FEMA (Federal Emergency Management Agency) publishes Flood Insurance Rate Maps (FIRMs) that identify Special Flood Hazard Areas (SFHAs). Properties in SFHAs with federally backed mortgages are required to carry flood insurance through the National Flood Insurance Program (NFIP). Standard homeowners insurance does NOT cover flood damage. Lenders must notify borrowers if their property is in a flood zone, and many states require sellers to disclose flood zone status as well.
A property is located in FEMA Zone AE, a high-risk flood area. The buyer's lender requires flood insurance as a condition of the mortgage. Annual flood insurance premiums are $1,200 in addition to the homeowner's insurance policy. The seller must disclose the flood zone designation.
Standard homeowners insurance does NOT cover floods—separate flood insurance is required. Flood insurance is MANDATORY in Special Flood Hazard Areas (SFHAs) for federally backed loans. FEMA maps determine flood zones. Remember that flood zone status can affect property value and insurance costs significantly.
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Frequently Asked Questions
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Flood Zone Disclosure may have state-specific rules. Choose your state to study Mandated Disclosures with localized content: