Getting thorough flood insurance depends on a home's value and risk.
As of 2011, the Federal Emergency Management Agency works in conjunction with the National Flood Insurance Program (designed by Congress in 1968) to provide flood insurance through lenders. If you happen to live in a high-risk flood area, the federal government requires you to get flood insurance. If you are not required to get flood insurance, cost of any flood insurance coverage will depend on the value and flood risk level of your home, says Floodsmart.gov.
Determining Flood Plains
The National Flood Insurance Program provides a map called the Flood Insurance Rate Map that shows areas around the United States most vulnerable to flooding. You can obtain those maps at FEMA's Map Service Center. Study these maps and you can determine whether the land around your home is a flood hazard. This will help you determine whether you need to contact a lender to get flood insurance outside of it being mandatory for high-risk zones.
Calculation on Mortgage Liability
If you determine that you should get flood insurance, the first thing a lender will do is determine how much liability is on your mortgage. Mortgages that are all paid will allow your home to be insured with the amount of your fully-paid mortgage. Any amount of your mortgage not paid will constitute the amount of liability flood insurance coverage you'll get on your home.
Premium Rate of Insurance
Floodsmart.gov says that if you live in moderate to low-risk flood areas, you can get a preferred premium rate through the National Flood Insurance Program. As of 2011, this preferred rate starts at $129 a year. This will vary, though, depending on the home's risk factors. The NFIP also provides a standard rated policy that costs a little more if you don't qualify for the preferred rate.
More Calculations to Determine Coverage
Once a lender comes to inspect your home, it will consider how long the home has been there, how many people live in the home, how many floors it has, where you have certain things placed that could get damaged and, of course, the flood zone aspect. The lender will also study the bottom floor of newer homes to determine how low in elevation they are to the requirements on FEMA's flood plain maps.
Required Forms
When applying for flood insurance, FEMA provides three different forms. The one you need will be based on what kind of dwelling you live in. A Dwelling Policy Form will be for homes with two to four rooms. A General Property Policy Form is for all alternate residential buildings like hotels, apartments or dorms. The Residential Condominium Building Association Policy Form helps insure eligible condominiums from flood damage.
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