Federal law requires that any bank that makes a loan secured by a building in a government-designated flood hazard area must require the owner of the property to obtain and maintain a flood insurance policy. However, if you believe that your home does not lie in a flood plain and the flood insurance you are being required to carry is unnecessary, it is possible to fight the requirement and save yourself a significant amount of money on insurance.
Contact your bank within 45 days of receiving notice that your property is in a flood plain. Explain that you wish to dispute the flood determination and the requirement to obtain insurance. You and your bank may jointly submit a request to FEMA called a Letter of Determination Review (LODR) that will cause the government agency to review the flood zone determination and either affirm or reject the original decision.
Hire a surveyor and obtain an elevation certificate in the event that your bank refuses to submit an LODR or your LODR is rejected by FEMA. An elevation certificate will show whether or not your home or other building is built above the flood zone.
Submit your elevation certificate and FEMA form MT-1, the application for a Letter of Map Amendment (LOMA) to FEMA. An LOMA is different from an LODR in that if it is accepted, FEMA will change its existing flood map to indicate that your building is not in a flood zone. This would eliminate the bank's obligation to require flood insurance.
Wait for FEMA to make a determination regarding your LOMA application. You will still be required to carry flood insurance while a decision is made. According to FEMA, they will issue a decision within 30 to 60 days.
Notify your bank when you receive a determination from FEMA indicating that your property is not in a flood zone. The bank will likely remove the requirement for flood insurance from your loan.
If you have questions or concerns regarding flood insurance requirements, it is always best to consult an insurance professional for help. Some companies offer flood insurance dispute packages that can help you fill out paperwork and obtain the correct documentation.
While most banks will remove the requirement for flood insurance from your loan if you have an LOMA accepted by FEMA, there is no law requiring them to do so. If, after you notify the bank that your property is no longer in a flood zone, your bank refuses to remove the requirement, you may wish to refinance your loan to an institution that will accept your documentation.