Flooding can happen in any home, but insurance companies and the federal government deem certain areas at higher risk than others. They identify zones prone to flooding from natural disasters or geography for insurance purposes. The federal government designates areas with a minimal risk of flood as "Zone X."
Places Prone to Flooding
Flood maps, or Flood Insurance Rate Maps, were developed to help insurance providers and homeowners understand the risk associated with living in and insuring homes in flood-prone areas. The maps indicate moderate-to-low risk areas with a "B," "C," "X," or a shaded "X." Homeowners in Zone X aren't required to purchase a separate flood insurance policy, although insurance companies recommend the coverage as an added measure of protection.
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Importance of Flood Insurance
The Federal Emergency Management Administration, or FEMA, defines areas with a 26 percent or more chance of flooding during a 30-year mortgage term as "high-risk." Homeowners in these areas must purchase flood insurance for the life of the loan if the loan is insured or guaranteed by the federal government. This includes conventional loans backed by Fannie Mae or Freddie Mac and the Federal Housing Administration, or FHA-insured loans. Lenders don't require flood insurance for Zone X properties, but they do require homeowners insurance. Regular homeowners insurance policies may cover non-flood water damage, but they generally don't cover floods or flash flooding.