Why is my lender requiring the purchase of flood insurance?

For nearly every mortgage transaction in the United States that involves a structure, the lender reviews current National Flood Insurance Program (NFIP) maps for the community in which the property is located. The NFIP map review is made to determine the location of the property in relation to the Special Flood Hazard Area (SFHA). If the lender determines that the structure is indeed located within the SFHA and the community is participating in the NFIP, the borrower is notified that flood insurance will be required as a condition of receiving a loan.

These lender requirements are set forth in the Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994. Stipulations of these legislative acts require the purchase of flood insurance by property owners who are being assisted by federal programs or by federally regulated institutions in the acquisition or improvement of land, or facilities, or structures located or to be located within an SFHA. For more information please visit our Flood Insurance page.

Related questions

Flood Management (Environment)

How can a property owner determine if the property is in a Special Flood Hazard Area (SFHA)?

FEMA publishes Flood Insurance Rate Maps, which show the flood hazard areas in communities. The Flood Insurance Rate Map for the county is on file with the Department of the Environment (DoE) and many insurance companies. In addition to the Flood Insurance Rate Map, DoE has done a number of watershed studies covering most of Prince George's County. The Flood Insurance Rate Map and local floodplain maps can be viewed by the public at the DoE offices in Largo. In addition, local residents and business owners can call the Department of the Environment at (301) 883-5810 to request floodplain information about their particular property.

My mortgage company informed me that I am in a designated Special Flood Hazard Area (SFHA). What is a SFHA?

The Special Flood Hazard Area (SFHA) is what is commonly referred to as the "100-year" floodplain. This is somewhat of a misnomer because it often leads people to believe that this is a flood that occurs only once in 100 years when in fact there might be two "100-year" floods within a month. The "100-year flood" is the name given to a flood that has a 1% chance of occurring in any given year. In fact, over a 30-year mortgage, there is a 26% chance that a flood will occur to a home and only a 4% chance of a fire. For more information please visit our Flood Insurance page.

What if I disagree with my lender's determination that I am in the flood zone?

Property owners may not contest the requirement if the lending institution has established the requirement as part of its own standard lending practices. However, if a lending institution is requiring the insurance to meet mandatory flood insurance purchase requirements of the National Flood Insurance Program (NFIP), the property owner and lender may jointly request that Federal Emergency Management Agency (FEMA) review the lending institution's determination. The FEMA review merely looks to see if the determination is accurate based upon a review of the NFIP maps and the location of the property in relation to the Special Flood Hazard Area (SFHA).

If a property owner is not satisfied with the results of this review, they may apply for a Letter of Map Amendment (LOMA), which is a more detailed look at the elevation of the structure on the property and the elevation of the floodplain as shown on the NFIP map. Please contact the Sustainability Division at (301) 883-5810 or ltennekoon@co.pg.md.us for additional information on the LOMA process.

Who can purchase a flood insurance policy?

National Flood Insurance Program (NFIP) coverage is available to all owners of insurable property (a building and/or its contents) in a community participating in the NFIP. Owners and renters may insure their personal property against flood loss with "contents coverage."

For the answers to additional questions on flood insurance purchase requirements and flood zone determinations, visit the FEMA website.