When it comes to flood insurance, we've known about why it can be required for your property. It may be because you're mapped into the high-risk flood zone or the special flood hazard area (SFHA) which generally means that the bank which is generally managed by the federal government will require you to get a flood insurance policy for your house through the Federal Emergency Management Agency (FEMA) or the private market.
Today, we want to answer, can your bank require you to get flood insurance even if you're in a low-risk zone?
What are Low-Risk Flood Zones?
First, let's do a quick review of what a low-risk flood zone is. You see, when it comes to flood maps and flood zone designations, there are low-risk zones and high-risk flood zones or the SFHA. These are zones that you can see across the country even if it's not on the coasts.
Most low-risk flood zones are composed of what we call a Flood Zone X. This group also includes Flood Zones B and C. These are areas determined to be outside of the 500-year floodplain or areas that can have a massive flood once every 500 years. Generally, you see Flood Zone X protected by levees or dams from the 100-year flood zones like Flood Zone A.
You can check our videos on these flood zones below:
Why Is It Required?
Since low-risk zones are generally not officially announced to require flood insurance compared to high-risk zones and SFHA, most homeowners would simply forget about getting flood insurance. We see this a lot where they're surprised to receive that letter from their bank or lender that they need to get a policy in effect.
Now, it's important to note that banks and lenders have full discretion whether or not to require you to get flood insurance on your policy. Generally, this depends on the type of bank you're working with. We see this a lot on the private market side especially when it comes to commercial loans where some banks are more conservative.
When a property is sitting in a low-risk flood zone, but the nearby houses are in that blue zone (high-risk zones or SFHA), the bank will require that flood insurance. This is generally because they want to make sure that the property's protected. Always remember that floodwater doesn't really know when to stop at that line of the Flood Zones A or AE.
If you have any questions on these requirements by mortgage lenders or your bank when it comes to flood insurance, reach out to us through the links below. You can watch this flood education video below as well:
Remember, we have an educational background in flood mitigation and we want to help you avoid flood risks and surprise mandatory flood insurance. Let's make sure that the value of your property and your safety are secured through flood education and awareness.
