A typical homeowners policy doesn’t account for a few natural disasters, such as flooding, that can damage or destroy a home. For homeowners who need protection from flooding, their only solution is to buy flood insurance sponsored by the federal authorities. A number of criteria exist which determine whether homeowners should have flood insurance.

Where You Live

You are required to buy flood insurance if you reside in an area designated as a Special Flood Hazard Area from the Federal Emergency Management Agency and you have a mortgage on your home. If you don’t have a lien against your home, you are not required to purchase a policy, even if you reside in an SFHA. According to FEMA, the SFHA is also referred to as a 100-year flood plain. This usually means the area has a one-percent prospect of being flooded each year.

Your House’s History

Regions that suffer significant flooding might be designated as federal disaster areas, which allows the authorities to provide financial relief if your home suffered harm as a result of the flood. If you take this fiscal aid, you must then carry a federal flood insurance coverage on your home as long as you live there. If you sell the home, the government requires you to tell the new owners about the property’s history along with the flood insurance requirement.

Your Loan

Since the government requires flood insurance on homes that reside in an SFHA and also have a mortgage, the two creditors backed by the federal authorities and non-government lenders require a flood policy. Non-government lenders require the coverage so their loans adhere to the standards set by Fannie Mae or Freddie Mac, which are backed by the authorities. Fannie Mae and Freddie Mac buy mortgages on the secondary financial market, and will not purchase mortgage loans which don’t adhere to those standards.

Determining Your Flood Zone

FEMA generates Flood Insurance Rate Maps, or FIRMs, which show the designated SFHA areas around the US. Homeowners, insurance suppliers, state catastrophe planning organizations and the federal government all utilize the maps, which are updated frequently by FEMA. The government uses a naming convention to signify levels of flood danger, which will be able to help you determine your house’s SFHA status. FEMA designates SFHA areas with codes which begin with the letter A or V.”V” suggests homes in the SFHA which are also subject to damage from waves made by storms. “A” stands for homes in the SFHA which are not subject to wave damage from storms. Moderate-flood zones are mentioned by the letter B, and low-flood zones are mentioned by the letter C or X.

Moving into an SFHA

FEMA’s FIRM upgrades can sometimes affect whether you have to purchase flood insurance. If you lived in an area which previously was not in the SFHA and the latest FEMA-updated FIRM places your property in an SFHA, your creditor should document that fact and ask you to buy flood insurance. There’s no waiting period for flood insurance if your SFHA status changes. In case you have not bought a flood insurance coverage by 45 days after being notified of the condition, your creditor has the right to buy a flood insurance coverage of its choice and bill you for it.

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