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Commissioner Downing Advises Homeowners to Review Federal Flood Insurance Policy

Rule Change Could Save Homeowners Thousands of Dollars

A recent rule amendment by the Federal Housing Administration (FHA) gives homeowners living in special flood hazard areas (SFHA) the option to purchase private flood insurance plans on FHA-insured mortgages. This relieves homeowners of the previous restriction of only purchasing NFIP flood insurance through FEMA.

Under the 1973 Flood Protection Act, homeowners are required to purchase flood insurance if the property is located in an SFHA (100-year floodplain) as a condition of receiving a mortgage backed by the federal government. Programs included are:

• Federal National Mortgage Association (Fannie Mae)

• Federal Home Loan Mortgage Corporation (Freddie Mac)

• Department of Veterans Affairs

• Department of Agriculture

• Federal Housing Administration (FHA)

"Private flood insurance may be significantly cheaper and may provide more coverage than FEMA policies. Private market participation should drive lower premiums," Commissioner Downing said. "Homeowners should evaluate their flood risks and review flood insurance with their agent. Private flood insurance, in most cases, is available even if you're not in a floodplain."

The rule change takes effect on December 21, 2022. Homeowners can contact the CSI team at 406-444-2040 or by going to 

Troy Downing is the Commissioner of Securities and Insurance, Montana State Auditor. Commissioner Downing is a two-tour combat veteran, businessman, and entrepreneur.

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