Answers about Flood Insurance

I applied for a mortgage loan, and the bank is forcing me to buy flood insurance. Can the bank do this?

Yes.  If your home is located in a Special Flood Hazard Area (SFHA) in which flood insurance is available under the Flood Disaster Protection Act (FDPA), any federally regulated lender will require you to purchase flood insurance before you get a mortgage.

You do not have to purchase the flood insurance policy from the bank.  It may be purchased through insurance companies, which sell policies through their network of agents.  The coverage is offered through the Federal Emergency Management Agency (FEMA) and its National Flood Insurance Program (NFIP).

On property that is not subject to the FDPA requirements, any requirement for flood insurance is a matter of contract between the lender and borrower.

February 2011