Answers about Flood Insurance

The bank force placed flood insurance on my property. What is the amount of insurance required to be placed?

The amount of insurance coverage required under the National Flood Insurance Act (Act) is the same regardless of how the insurance is purchased.  The minimum amount of flood insurance necessary to meet the Act’s requirement is the lesser of:

  • The outstanding principal balance of the loan(s), or
  • The maximum amount of insurance available under the National Flood Insurance Program (NFIP), which is the lesser of:
    • The maximum limit available for the type of structure, or
    • The insurable value of the structure.

For one-to-four family non-condominium residential buildings located in a participating community under the regular program, the maximum amount of flood insurance available under the NFIP is $250,000. For other non-condominium residential buildings and nonresidential buildings, the maximum amount of flood insurance available under the NFIP is $500,000.

Lenders, however, generally are permitted to require and force place more flood insurance coverage than the minimum required by the Act.  (Massachusetts state law limits the amount of coverage that a lender may require to the outstanding principal balance of the mortgage loan.)

September 2017