How to Get Flood Insurance

by Steve CookJune 8, 2017

Homeowners insurance policies do not cover damage from floods, yet flooding is the most common natural disaster in the United States, affecting every region and state. The damage from just one inch of water can cost more than $20,000.

The federal government provides flood insurance to homeowners, renters, landlords, and businesses through the National Flood Insurance Program, which is administered by the Federal Emergency Management Agency (FEMA). FEMA provides subsidized insurance to owners and renters, and encourages communities to adopt and enforce floodplain management regulations.

FEMA has identified flood zones according to varying levels of flood risk, reflecting the severity or type of flooding in the area. When you are considering making an offer to buy a home, ask your real estate agent or insurance agent to find out if you live in a high-risk zone or if a home you are thinking about buying is located in one. The NFIP has detailed maps online that show flood risk zones by Zip code.

All federally regulated lenders, such as credit unions and most banks, must determine whether a home is located in an area where NFIP coverage is available before they make a loan and they must notify borrowers. Homeowners who take out a mortgage from a lender that is federally regulated or federally insured, such as a VA, FHA or USDA mortgage, and buys a home in a high-risk flood zone (also known as a Special Flood Hazard Area) will be required by their lender to buy flood insurance.

Also, if you live in a high-risk flood zone and you’ve received federal disaster assistance in the form of grants from FEMA or low-interest disaster loans from the U.S. Small Business Administration (SBA) following a Presidential Disaster Declaration, you must maintain flood insurance to be considered for any future federal disaster aid.

You can also buy a private flood insurance policy in many states. Following Hurricane Katrina, which resulted in claim payments of $16.2 billion from the National Flood Insurance Program, and other major hurricanes and floods, NFIP rates rose, and several private insurers began offering an alternative. If you are considering private flood insurance, be sure to check on the financial strength of the insurance company, review their standing with your state insurance commission and find out whether your mortgage lender will honor its coverage.
Flood insurance form on a table with a book.
You must live in an NFIP-participating community to purchase an NFIP policy. You can find out if your community participates by looking it up online in the Community Status Book. Contact your insurance agent to find out if your community participates in the National Flood Insurance Program. Flood insurance from the NFIP is only available in participating communities. Owners who have no mortgage are not required to buy flood insurance but can buy NFIP insurance if they live in a participating community.

Flood insurance for private homes covers up to $250,000 for the structure and up to $100,000 for contents. These are separate policies and renters can take out a policy on their contents of their home. Flood insurance does not renew automatically, so it is important to ensure your policy does not lapse. If you allow your flood insurance policy to lapse for either more than 90 days or twice for any number of days, you may no longer be eligible for the policy rate discounts you might have been receiving before the policy lapse.

You can purchase flood insurance through an insurance agent who offers federal flood insurance; you cannot buy it directly from the National Flood Insurance Program (NFIP). If your insurance agent does not sell flood insurance, contact the NFIP Referral Call Center at (888) 379-9531 to find an approved local insurance agent. You can apply for floor insurance online at DisasterAssistance.gov. If you experience difficulty applying online, you may also call (800) 621-3362 / TTY (800) 462-7585.

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About The Author
Steve Cook
Steve Cook is editor and co-publisher of Real Estate Economy Watch. He is a member of the board of the National Association of Real Estate Editors and writes for several leading Web sites, including Inman News. From 1999 to 2007 he was vice president for public affairs at the National Association of Realtors.

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