Flooded HouseFlood Insurance Rates Are Established by the Government

Flood insurance rates are cut in stone by the Federal Government. You have no need to shop rates.

Agents Are Not Permitted to Bind Flood Coverage

Flood Insurance agents do not have binding authority. It takes your signature and receipt of money to validate coverage for your mortgage lender. Floodsmart makes this easy, you can pay the FloodSmart Insurance Agency with a Visa, MasterCard, American Express, or Discover Card. They also take computer checks (the bank refers to them as drafts).

Flood Insurance is Required by Law

To get secured financing to buy, build, or improve structures in Special Flood Hazard Areas (SFHA’s) you will be required to purchase flood insurance. Lending institutions that are federally regulated or federally insured must determine if the structure is located in a SFHA and must provide written notice requiring flood insurance.

Here are some frequently used terms:

Insurance Agent

You cannot buy flood insurance directly from the federal government, you must us an agent. The flood program is complex and for the best results you should use an agent with direct knowledge and experience in the National Flood Insurance Program.


As with any other type of insurance, it’s important to know what your policy does and doesn’t cover. For example, damage caused by a sewer backup is only covered by flood insurance if it’s a direct result of flooding. The damage is not covered if the backup is caused by some other problem.


Deductibles apply separately to building and contents with different amounts to choose from. Like other insurance plans, a higher deductible will lower the premium you pay, but will also reduce your claim payment. Your mortgage lender can also set a maximum amount for your deductible.

Mandatory Requirements

Homes and businesses with mortgages from federally regulated or insured lenders in high-risk flood areas are required to have flood insurance. While flood insurance is not federally required if you live in a moderate-to-low risk flood area, it is still available and strongly recommended.


The NFIP, a federal program, offers flood insurance, which can be purchased through most leading insurance companies. Rates are set and do not differ from company to company or agent to agent. These rates depend on several factors including the date and type of construction of your home, along with your area’s level of risk. All premiums include a Federal Policy Fee and ICC Premium.

If your agent is inexperienced with flood insurance you may very well be paying the wrong rate. Do not let an inexperience agent be your first big disaster with the flood insurance program.

30-Day Waiting Period

There is typically a 30-day waiting period—from date of purchase—before a new flood policy goes into effect. Here are the only exceptions:

  • If your lender requires flood insurance in connection with the making, increasing, extending, or renewing of your loan.
  • If an additional amount of insurance is required as a result of a map revision.
  • If flood insurance is required as a result of a lender determining that a loan that does not have flood insurance coverage should be protected by flood insurance.
  • If an additional amount of insurance is being obtained in connection with the renewal of a policy.


Payment must be made for the full year’s premium, unless your agent or company provides that independently. The National Flood Insurance Program accepts check and credit card payments (i.e. American Express, VISA, MasterCard). Coverage will not be effective until full payment is received.

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