Who is typically required to have flood insurance?

The requirement for flood insurance typically applies to property owners in flood-prone areas. This is particularly important as certain locations are designated by the Federal Emergency Management Agency (FEMA) as Special Flood Hazard Areas (SFHAs). In these zones, there is a higher risk of flooding, and therefore, lenders often require homeowners to carry flood insurance to protect their investment.

The reasoning behind this requirement stems from the severe financial impact that flood damage can cause, and having insurance helps mitigate that risk. While there are properties outside of flood-prone areas that may still be at risk, or properties that do not require insurance if they are not mortgaged, the key point is that the requirement for flood insurance is most strongly tied to the risk level associated with specific geographical areas known for flooding. Thus, property owners in these designated flood-prone areas must secure appropriate flood insurance as part of responsible property ownership and lender requirements.