Who Must Have Flood Insurance? Key Facts To Know

​Floods are among the most frequent and costly natural disasters in the United States. Yet, many homeowners don’t realize that standard home insurance policies do not cover flood damage. That’s why flood insurance exists—offering critical protection against losses from rising water. But who is legally required to have flood insurance, and when is it simply a smart financial decision? Let’s break it down.

When Flood Insurance Is Required
1. Homes in High-Risk Flood Zones (Special Flood Hazard Areas – SFHAs)

• If your property is located in an SFHA and you have a federally backed mortgage (like FHA, VA, or USDA loans), flood insurance is mandatory.
• Lenders will require proof of coverage before closing on the loan.

2. Federally Backed or Regulated Mortgages

• Any mortgage from a federally regulated or insured lender requires flood insurance if the property is in a high-risk flood zone.

3. Homes That Have Received Federal Disaster Aid

• If you’ve received federal disaster relief for flood damage in the past, you may be required to maintain flood insurance to remain eligible for future assistance.

When Flood Insurance Is Not Required but Recommended

• Moderate- or Low-Risk Areas
  Even if you’re not in a designated floodplain, floods can still happen. FEMA reports that over 20% of flood claims come from properties outside high-risk zones.
  
  
• Cash-Purchased Homes
  If you buy a home outright without a mortgage, you won’t be legally required to carry flood insurance. Still, coverage is strongly advised.
  
  
• Secondary or Vacation Homes
  Flood damage can happen to seasonal properties, and repairs may be even more difficult if you’re not there year-round.

What Flood Insurance Covers
1. Building Coverage

• Structure of the home (foundation, walls, plumbing, electrical systems, built-in appliances).
• Available through the National Flood Insurance Program (NFIP) up to $250,000.

2. Contents Coverage

• Personal belongings (clothing, furniture, electronics, and appliances).
• Coverage available up to $100,000 through NFIP, with higher options offered by private insurers.

3. Optional Private Flood Insurance

• May offer higher limits, temporary living expense coverage, or additional protections beyond NFIP policies.

Key Facts to Keep in Mind

• Standard homeowners insurance does not include flood protection.
• Flood insurance has a 30-day waiting period in most cases before coverage begins, so plan ahead.
• Federal disaster assistance is often a loan, not free aid—making flood insurance a better long-term safeguard.
• Premiums vary based on risk zone, property value, and coverage limits.

Conclusion
Flood insurance is mandatory for homeowners in high-risk flood zones with federally backed mortgages, but it’s also a smart choice for many others. Floods can happen anywhere, and without coverage, recovery costs can devastate your finances.

The takeaway: Even if you’re not required by law, consider adding flood insurance to your protection plan. It’s a small investment for peace of mind and long-term financial security.

At Clark & Bell Insurance Agency, we aim to simplify the insurance process while delivering exceptional service and affordable options tailored to your needs. For more information or a free quote, call us at (239) 334-4141 or CLICK HERE.

Disclaimer: The information provided in this blog is intended for general knowledge only. Consult a licensed insurance professional for personalized advice suited to your specific insurance requirements.