managers and are not very easy to understand for the typical insurance consumer. To better understand flood zones and which ones require flood insurance, let’s break down each flood zone.
Is Flood Insurance Required For 100 Floodplains?
Yes, 100 year floodplain has at least a 1% chance of flooding which makes this property a high risk.
There is also a 500 year floodplains as well. These two floodplains are what local community organizers use to create the flood zones. These are a few of the most popular flood zones:
Let’s dive a little deeper and see what each of these flood zones require.
Is Flood Insurance Required For Zone A?
Zone A is an indicator of an area that is at high risk for flooding and will be required to carry flood insurance.
Since Zone A is a higher risk than some other zones, you could pay more than the average homeowner for flood insurance.
Zone A is in the high risk group of zones known as special flood hazard area (SFHA) and have had flooding in at least 1 of the past 100 years.
is flood insurance required in zone b, c and x
These Flood zones indicate moderate to low risk areas. That means that flood insurance is not required but is still recommended.
Flood zone B have had flooding within the last 500 years but no flooding has occured in at least 100 years.
Zone C and X have not flooded in at least 500 years.
You can read more about how these flood zones change here
See if your home is in a flood zone with FEMA’s Flood Zone Map
How Much Flood Insurance Do I Need?
Knowing how much flood insurance you need will really depend on the most recent flood insurance rate map.
What Is A Flood Insurance Rates Map?
A flood insurance rate map (FIRM) is a tool that a property owner can use to get fairly reliable information about what flood zone they are in. There are also digital versions known as DFIRMs.
These maps generally show:
While FIRMs are accurate, they are constantly being updated and flood zones change often. To make sure that you know if your property is in a flood zone that requires flood insurance, contact an insurance agent or your community floodplain manager.
FDIC flood insurance frequently asked questions:
How much flood insurance can a lender require?
According to the Flood Disaster Protection Act of 1973 and as amended by the National Flood Insurance Reform Act of 1994, The amount of flood insurance coverage required is the lesser of:
If the property is in a moderate to low risk area you are not required by federal law to have flood coverage, but your lender can still require it.
Historically, 25% of flood claims come from moderate to low risk areas. Plus, if the flood maps are revised during the time you own the property the lender will require you to buy flood insurance at that point.
How Much Does Flood Insurance Cost Per Year?
Flood insurance costs vary based on the flood zone that is being covered. There are some rumors going around on may popular websites that say that the average flood insurance policy costs around $700, but unfortunately there is no one size fits all approach to this answer.
Each home is going to be looked at on a case by case basis. You may be in a flood zone that doesn’t require flood insurance…
Or you may end up paying north of $2500.
How can I avoid paying flood insurance?
Unfortunately, if your mortgage lender requires that your home has flood insurance coverage then the only way to avoid paying for it is if you choose to buy a home outside of a flood zone, or if you happen to find a lender that doesn’t require it.
But the good news, even if your home is in a floodplain there are 5 things that FEMA suggests that you do if you want to try to avoid paying flood insurance (or at least pay less in flood insurance costs)
In a document created in 2007, they give an example of a home that had a $1,255 annual premium for a policy with $100,000 of coverage after the home flooded.
After doing 4 of the suggested improvements to the home the premium went down to $190 for the same amount of coverage.
The document is called 5 Ways to Lower the Cost of Your Flood Insurance Premium and it is definitely worth reading.
Can you purchase flood insurance directly from FEMA?
FEMA does not sell flood insurance directly so if you need flood insurance you are going to want to get a quote from a licensed insurance agent.
Is flood insurance effective immediately?
A new flood insurance policy typically takes 30 days to go into effect.
However, according to fema.gov there are certain exemptions
In this article, we’ve talked in depth about flood insurance and it’s requirements. We also touched on flood zones and who need flood insurance.
If you have anything that you don’t feel confident about and would like to ask someone who is knowledgeable a question you can reach out to us by phone at 1 (888) 258-8808 or use the contact page to email us.
Ready to get a flood insurance quote