Floods - Mandatory Insurance Purchase

Flooded Neighborhood With House in DistanceMandatory Purchase Requirement

The Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994 made the purchase of flood insurance mandatory for federally backed mortgages on buildings located in a Special Hazard Flood Area. The requirement applies to secured mortgage loans from financial institutions, such as commercial lenders, savings and loan associations, and credit unions. It also applies to all mortgage loans purchased by Fannie Mae or Freddie Mac in the secondary mortgage market. It also affects all forms of federally related financial assistance (from the Department of Veterans Affairs, Federal Housing Administration and Small Business Administration, for example) for buildings located in a Special Flood Hazard Area.

How It Works

Changes in Home Characteristics

Lenders are required to complete a Standard Flood Hazard Determination form whenever they make, increase, extend or renew a mortgage, home equity, home improvement, commercial or farm credit loan. It is the federal agency’s or the lender’s responsibility to check the Flood Insurance Rate Maps to determine if the building is in a Special Flood Hazard Area.

If the building is in a Special Flood Hazard Area, the agency or lender is required by law to require the recipient to purchase a flood insurance policy on the building.

Structural Coverage

The requirement is for structural coverage equal to the amount of the loan (or other financial assistance) or the maximum amount available, whichever is less. The maximum amount available for a single-family house is $250,000. Please see the National Flood Insurance Program website at www.floodsmart.gov or call toll-free, 888-379-9531, for information on policy rates and coverage. Contacting a local insurance agent or lender for details is suggested. Be aware that there is a 30-day waiting period before coverage goes into effect - so don’t delay.

There are undeveloped parts of Pinellas County that are classified coastal barriers under the Coastal Barrier Resources System Act (PDF), where flood insurance may not be available.


The mandatory purchase requirement does not affect loans or financial assistance for items that are not covered by a flood insurance policy, such as vehicles, business expenses, landscaping and vacant lots. It does not affect loans for buildings that are not in the Special Flood Hazard Area. While not mandated by law, a lender may require a flood insurance policy as a condition of a loan for a property in any zone on a Flood Insurance Rate Map.

Submittal Review

If a person feels that a Standard Flood Hazard Determination form incorrectly places the property in the Special Flood Hazard, they can request a Letter of Determination Review from FEMA . This must be submitted within 45 days of the determination.