Separate insurance coverage for flood damage — required by lenders for properties in FEMA-designated high-risk flood zones and not included in standard homeowners policies.
Full Definition
Standard homeowners insurance policies exclude flood damage. Flood insurance is primarily provided through the federal NFIP (National Flood Insurance Program), administered by FEMA, though private flood insurance has grown significantly. Lenders are federally required to mandate flood insurance for properties in Special Flood Hazard Areas (SFHAs) — zones designated as 100-year floodplains on FEMA flood maps. Coverage through NFIP goes up to $250,000 for the structure and $100,000 for contents. Premiums depend on the flood zone, the structure type, and the coverage amount. Buyers should check FEMA flood maps early in the purchase process — flood insurance can add thousands annually to housing costs and affect affordability significantly.
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