Flood Zone

A flood zone is FEMA's official classification of how likely a property is to experience flooding, based on its elevation, proximity to water, drainage patterns, and historical flood data. FEMA maintains flood insurance rate maps for virtually every county and municipality in the country. The zone your property falls in determines whether federal mortgage lenders require you to carry flood insurance and significantly influences how much that coverage costs.

The most important zones to know are Special Flood Hazard Areas, designated as Zone A, AE, AH, AO, VE, or V. These are high-risk zones with roughly a 1-in-4 chance of flooding over a 30-year mortgage. Federal law requires flood insurance for federally backed mortgages on properties in these zones. Zone X is a low-to-moderate-risk designation. Properties in Zone X are not required to carry flood insurance by federal law, but floods do occur in Zone X -- FEMA data shows that roughly 20 to 25 percent of all flood insurance claims come from properties outside the designated high-risk zones.

FEMA periodically updates its flood maps, and a rezoning can have significant financial consequences. A property moved from Zone X to Zone AE may suddenly face mandatory flood insurance requirements, sometimes with premiums of $2,000 to $5,000 or more per year. If you receive notice of a map change, you have options: obtain an elevation certificate, and if your structure sits above the new base flood elevation, file a Letter of Map Amendment (LOMA) with FEMA requesting removal from the high-risk designation. A successful LOMA can eliminate the mandatory purchase requirement and dramatically reduce or eliminate the increased cost.