Flood Insurance: Requirements You Need to Know

If you think you might need flood insurance, take a look at these flood insurance requirements and see if you qualify for flood insurance. You may also need to determine if you want to purchase it, even if you qualify.

1. Federal Flood Disaster Area
If you have received Federal financial assistance for a property that was damaged in a federal flood disaster, then you are required to have flood insurance on that property for as long as you live there.

If you ever sell your home, you are required to tell the new owners that they are required to maintain flood insurance on the property.

2. Renters Need Insurance

If you are a renter living in a building that was damaged by flood and you received federal financial assistance, then you must have food insurance coverage as long as you live in that property. If you move to another property, then the requirement is lifted.

3. Time Limits
If you have a certificate saying that you have group flood insurance through FEMA following the declaration of the president of your area as a presidential disaster area, then you will need to obtain your own insurance within three years. The group policy only lasts for three years, then you must have  your own flood insurance if you intend to stay in the area.

4. Federal Flood Zones

If you are in a federally certified flood zone, even if you have not had a recent flood, you are required to have food insurance if you are using any kind of loan regulated by the federal government. These loans include FHA, FNMA, Freddie Mac, and Fannie Mae.

If your loan is through some other lender, then you are not required to get flood insurance. However it is probably a good idea to have the insurance anyway.

5. Required Insurance? Go Through the Government

Required flood insurance is offered through the Mandatory National Flood Insurance Program. This program operates through FEMA and Homeland Security.  

5. Federal Maximums

The maximum flood insurance amount possible from the Federal government program is $250,000. If you need more insurance than this, then you will have to go to a private insurance company to get insured for the difference.

6. Mitigation/Prevention
While the insurance is required and you are allowed to rebuild after a claim, FEMA is interested in mitigation and prevention. Therefore they will make offers of help or creative solutions to those who have repeated problems. For example, they will help pay for stilts for a home, or if the land washes away, they will offer to pay you the fair market value of the land in order to have you move to another location.

7. Lower Property Values
The mandatory flood insurance zones will affect the value of your property dramatically. There is no way to avoid the severe consequences of the required flood insurance. If you have not been in a flood area before but are begin reclassified into a required flood area, then you may see a dramatic reduction in the value of your home.

8. Collect Benefits

In order to collect benefits under the mandated flooding program, the government must declare it to be a disaster area.

Federal flood insurance laws can be complex and often surprise homeowners with their requirements. Be acquainted with the entire law and all the provisions before buying a home in a flood zone.

blog comments powered by Disqus