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Iowa City participates in the National Flood Insurance Program (NFIP), which makes federally-backed flood insurance available for all eligible buildings, whether they are in a floodplain or not. Iowa City also participates in the Community Rating System (CRS) and has earned an automatic 20% discount on flood insurance premiums for structures in the 1% annual-chance flood hazard area.
The NFIP insures commercial and residential buildings, including mobile homes, with two types of coverage: building and contents. Building coverage is for the walls, floors, insulation, furnace, and other items permanently attached to the structure. Contents coverage may be purchased separately, if the contents are in an insurable building.
Flood hazards in Iowa City
There are two designated flood hazard areas in Iowa City: the 1% (or 100-year) and the 0.2% (or 500-year). Over the life of a 30-year mortgage, there is a 26% chance that a home in the 1% flood hazard area will flood. Over the same period of time, there is a 6% chance that a home in the 0.2% flood hazard area will flood.
Loans, assistance and Federally-mandated flood insurance
Since 1973, flood insurance has been mandatory for federally-backed mortgages on buildings that are located in a Special Flood Hazard Area (SFHA). The SFHA is the 1% flood hazard area that is illustrated with an “A” on Iowa City’s Flood Insurance Rate Map (FIRM).
The mandatory purchase of flood insurance for homes in the SFHA applies to loans from financial institutions that are regulated, supervised, or insured by Federal agencies. It also applies to mortgage loans purchased by Fannie Mae or Freddie Mac in the secondary mortgage market.
The mandatory purchase of flood insurance for homes in the SFHA applies to financial assistance programs from federal agencies such as the Department of Veterans Affairs, Farmers Home Administration, Federal Housing Administration, Small Business Administration and FEMA.
How it works: Lending institutions
When you approach a federally-insured lender to get a mortgage, credit loan or home equity loan, or to re-finance an existing loan, that lender is required to complete a Standard Flood Hazard Determination (SFHD) form. If the determination finds that a building is in an SFHA, the lender is obligated by law to require that the building be insured against flood. Federal regulations require that the coverage be equal to the amount of the loan for the structure, or the maximum amount of insurance available from NFIP (whichever is less).
Some lenders require flood insurance coverage equal to the value of the structure – not just the loan amount. While this may exceed the federal regulation, it is the right of a mortgage lender to require more insurance than the federally-defined minimum. Similarly, it is the right of a mortgage lender to require flood insurance for structures that are in the 0.2% (aka 500-year) floodplain.
The mandatory purchase requirement does not affect loans or financial assistance for items such as vehicles, business expenses, landscaping, and vacant lots. It does not affect loans for buildings that are not in an SFHA.
Appealing the requirement for flood insurance
If you believe that an SFHD form has incorrectly placed a building in the SFHA, you may request a Letter of Determination Review from FEMA. This must be submitted within 45 days of the determination. If FEMA determines that the SFHD is valid and you still believe the determination to be in error, you may apply for a Letter of Map Amendment (LOMA).
Floodplain maps can be viewed here.
If you have questions or need more information, call Julie Tallman, Certified Floodplain Manager, at 319-356-5132.