Flooding can happen just about anywhere it rains or snows. On average, 40% of the National Flood Insurance Program (NFIP) flood insurance claims occur outside the high-risk flood areas. That’s why it’s important to protect the life you’ve built with flood insurance, even if you live in an area with low-to-moderate flooding risk.
Unfortunately, many property owners do not find out until it’s too late that their homeowners insurance policies do not cover flooding. There is usually a 30-day waiting period before the policy goes into effect, with some exceptions: If you initially purchased flood insurance while securing, adjusting, or renewing a loan for your property, there is no waiting period. Coverage goes into effect when the loan is closed.
The government requires that homes in high-risk flood areas designated on flood maps by the letters A, AE, or VE be protected by flood insurance if they are security for loans backed by a federally regulated lender. Lenders must notify borrowers of this requirement, prior to closing, if their property is in one of these areas.