Is flood insurance required? Find your lender requirements

Flood insurance isn’t usually a requirement, but if your home is in an area at high risk of flooding, such as Zones AE or VE, and you have a government-backed mortgage, you’re required to purchase flood insurance.

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Pat HowardManaging Editor & Licensed Home Insurance ExpertPat Howard is a licensed insurance expert and managing editor at Policygenius. Pat has written extensively about the home insurance industry and his insights as a subject matter expert have appeared in several top tier publications, including The New York Times, The Wall Street Journal, CNBC, and Reuters. Pat has a bachelor's degree in journalism from Michigan State University.&Rachael BrennanSenior Editor & Licensed Auto Insurance ExpertRachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and AutoInsurance.com.

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Jennifer GimbelJennifer GimbelSenior Managing Editor & Home Insurance ExpertJennifer Gimbel is a senior managing editor at Policygenius, where she oversees all of our insurance coverage. Previously, she was the managing editor at Finder.com and a content strategist at Babble.com.

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Many people assume that their homeowners insurance automatically covers flood damage, but that isn’t the case. Homeowners who want to be protected from flood damage need to purchase a separate flood policy and some people may even be required to purchase it, depending on the type of mortgage they have and where they live. 

If you live in a high-risk flood zone and you have a federally-backed mortgage, your lender may require you to purchase flood insurance. While lenders can choose to require flood insurance as a condition of your mortgage, there are also federal mandates that require this coverage on all homes and buildings in special flood hazard areas.

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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. You may be required to buy flood insurance if you use one of these lenders:

  • Federal Housing Administration (FHA) 

  • Veterans Affairs (VA)

  • United States Department of Agriculture (USDA) 

These lenders require homes and businesses in high-risk flood zones to have flood insurance to account for the increased financial risk. 

In some cases your lender may 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 without a flood insurance policy, 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.

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 National Flood Insurance Program (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 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 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?

What is the difference between zone A and V?

Zones A and V are the highest risk flood zones according to FEMA flood maps. The biggest difference between the two is that zone V is specific to coastal areas and zone A is specific to inland flood zones.

  • A: Areas with a 1% annual chance of flooding and a 26% chance of flooding in a given 30-year period. No depths or base flood elevations are shown within zone A.

  • V: Coastal areas with a 1% or greater chance of flooding along with an additional hazard associated with storm waves. Zone V areas have a 26% chance of flooding in a given 30-year period. Zone V shows no base flood elevations.

Is flood insurance required in zone X?

Zone X is considered a medium- to low-risk flood zone. Shown as areas shaded orange on FEMA flood maps, zone X represents moderate flood hazard areas that have a 0.2% chance of flooding every year, and a 6% chance of flooding over the course of a 30-year mortgage. 

Homeowners with a government-backed mortgage in zone X generally aren’t required to purchase flood insurance, but there are still times when it may be required regardless of your mortgage type. For example, homeowners who have received FEMA grants in the past and want to be eligible for future assistance may be required to purchase flood insurance. 

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. This is especially true as climate change continues to cause a surge in devastating storms and rising sea levels. 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?

Most home insurance companies offer flood insurance coverage, so you might be able to buy flood insurance from your current insurer. 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. [3]

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 best flood insurance companies of 2023

How do I choose which type of flood insurance to buy?

The best way to figure out which type of flood insurance is right for you is to work with an insurance expert. Policygenius can help you choose the right type of insurance and compare quotes from multiple companies to make sure you are getting the best possible rate.

Compare flood insurance quotes with top insurers in minutes

How much does flood insurance cost?

As of 2023, the average cost of flood insurance through the National Flood Insurance Program is around $888 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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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.

Do you need flood insurance if you don’t have a mortgage?

Flood insurance isn’t required 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.

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 oureditorial 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.

  3. FEMA

    . "

    Flood insurance coverage deductibles explained

    ." Accessed October 12, 2023.

Authors

Pat Howard is a licensed insurance expert and managing editor at Policygenius. Pat has written extensively about the home insurance industry and his insights as a subject matter expert have appeared in several top tier publications, including The New York Times, The Wall Street Journal, CNBC, and Reuters. Pat has a bachelor's degree in journalism from Michigan State University.

Rachael Brennan is a senior editor and a licensed auto insurance expert at Policygenius. Her work has also been featured in MoneyGeek, Clearsurance, Adweek, Boston Globe, The Ladders, and AutoInsurance.com.

Editor

Jennifer Gimbel is a senior managing editor at Policygenius, where she oversees all of our insurance coverage. Previously, she was the managing editor at Finder.com and a content strategist at Babble.com.

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