Flood Insurance

Value of Having an Elevation Certificate

  • The default flood insurance rating is for buildings constructed at-grade level (no elevation a/k/a slab-on-grade). The only way to get credit for a building not sitting on the ground is to have a FEMA Elevation Certificate completed by a land surveyor
  • FEMA's efforts to eliminate subsidized flood floor insurance rates results in yearly cost increases. Those increases continue until the rate represents the risk; where buildings much lower than the flood level are charged more than homes closer to the flood level.  However, absent an Elevation Certificate on-file with FEMA, there's no trigger to stop these increases and they'll keep escalating. If your Insurance Agent has placed an Elevation Certificate in your FEMA file, then the rates will automatically level-off when the proper rate is reached.

Flood Insurance Available to Owners & Renters

Flood insurance is available to all building owners and renters. The City of Key West participates in the National Flood Insurance Program (NFIP). With the City’s participation, NFIP makes federally backed flood insurance available for all buildings, whether they are in a floodplain or not. Flood insurance covers direct losses caused by surface flooding, including an ocean storm and local drainage problems.

Coverage Types

The NFIP insures buildings, including mobile homes, with two types of coverage: structural and contents. Contents coverage may by purchased separately provided the contents are in an insurable building. Structural coverage is for:

  • Air-conditioning
  • Floors
  • Furnace
  • Insulation
  • Walls

Important Flood Insurance Facts

  • Flooding isn’t covered by homeowners insurance, a separate policy is required.
  • There is a 30-day waiting period between purchase and coverage becoming effective (with a few exceptions).
  • Flood insurance covers damage caused by rising water - building and contents coverage is provided in two separate policies, except when written as Preferred Risk. Coverage purchased as a requirement for getting a mortgage typically covers just the building, not the contents. 
  • Flood insurance pays up to $30,000 toward the cost of elevating a home if it was substantially damaged by the flood and is being required to elevate before being restored (view the Coverage D on the Dwelling form).

Mandatory Purchase Requirement

The flood insurance mandatory purchase requirement applies to all forms of federal or federally related financial assistance for buildings located in a Special Flood Hazard Area (SFHA). This requirement affects loans and grants for the purchase, construction, repair, or improvement of any publicly or privately owned building in the SFHA, including machinery, equipment, fixtures, and furnishings contained in such buildings.

Financial Assistance Programs

Financial assistance programs affected include:

  • Farmers Home Administration
  • Federal Emergency Management Agency
  • Federal Housing Administration
  • Loans and grants from agencies such as the Department of Veterans Affairs
  • Small Business Administration

Secured Mortgage Loans

The requirement also applies to secured mortgage loans from financial institutions, such as commercial lenders, savings and loan associations, savings banks, and credit unions that are regulated, supervised or insured by federal agencies such as the Federal Deposit Insurance Corporation and the Office of Thrift Supervision. It also applies to all mortgage loans purchased by Fannie Mae or Freddie Mac in the secondary mortgage market.

How It Works

Before a person may receive a loan or other financial assistance from one of the affected agencies or lenders, there must be a check to see if the building is in a Special Flood Hazard Area (SFHA). The SFHA is the base (100-year) floodplain mapped on the Flood Insurance Rate Map (FIRM). It is shown as one or more zones that begin with the letter "A" or "V".

If the building is in a SFHA, the agency or lender is required by law to require the recipient to purchase a flood insurance policy on the building. The requirement is for structural coverage equal to the amount of the loan (or other financial assistance) or the maximum amount available, whichever is less.

  • If the policy should lapse during the term of the mortgage and isn't restored, the lender may purchase it's own policy known as "force-placed."  The cost of force-placed policies are then applied to the mortgage. If there's a flood damage claim, payment is made to the lender not the property owner. 
  • Most policies are still subsided to some degree.  If a policy lapses and needs to be re-issued, it will likely cost considerably more because the previous subsidy would have been extinguished. 

Amounts Available

The maximum amount available for a single-family house is $250,000 for the building, and another $250,000 for contents. For commercial property, the maximum is $50,000/$500,000.

Buildings located with type "X" zones are not required to maintain flood insurance. Yet it is available for these properties at very discounted rates.

What Is Not Covered by the Policy

The mandatory purchase requirement does not affect loans or financial assistance for items that are not covered by a flood insurance policy, such as vehicles, vessels, houseboats, business expenses, landscaping, pools, outside motors, porch items and vacant lots. It does not affect loans for buildings that are not in the SFHA, even though a portion of the property may be flood prone. While not mandated by law, a lender may require a flood insurance policy as a condition of a loan for a property that is only partially within a 100-year floodplain as indicated on a Flood Insurance Rate Map.