If you live in a high-risk flood zone and your home is financed with a federally-backed mortgage, your lender may require you to purchase flood insurance. While lenders can require flood insurance by their own accord, it often isn’t up to them — federal law mandates that government regulated or insured lenders require this coverage on all homes and buildings in special flood hazard areas.
Keep reading for more information about flood insurance requirements by flood zone, as well as how much coverage you’ll likely need to purchase.
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Key takeaways
All federally regulated and insured lenders must require flood insurance before extending a loan to a home in a high-risk flood zone
Mortgage lenders base their flood insurance requirements on Federal Emergency Management Agency (FEMA) flood maps
If your house is in any zone that starts with A or V and you have a government backed mortgage, you’ll need to purchase flood insurance
While this requirement is typically enforced at mortgage closing, lenders can require you to purchase flood insurance during your mortgage term if your home was recently determined to be in a high-risk flood zone during the remapping process
When is flood insurance required by law?
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
What flood zones require flood insurance?
Whether or not you need flood insurance depends on your home’s FEMA-designated flood zone. Here’s a breakdown of flood insurance requirements for various types of flood zones.
Is flood insurance required in zone A or V?
Flood zones A or V, or areas 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?
High-risk flood zones where flood insurance is required
Because not every home within the A and V flood zones faces the same risk of flooding, the NFIP created subzones based on the home's location and elevation to help inform its flood insurance rates. Most homes fall in either flood zone AE (base inland floodplain) and flood zone VE (base coastal floodplain).
Here are the specific subzones where federal flood insurance requirements apply to mortgages.
Inland high-risk flood areas
AE
A1-30
AH
AO
AR
A99
Coastal high-risk flood areas
VE
V1-30
Is flood insurance required in zone X?
Zone X, or areas shaded orange on FEMA flood maps, is considered a medium- to low-risk flood zone. Moderate flood hazard areas have a 0.2% chance of flooding every year, and a 6% chance of flooding over the course of a 30-year mortgage.
Homeowners in moderate-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 can 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
How much does flood insurance cost?
As of 2023, the average cost of flood insurance through the National Flood Insurance Program is around $939 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.
Find the average cost of flood insurance in your state in 2023
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Frequently asked questions
What is Flood Zone X?
Flood Zone X is an area of moderate flood hazard risk that is determined to be outside of the Special Flood Hazard area, according to FEMA flood maps. Also known as 500-year flood zones, these areas face a 0.2% chance of flooding during any given year. Homes in Flood Zone X are not federally mandated to have flood insurance.
Do I need flood insurance if I’m not in a flood zone?
A typical homeowners insurance policy does not cover water damage caused by flooding, so if you live near a body of water or any area that experiences even mild flooding from time to time, you may want to consider flood insurance. Without flood insurance coverage, you’ll have to pay out of pocket damages to your home caused by flooding.
How do I know if I need flood insurance?
To see if you need to buy flood insurance for your home for mortgage purposes, simply go to FEMA’s Flood Map Service Center and enter your address. If your home is in an area shaded blue, or any A or V zone, there’s a good chance you’ll need to purchase flood insurance to close on the home.
Is flood zone C better than X?
Flood zone C is said to have "minimal" risk primarily from ponding or local drainage problems and, along with zone X (unshaded) is outside of the 500-year floodplain, according to FEMA. Zone X (shaded) and zone B have a "moderate" risk of flooding and are both in the 500-year floodplain. While both minimal- and moderate-risk areas have a 0.2% of flooding annually, one could argue zones C and X (unshaded) face less risk than zones X (shaded) and B.
What happens if I cancel my flood insurance?
If flood insurance is required for your mortgage and you cancel it, you're likely breaking the terms of your loan agreement and it could result in you losing your mortgage. Canceling your flood insurance also means your home and personal belongings are unprotected in the event they're damaged during a flood, which means you'd likely have to front repair and replacement costs yourself.
What is the best flood zone?
The flood zones that face the least amount of risk are zones B and X (shaded), as they are moderate-risk areas, while zones C and X (unshaded) face the last amount of flood risk.
Do you need flood insurance if you don’t have a mortgage?
No, you don't need flood insurance if you don't have a mortgage, but you may want to consider purchasing a policy anyway to ensure your home and belongings are covered in case of flood damage. Homes in minimal- and moderate-risk areas account for around 26% of flood insurance claims. Considering policies cost as little as $200 per year in these areas, it's a small price to pay knowing your property is fully protected.
