FEMA Flood Zones Explained: When a Lender Requires Flood Insurance

Flood is the coverage that surprises borrowers at closing. Whether a lender requires it depends mostly on the property's FEMA flood zone. Here is what the zones mean and what lenders do with them.

Special flood hazard areas: A and V zones

Zones that start with A (A, AE, AH, AO and others) or V (V, VE) are special flood hazard areas. FEMA maps them as having at least a 1% chance of flooding in any year. V zones also face waves from coastal storms.

When a property in one of these zones secures a loan from a federally regulated lender, or a loan sold to or backed by a federal agency, flood insurance is required by federal rules.

Zone X: not required, sometimes asked for

Shaded X is a moderate-risk area, about a 0.2% chance of flooding in any year. Unshaded X is minimal risk. Flood insurance is not required by federal rules in zone X, but some lenders still ask for it, and many flood claims come from outside the high-risk zones.

How the zone is determined

The lender orders a flood zone determination for the loan, which reads the property's location against FEMA's flood maps. You can look up the zone yourself on FEMA's flood map service. If the determination and the map disagree, or a map has changed, ask before closing.

NFIP and private flood

The National Flood Insurance Program limits residential building coverage to $250,000. Private flood policies can go higher and are sometimes priced lower. Many lenders accept either, as long as the policy meets their requirements.

Always a separate policy

Flood is never part of the landlord or builders risk policy. It is its own policy, with its own evidence of insurance and its own invoice. Lenders often ask for the flood declarations page.

Get a quote