How to Know If You Need Homeowner's Flood Insurance

According to the Federal Emergency Management Association, the answer to the question of who needs flood insurance is simple; everyone. To that end, Congress passed the National Flood Insurance Act creating the National Flood Insurance Program to underwrite insurance policies that were administered by private insurers. The program has grown through the years, most notably after significant flood events like Hurricane Agnes in the 1970s and Hurricane Katrina in 2005. Now, more than 20,000 communities participate in the program.

Instructions

1. Consult FEMA's flood risk mapping tool at their website. The federal government requires flood insurance for homeowners in high-risk areas that receive federally backed mortgages or mortgages from lenders who are federally insured. You can educate yourself before pursuing a mortgage, but if you are looking to buy in a high-risk area, your lender will inform you of the requirement before you are able to complete the loan.

2. Check your local city hall for the Flood Level Assessment Survey, which is required by FEMA for communities wishing to participate in the NFIP. Such surveys include flood plain and elevation information for your area, which is used to determine the NFIP rates and requirements.

3. Ask your homeowner's insurance agent about the requirements in your area. Chances are, if you are paying a mortgage and you do not have flood insurance, it is not required, but your homeowner's insurance agent will have the risk assessment information that can guide you in deciding if flood insurance is right for you.

4. Don't shop around. Since flood insurance is underwritten by the federal government, prices are set. All agents will quote the same rate for a given property. Your rate is determined by the risk of a flood in your area as outlined in the surveys completed by participating communities.

5. Call FloodSmart.gov, the official site of the NFIP, for questions or help regarding flood insurance and risk maps at [phone].

Tips & Warnings

• Flood insurance typically costs around $400 per year on average.

• Flood insurance takes about 30 days to kick in, so be prepared in advance of the next big weather event.

References

• Floodsmart.gov
• FEMA: Myths and Facts about the NFIP
• Smart Money: Do You Need Flood Insurance?

Resources

• FEMA: Map Service Center