The Real Estate Encyclopedia
Is Flood Insurance Required?
Category - Home Buying Questions - Insurances & Taxes FAQ's

Floods are the most common and widespread of all natural disasters, except for fires. Most communities in the United States experience some degree of flooding after spring rains, heavy thunderstorms, hurricanes, or winter snow thaws. Often homeowners are victims of natural disasters involving floods and devastated by their lack of flood insurance, because most homeowner insurance policies do not cover flood. 


Federally mandated flood insurance is required if all the following conditions are present: 1) the local community where the property is located is participating in the National Flood Insurance Program (NFIP) contact FEMA toll-free at 877 336-2627 or at for more information; 2) the property is located in a mapped floodplain shown on the community’s Flood Insurance Rate Map; and 3) the borrower is obtaining a federally insured, regulated or supervised loan.


Lenders always have the option to require flood insurance in high risk areas. The average flood insurance premium costs around $400 per year, depending on the area.  In low to moderate risk areas, coverage can be purchased for around $100 per year. 


Flood insurance is purchased from The National Flood Insurance Program (NFIP). The NFIP is a federal program enabling property owners to purchase insurance protection against losses from flooding. This insurance is designed to provide an insurance alternative to disaster assistance to meet the escalating costs of repairing damage to buildings and their contents caused by floods. Participation in the NFIP is based on an agreement between local communities and the federal government which states that if a community will implement and enforce measures to reduce future flood risks to new construction in special flood hazard areas, the federal government will make flood insurance available within the community as a financial protection against flood losses which do occur.


You can buy flood coverage through your insurance agent or insurance company. Some insurance companies actually issue the flood insurance policies, in partnership with the federal government, as a service and convenience for their policyholders. In those instances, the insurance company handles the premium billing and collection, policy issuance, and loss adjustment on behalf of the federal government. These insurance companies are called Write Your Own (WYO) insurers. If your agent or insurance company is not in the WYO program, you may be referred to another agent or insurance company involved in the program. Your agent may also write a policy for you directly from the federal government.

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