Homeowners and flood insurance before you close

Homeowners insurance: your policy, your choice

The CFPB's Loan Estimate explainer reminds buyers that the homeowners insurance premium is set by the insurance company, not the lender, and that you get to choose your insurer. It suggests comparison shopping to find the policy you want and to learn whether the lender's estimate is accurate for your situation. It also notes that you will usually pay the first months of the premium at or before closing, and that insurance may be paid through escrow afterwards. See escrow accounts.

Start early. Some properties are harder to insure, because of age, roof condition, location or claims history. Finding that out a week before closing leaves few options.

What to compare between quotes

Premiums are only one line. Ask each insurer the same questions and write the answers in a table:

• Dwelling coverage. How much, and is it based on replacement cost or actual cash value?
• Other structures. Fences, sheds, detached garages.
• Personal property. Your belongings, and whether they are covered at replacement cost.
• Liability. Coverage if someone is injured on your property.
• Loss of use. Living costs if you cannot stay in the home after a covered loss.
• Deductibles. Some policies have separate deductibles for certain events, such as wind or hail, which can be a percentage of the dwelling coverage.
• Exclusions. Common exclusions can include flood and earthquake. Read the list.

Ask the insurer what information about the home they need, such as roof age, and what an inspection might change. Your inspection report can help answer these questions.

Flood is usually separate

FloodSmart, the official site of the National Flood Insurance Program, says most homeowners and renters insurance does not cover flood damage. Flood coverage is typically a separate policy.

According to FloodSmart:

• Homeowners in a participating NFIP community are eligible for NFIP coverage, including condominium and townhouse owners.
• NFIP building policies cover up to $250,000 of flood damage, and contents policies up to $100,000 for belongings inside the home (limits as published on FloodSmart when checked in November 2026).
• Building and contents coverage are typically purchased separately and have separate deductibles.
• Policy rates are unique to your location and needs and do not vary by insurance provider for NFIP policies.

Private flood insurance may also be available in some areas. Compare coverage and terms carefully if you are offered one.

Look up the flood zone

FEMA's Flood Map Service Center lets you search an address for its flood map. FloodSmart explains the zones in plain language:

• High-risk areas include zones beginning with A and coastal zones V and VE. In communities that participate in the NFIP, FloodSmart says flood insurance is mandatory for federally backed mortgages in these zones.
• Moderate- and lower-risk areas include zones B, C and X. FloodSmart says flood insurance is recommended.
• Zone D has possible but undetermined flood hazards. Flood insurance is recommended.

FloodSmart also states that everyone lives in an area with some flood risk; the question is whether it is high, moderate or low. Flood maps are updated over time, so check the current map rather than an old listing description.

Ask the seller and look around

Beyond the map:

• Ask the seller about past water in the home and any flood claims. Seller disclosure rules vary by state.
• Look at the inspection for signs of water entry, grading and drainage.
• Notice the home's position relative to nearby streams, low streets and drainage.

Fit it into your budget

Insurance is part of your monthly housing cost whether or not it is escrowed. Put real quotes, including any flood premium, into the payment worksheet and the cash-to-close worksheet. A home that fits your budget only without insurance does not fit your budget.

Before closing

• Bind the homeowners policy with an effective date of your closing date, and send proof to your lender.
• If flood insurance is required, ask the lender exactly what coverage amount they need.
• Make sure the lender's name appears correctly on the policy.
• Keep the policy documents with your closing papers.

Each year

Read the renewal notice. Check whether the premium, coverage or deductibles changed, and compare with other insurers if it rose significantly. Tell your servicer if you change insurers so escrow pays the right company.

Insurance terms and NFIP limits can change. Check FloodSmart and your insurer for current details.