Determining Flood Risk
and Flood Insurance

Q: What is flood insurance?

In 1968, Congress created the National Flood Insurance Program (NFIP) in response to the rising cost of taxpayer funded disaster relief for flood victims and the increasing amount of damage caused by floods.

Q: Why do I need flood insurance?

Flood losses aren't covered by your homeowners insurance policy. Local flooding can happen in all parts of the country at almost any time of the year. Flooding causes more damage in the United States than any other severe weather related event, an average of $4.6 billion a year in the past 20 years (1984-2003).

Q: How do I obtain a flood insurance policy?

You can purchase National Flood Insurance from private insurance companies and agents. In fact, you may be able to purchase it with a credit card. Currently, there are over 100 insurance companies that sell National Flood Insurance coverage, in addition to some 60,000 independent insurance agents.

If the seller of the property has flood insurance coverage on the building, that policy can be assigned to the buyer at the time of closing. If the mortgage company requires flood insurance as a condition of the loan, the lender may escrow flood insurance premiums - making it easy to ensure that you will not get caught without flood insurance when a flood threatens your home.

Q: Who can purchase flood insurance?

Anyone can purchase National Flood Insurance, no matter where you, if your community participates in the NFIP, except in the Coastal Barrier Resources System (CBRS) areas. The Program was created in 1968 to provide flood insurance to people who live in areas with the greatest risk of flooding, called Special Flood Hazard Areas (SFHAs). In fact, under the National Flood Insurance Act, lenders must require borrowers whose property is located within an SFHA to purchase flood insurance as a condition of receiving a federally regulated mortgage loan. There is an exemption for conventional loans on properties within CBRS areas.

Lenders should notify borrowers that their property is located in an SFHA and National Flood Insurance is required.