To purchase federal flood insurance, your community must participate in the federal National Flood Insurance Program. Everyone who lives in areas at great risk for flooding (called special flood hazard areas, or SFHAs) is entitled to buy federal flood insurance. To receive a federally backed housing loan, the National Flood Insurance Act requires borrowers who want to live in an SFHA to purchase flood insurance. Conventional loans on property within coastal barrier resources system areas do not require flood insurance, but lenders are required to notify borrowers that their property is situated in an SFHA, and borrowers are entitled to purchase federal flood insurance.

Limits to Flood Insurance
The following limits apply to flood insurance:

• $250,000 per multi-family unit or single-family residential buildings
• $100,000 for contents, also available to renters
• $500,000 each for commercial structures and contents

30-Day Waiting Period
Although you can apply for coverage at any time, no coverage is available, with few exceptions, until a 30-day waiting period after you have applied for coverage and paid the premium. To be covered, flooding must be a general and temporary condition during a period when the surface of normally dry land is partially or completely inundated, so that two or more acres or two adjacent properties become flooded.
Perils covered by flood insurance:

• inland or tidal water overflow (which can occur as the result of the failure of a dam or levee)



• flooding that causes mudslides or mudflows



• floods caused by unusual or rapid accumulation or runoff of surface waters from melting snow or heavy rainfall



• damage resulting from the collapse or instability of land along a body of water from the eroding effects of moving water



• floods caused by hurricanes, with the exception of risks covered by your regular property and liability policy, such as from hail or from rain entering as a result of wind damage



• damage to basements or any area with a floor that is below ground level on all sides, including cleanup expenses and damage to appliances or equipment located in the basement, with the exception of the contents of a finished basement and improvements such as finished walls, floors, or ceilings

Federal Disaster Area
Note that if a community is declared a federal disaster area, assistance in the form of no- or low-cost federal loans may become available (awarded less than 50 percent of the time), but this does not relieve you of your responsibilities on your original mortgage.