Do I need flood insurance? Guide to lender requirements by flood zone

If your home is in a high-risk flood zone (A or V) and you have a federally backed mortgage, your lender may require you to purchase flood insurance. But if it isn't required as part of your mortgage, you’re not legally obligated to purchase a policy.

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Pat Howard

Pat Howard

Managing Editor & Licensed Home Insurance Expert

Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

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While not required by law, your mortgage lender may require flood insurance depending on the type of loan you’re borrowing and which flood zone your home is in. Most standard homeowners insurance policies don’t cover any type of flooding, so lenders often require borrowers in high-risk areas to purchase flood insurance to protect their investment. 

Keep reading for more information about flood insurance requirements in your flood zone as well as how much coverage you’ll likely need to purchase.

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When is flood insurance required?

If you’re taking out a government-backed mortgage and your home is in a high-risk area, your mortgage lender will require you to purchase flood insurance before extending you the loan. All mortgages backed by the FHA, VA, or USDA require homes and businesses in high-risk flood zones to have flood insurance to cover the financial risk they’re taking on. 

Your lender can also require flood insurance regardless of whether your mortgage is federally backed or not — like if you have a conforming mortgage secured by Fannie Mae and Freddie Mac. In most cases, Fannie and Freddie won’t agree to secure a mortgage on a home in a high-risk area if it’s not protected with flood insurance, so lenders often require coverage for this reason.

Learn more >> 5 easy steps to buying flood insurance

Flood insurance requirements by flood zone

Whether or not you need flood insurance depends on your home’s FEMA-designated flood zone.

Do I need flood insurance in Zone A or V?

Flood zones A or V (shaded blue on FEMA flood maps) are considered to be at the highest risk of flooding. Also known as special flood hazard areas, A and V flood zones have a 1% chance of flooding every year, and a 26% chance of flooding over the course of a 30-year mortgage. If your home or business is in an A or V flood zone and you have a mortgage, you’ll likely have to purchase enough flood insurance to cover one of the following (whichever is lowest): 

  • The principal balance of the mortgage

  • The maximum amount of building coverage available ($250,000) through the National Flood Insurance Program (NFIP)

  • The replacement cost of your home, or the cost to rebuild

If you need flood insurance as part of your mortgage, you’ll likely be required to keep the home insured until the mortgage is completely paid off.

Learn more >> How much flood insurance do you need?

Do I need flood insurance in Zone X?

Zone X (shaded orange on FEMA flood maps) is considered a medium- to low-risk flood zone, which is an area with a 0.2% chance of flooding every year, and a 6% chance of flooding over the course of a 30-year mortgage. 

Homeowners in medium-risk flood zones generally aren’t required to purchase flood insurance unless they’ve received FEMA grants in the past and want to be eligible for future assistance. But homeowners living outside of high-risk flood zones shouldn’t rely exclusively on FEMA disaster assistance, says Mark Friedlander, spokesman for the Insurance Information Institute (Triple-I). 

“Relying on FEMA emergency funds is not a substitute for having adequate property insurance and flood insurance coverage,” says Friedlander. “It is a very complex process to get approved for a FEMA grant and you typically only get a very small portion of funds to cover losses to your property.”

Over 40% of all NFIP claims filed from 2014 to 2018 were from policyholders outside of high-risk flood areas. It’s also estimated that existing FEMA flood maps haven’t accounted for up to 6 million properties located in 100-year floodplains. [1]

Additionally, homeowners in Zones B, C, and X are often eligible for preferred risk policies, which are basically a cheaper flood insurance option from the NFIP, the main provider of flood insurance in the U.S.

Learn more >> Flood insurance facts & statistics

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How to figure out if you’re in a flood zone

To find out if your residence is located in a flood zone, take the following steps:

  • Go to FEMA’s flood map service center

  • Plug in your home’s address

  • Find out your home’s flood zone

  • Pay attention to the last time the map was updated

The age of the map is important, because although your home may sit in a minimal flood hazard zone, that may not tell us much if the map was updated 15 years ago. If you suspect your community’s flood map is outdated, check with a local insurance agent to get their input on the area’s actual flood risk, or see if other residents in your area have flood insurance.

Where do I get flood insurance?

You can typically buy flood insurance from your homeowners insurance company. Nearly every major insurance company offers NFIP flood insurance to residents of participating communities, but some may also provide their own private flood insurance. In this section, we’ll walk you through the different types of flood insurance available to you. [2]

1. The National Flood Insurance Program

NFIP flood insurance is backed by the federal government and provided by private insurance companies. Government flood insurance offers up to $250,000 in buildings coverage for your home, and you’re able to add up to $100,000 in contents coverage for your belongings if you choose. NFIP flood insurance only includes buildings coverage by default, so you’ll need to add contents coverage separately for an additional amount.

2. Private flood insurance

You also have the option of purchasing private flood insurance which is written and backed by private insurance companies instead of the government. Private flood insurance providers generally offer higher coverage amounts than the NFIP’s plan, and policies are often cheaper in lower risk areas.

Private flood insurance is typically available as a standalone policy or as an endorsement that you can add onto your homeowners insurance. 

3. Excess flood insurance

Since NFIP coverage limits aren’t always high enough to pay for a full rebuild of your home or replace all of your belongings, many insurance companies offer excess flood insurance as a safety net policy. Excess flood insurance increases your coverage limits if the damage to your home exceeds $250,000 or if damage to your personal belongings exceeds $100,000. 

Learn more >> The top flood insurance companies for 2022

Find the average cost of flood insurance in your state in 2022

How much does flood insurance cost?

As of 2021, the average cost of flood insurance through the National Flood Insurance Program is around $738 per year, according to an analysis of FEMA policy data. The amount you pay for flood insurance will depend on:

  • Your home’s flood risk: Your flood insurance rates are based primarily on your home’s likelihood of being flooded. If your house is in a high-risk flood zone, expect your rates to be north of $1,000.

  • Your coverage types and amounts: The more building or contents coverage you choose, the higher your flood insurance premiums will be. 

  • Your home’s age and build: The age and construction of your home will also impact your flood insurance rates. Homes without flood mitigation features, like flood openings or barriers, or home’s not built to modern floodproofing standards are likely going to cost more to insure. 

  • Your policy deductible amount: Your policy deductible is the amount you’re responsible for paying before flood insurance will cover your claim. A higher deductible means lower rates, but it also means you’ll be paying more out of pocket if you ever file a claim for flood damages.

Flood insurance costs will likely change in the near future thanks to Risk Rating 2.0, the NFIP’s new method for calculating flood insurance rates. The changes, which kicked in on new policies in October 2021 and existing policies in April 2022, are expected to increase flood insurance costs on roughly 77% of existing policies.  

Compare rates and shop affordable flood insurance today

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References

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Policygenius uses external sources, including government data, industry studies, and reputable news organizations to supplement proprietary marketplace data and internal expertise. Learn more about how we use and vet external sources as part of our

editorial standards.
  1. Risk Factor

    . "

    Find Your Home's Flood Risk

    ." Accessed July 15, 2022.

  2. Federal Emergency Management Agency

    . "

    Ready to purchase flood insurance?

    ." Accessed July 15, 2022.

Author

Managing Editor & Licensed Home Insurance Expert

Pat Howard

Managing Editor & Licensed Home Insurance Expert

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Pat Howard is a managing editor and licensed home insurance expert at Policygenius, where he specializes in homeowners insurance. His work and expertise has been featured in MarketWatch, Real Simple, Fox Business, VentureBeat, This Old House, Investopedia, Fatherly, Lifehacker, Better Homes & Garden, Property Casualty 360, and elsewhere.

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