My property has never flooded. Why am I required to purchase flood insurance?

In accordance with the Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994, the Federal flood insurance requirement applies to structures located in Special Flood Hazard Areas (SFHAs) that carry a mortgage backed by a federally regulated lender or servicer.

These Acts prohibit Federal agency lenders, such as the Small Business Administration and the Department of Agriculture’s Rural Housing Service, and Government-Sponsored Enterprises for Housing (such as Freddie Mac and Fannie Mae) from making, guaranteeing, or purchasing a loan secured by real estate or mobile home(s) in an SFHA, unless flood insurance has been purchased and maintained during the term of the loan.

In addition, the flood hazard information shown on Flood Insurance Rate Maps is based on the best information available at the time the maps were prepared. In many areas, hydraulic and hydrologic studies were conducted to reflect the long-term projection of flood risk. Because of the infrequent occurrence of flood events and the relatively short history of the National Flood Insurance Program, SFHAs are not based only on flooding occurrences. The fact that a flood has not occurred within memory does not mean one may not happen soon.

The base flood is a relatively rare event. However, structures located in the SFHA have a 26% chance of suffering flood damage during the term of a 30-year mortgage. For these reasons, flood insurance is required as a condition of receiving Federal or federally backed financing.

Show All Answers

1. What is a floodplain?
2. Do I need flood insurance?
3. Which permits do I need to work in a floodplain?
4. Is my property within a floodplain?
5. My property has never flooded. Why am I required to purchase flood insurance?
6. Where can I learn more about purchasing flood insurance?
7. What can I do to protect my property and belongings in the event of a flood?
8. How do I build adjacent to a floodplain?