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Real Estate Tips and Advice

Do You Need Flood Insurance?

Buying a home can
be a confusing time,
especially if it’s your
first time. Appraisers,
inspections, closing
costs and more can
leave your head
spinning.
One thing that’s going to
come up time and again
is your property insurance
policy. You may be surprised
to learn that, with most
homeowners insurance
policies, floods are not
covered.
THE NATIONAL FLOOD
INSURANCE PROGRAM
Your regular policy won’t
cover flood insurance.
Instead, if you are required
to have flood insurance by
your lender or if you elect to
cover your property on your
own (more on that later),
your insurer will most likely
sell you a policy from the
National Flood Insurance
Program, or NFIP.
The NFIP started in 1968
with two goals, to reduce
flood damage and protect
property owners. Over

© ADOBE STOCK

REAL ESTATE 101
Flood Zones

Flood zones are geographic areas that FEMA defines according to levels of flood risk. Flood zones starting with A are high
risk and those starting with V are high risk in coastal areas. Most lenders require flood insurance on properties in Zones A
and V. Zones B, X and C are moderate to low risk areas and flood insurance is available, but may not be required.

the years since it started,
the program has paid out
billions in claims and also
has helped the owners of
flooding-prone properties
relocate to safer ground. In
2012, the Biggert- Waters
Flood Insurance Reform Act
authorizes the NFIP to create
a national flood mapping
program and implements
changes to the program to

guarantee fiscal soundness
just seven years after
Hurricane Katrina ran up a
$17 billion NFIP bill and the
same year Hurricane Sandy
caused more than $8 billion
in claims.
In 2014, another piece
of legislation placed limits
on flood insurance rate
hikes, even as larger and
more costlier storms run up

astronomical claims.
HOW IT WORKS
Through the NFIP, you
can get insurance on a
property in a flood plain that
traditional insurers may not
cover. A similar property not
found to be in a flood zone
by that extensive mapping
program we talked about
earlier is very inexpensive to
insure, meaning that those

payments cover the losses
on properties more prone to
flooding.
After 50 years of the NFIP,
the program is working
to close that insurance
gap and guarantee all
Americans flood coverage
no matter where they live.
The program also helps
local communities manage
floodplains and reduce the
built environment’s exposure
to flooding. The program’s
maps now cover 100% of the
nation’s populated areas,
meaning that when you buy
your next home, you can
see exactly what your risk of
flooding is.
That risk, often expressed
as a flood zone, may mean
you’re going to be a part of
the NFIP whether you want
to or not. Some lenders
require properties in certain
flood zones carry NFIP
coverage to keep a loan. It’s
also important to note that
the program re-evaluates
its maps every so often.
Properties that once didn’t
have to carry flood insurance
may be rezoned depending
on certain changes in the
community, including climate
change and rising sea levels.

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