FEMA Flood Insurance Required?

I’m looking at a home that is half in a FEMA designated AE flood plane; the other half is in a zone X flood plane. The mortgage lender is requiring that I get a $1562 a year FEMA policy before closing and make that payment every year there after. My question is this, once I’ve payed off the loan am required to keep purchasing the FEMA insurance? If I were to pay for the home with cash would I be required to have flood insurance.

I’m getting the insurance either way, just interested in knowing whether or not its required law.

Also, does being in a flood plane make the house worth less initially? I do realize that it makes it harder sell/resell.

I’m no expert, but as I understand it, you don’t have to buy the insurance if you’re not on a floodplain. Buy why take a chance? I’d sure rather have it than not. Depending on where you live, not being on a floodplain is no guarantee you won’t be flooded out. Our house in El Paso was ruined by flood–who would have thought you needed flood insurance in the desert in an area that averages 8 inches of rain a year?

You do not have to carry flood insurance if you own the house. You don’t need home owner’s insurance either if you own it.

Being in a flood plain could make the house worth less if nearby houses have lots that are just as nice while not being in a flood plain. Many houses are in flood plains as a consequence of being in a very desirable area. For example, a home on the Chesapeake Bay is gonna need flood insurance for the mortgage, but a house two blocks inland might not, but the home on the water is worth much more, all else being equal.

Being near some crappy creek that floods when others in similar home are far enough away to not need flood insurance: Yeah, that would suck, because the flood zoned house will be worth less.

Floodsmart.gov says that 2/3 of flood claims come from people who do not live in high risk flood zones.

Flood insurance requirements come from the lender, so no, if you had paid cash for your home you wouldn’t need to get a flood policy.

However, if you don’t have flood insurance and you suffer damage from a flood, your regular homeowner’s insurance will not cover it.

Is this house elevated on fill dirt? If so, you may be able to have it removed from the Special Flood Hazard area. That will cost you a few hundred bucks for preparation of the MT-1 application and submittal to FEMA, but would save you the premium in the long run.

hellpaso brings up a good point about gettting the insurance anyway. Let’s say you submit the MT-1 forms and have your home removed. Now your insurance will be much cheaper.

No it’s not on fill dirt; it’s on a ledge overlooking the small valley that the city/FEMA is using for flood control for the rest of the city downstream. The basement is finished and has a walkout patio door that is five feet below the flood level AE called out on the FEMA firmitte. Half the home is in flood zone X.

The present owner’s already had a surveyor study the situation and they were denied an elevation certificate to move them completely into level X which would have lowered the rates by $1100 a year; they did not disclose this too me even though I specifically asked them. I’m demanding that they either come down in price or give me my earnest money down ($1000) back for not disclosing this specific question. The city gave me copies of the surveyor’s report and there official communications with the present owner stating that they were in the 100 year flood plane. :mad:

Flood coverage needs to simply be required by law for every policy and the rates fixed so as to prevent gouging, I mean insurance is supposed to be just for any unexpected events. Because they let them get by with this, now people living on the entire east coast have a clause saying they won’t pay for any storm damage from a hurricane, or even any storm that was or later became one. Yet the Allstate premium never went down.

I am 20 miles from ocean, yet have to have over 10 percent of home destroyed now as a “Deductible” that I had no choice not to take. This is not flood damage, which was never covered, but wind and storm damage. They did it because they could, and then pay themselves bonuses. Soon I bet they will do this with tornadoes in the midwest and on and on till all the premiums can be used for bonuses instead of claims. We need laws that could stop this in a minute.

So from what Silverstreak Wonder is saying it may be to my advantage to be in a federally controlled flood zone rather than just outside of one. At least my insurance rates would be regulated; is this a correct assumption? Houses just one block away are out of all of the FEMA zones and would not be covered for any flood damages correct?

Flood insurance (in the U.S.) can only be purchased from the National Flood Insurance Program. The premiums are based on your flood risk, and the amount of coverage you choose. I’m not sure what you’re getting at about price gouging.

I think you are talking about homeowner’s insurance, which is a totally different thing.

I’m not sure what Silverstreak is referring to. The National Flood Insurance Program is the only flood insurer in the U.S. that I know of. Private insurers won’t touch it.

Using an example, let’s say that the lowest habitable floor of your house is at elevation 100, msl. If the base flood elevation is 99, then you are one foot above the BFE. Your premium will be based upon that.

If the BFE is 102, then you are two feet below. Your premium will be higher.

