Flood insurance is required for properties located in which area designation, according to FEMA, and what does it cover?

• A. It is optional for all properties
• B. It is required only for commercial properties
• C. It is required for properties in Special Flood Hazard Areas as determined by FEMA; covers physical damage caused by flood events
• D. It covers only contents of the home

Answer: (C)

Flood insurance is required for properties located in Special Flood Hazard Areas (SFHAs) as designated by FEMA, especially when the loan is secured by the property. This requirement exists because those areas have a higher risk of flooding, and the lender wants protection against flood losses.

The coverage provided by flood insurance protects the physical damage to the insured building and, depending on the policy, the contents inside. It is separate from standard homeowners insurance, which does not typically cover flood damage. So in these high-risk zones, you need flood insurance to cover flood-related damage to the structure and, if you choose, its contents up to the policy limits.