I’ve seen several posts on social media about homeowners not having flood insurance because they don’t live in a flood zone. I thought I must have been under a misimpression that flood insurance was available to all homeowners no matter where you live. So I turned to fema.gov to see if this was #fakenews.

Fema.gov states that anyone living in a community that participates in the NFIP qualifies for national flood insurance. Find a list of communities here.

Based on a quick search of the database it appears nearly all homeowners are able to purchase flood insurance no matter where they live; they just aren’t required to purchase it.

Fema.gov says:

Under federal law, the purchase of flood insurance is mandatory for all federal or federally related financial assistance for the acquisition and/or construction of buildings in high-risk flood areas (Special Flood Hazard Areas or SFHAs).

The amount of flood insurance coverage required by the Flood Disaster Protection Act of 1973, as amended by the National Flood Insurance Reform Act of 1994, is the lesser of the following:

1. The maximum amount of NFIP coverage available for the particular property type,

2. The outstanding principal balance of the loan or,

3. The insurable value of the structure.

If the property is not in a high-risk area, but instead in a moderate-to-low-risk area, federal law does not require flood insurance; however, a lender can still require it. In fact, nearly 1 in 4 NFIP flood claims occur in these moderate-to low-risk areas! Note that if during the life of the loan the maps are revised and the property is now in the high-risk area, your lender will notify you that you must purchase flood insurance.

Fema.gov defines the SFHAs as “the area where the National Flood Insurance Program’s (NFIP’s) floodplain management regulations must be enforced and the area where the mandatory purchase of flood insurance applies. The SFHA includes Zones A, AO, AH, A1-30, AE, A99, AR, AR/A1-30, AR/AE, AR/AO, AR/AH, AR/A, VO, V1-30, VE and V.

Moderate-risk flood zones include B, C and X.

To answer my initial question, yes, nearly all properties are eligible for flood insurance.

My husband, Corey, pointed out that actuarially that only makes sense. Why would the NFIP ever turn away any flood insurance applicant? It’s more policyholders to spread the risk.

Unfortunately, most homeowners don’t consider purchasing flood insurance because their mortgage company does not require it. I surveyed a few of my neighbors and most of them don’t have flood insurance. I went to https://msc.fema.gov/portal where I entered my address to download a local flood map. I’m located in Zone X, even though I’m less than a half-mile from the Hillsborough Bay.

Chip recently circulated a Forbes.com article he found titled Fifteen Insurance Policies You Don’t Need. The article lists number 9 as Flood Insurance, and states:

Unless you live in a flood plain or an area with a history of water problems, don’t even bother buying flood insurance. If none of the homes in the area has ever been flooded, yours is unlikely to be the first.

Forbes is a respected financial publication but this is horrible advice. For homeowners not in flood zones that require flood insurance the premium rates are generally very minimal. Hopefully homeowners can learn from terrible disasters like Hurricane Harvey and make better educated decisions about purchasing flood insurance.

  • David Thompson, CPCU

    Well, EVERYONE is in a flood zone, it’s just what zone you
    are in that matters. Are you in a high risk zone (Zones starting with A and V)
    or a low risk zone (Zones B, C, and X).

    FEMA statistics have consistently shown that about 25% of
    all paid flood comes are paid to structures in a low risk zone.

    No doubt, tens of thousands of the structures damaged by
    Harvey have no flood insurance. Less than 5% of the flood policies cover
    commercial structures.

    A homeowner in a low risk zone (B, C, and X) can typically
    buy a flood policy with the maximum $250,000 building coverage and $100,000
    contents for right at $450.

    Sadly, this happens almost every hurricane and ever river
    flooding. I’ve seen it on TV scores of times, a local resident saying, “I’ve
    lived here 75 years and it has never flooded until today.”

    Get smart about this: buy flood insurance even if not
    required by a lender.