There are also variations in premium based upon the coverage you choose. I’ll go look up some links for you.

Here is an example of some policy rates for a low-to-moderate risk area:

Here is a link giving a bit of info about the NFIP:

When is insurance required?:
(Note that lenders can require flood insurance even when Federal guidelines do not. For example, if a Special Flood Hazard Area crosses a property corner but not the house, Federal requirements don’t mandate flood insurance. However, a private lender may require it if any portion of the property touches the SFHA.)

Understanding flood maps:

Heavenly day! FEMA regulations do not allow basements in the flood plain in new construction. Your premium will be rated on this habitable floor which is five feet below the BFE. No wonder it is so high.

My advice to you is, don’t buy this house. Period.

Thanks NinteyWt, I was hoping that you would reply since I’ve seen your previous post in these types of matters and value your opinion on a professional level. I’d actually downloaded and been studying the FEMA Flood Insurance Manual over the holidays (fascinating reading btw) and everything you have noted only confirms my concern that this is a very serious issue. I’m extremely peeved that the seller is taking this so lightly and being evasive about my questions; especially since they did a lot of work trying to get an exemption just last year. :mad:

I spoke with the cities engineer and the city manager on Wednesday and they told me that there is another flood zone downstream of the city that they use as the primary flood control for the city (Northville Michigan) and that they have never had to utilize the one where the house I am looking at is using; yet. In fact, until 2006 the house was not marked as being in a FEMA flood zone (neither X or AE) and that they had worked with the homeowners on that street to get the exemption from FEMA but were unsuccessful. Still, they tried to reassure me that they would do everything possible (come hell or high water :rolleyes: ) to make sure that the homes on that street would not be allowed to flood until all available options were exhausted. Still, it’s very expensive to pay flood insurance every year and would make it much more difficult to sell the house down the road. I’m going to walk away from it.

Thank you for your kind words Si. I do my best to keep up with the regulations since they change a little bit each year. I’m always happy to try to shed light on the NFIP since it can be very confusing.

That sounds like a very strange situation. If there is an area which previously did not flood and the City is planning to cause flooding there (with a floodwater storage facility) then it looks to me as if they should have bought out the homes.

My concern with the five feet below the BFE is this: many smaller floods will occur below the BFE. With five feet still to go, it’s highly likely that the basement would flood very frequently - perhaps even annually.

I’m glad you’ve decided to walk away.

Let me add one more thing, in case anyone else is following this:
You mentioned houses on another street not needing insurance, and so they wouldn’t be protected in the event of flood. Those folks can buy flood insurance if they want to. As long as your community participates in the NFIP you can buy flood insurance, even if you are out of the SFHA*.

*In certain cases a house will not qualify for insurance but that has to do with frequently flooded properties where the amount of past claims exceeds 50% of the value of the house. There are other special cases but they are rare.

I don’t believe that it is so much that the city was planning on using the area for flood control; but that they have been forced by FEMA to designate as such; and thus consider it in their planning activities. I’m pretty certain that the city did not request this change.

I actually lived in apartments across this very creek several years ago (it was in the AE flood zone area and raised up on pilings; we parked underneath the building by the creek) and I could observe the home I’m looking at through the trees everyday. We had severe rain for several weeks in the spring of 2002 and it flooded half of our apartments parking area with about 4 inches of water; on the other side of the creek the water didn’t get any closer than 80 feet to the homes patio door. That said, the rise over that 80 feet seems to be less than 2 feet so that’s pretty close.

No one I’ve talked with can recall these homes ever flooding; but there must have been something come out of the 2002 rainy season that prompted FEMA to reassign the flood risk level. The FEMA site says that a new FIRM is being published in July of 2010 for this area; I think I’ll be keeping an eye on that one.

Ah, I see.

Nationwide, the NFIP maps are being updated; for example we are supposed to be finished remapping the entire state of Mississippi within a couple of years. So the 2002 rains there may not have had anything to do with it.

OTOH, sometimes a large event will trigger a second look at BFEs, as in the case of Katrina on the MS coast.

Other things such as increased upstream development or changes in geomorphology of streams can be the impetus behind updated mapping.

The SFHA zones shown on the NFIP maps are zones of risk; they are not really intended to be detailed hydraulic studies. The initial purpose was to give actuaries a tool to use when determining premiums based on that risk. So, the fact that a property has never actually flooded doesn’t impact the mapping much. Sometimes it takes a span as great as 500 years to actually see a 100-year recurrence interval flood.