Flood Insurance for American Farmers and Ranchers

Flood insurance is a major part of American farmers and ranchers’ lives in large sectors of the rural United States. While more than 20,000 communities across the United States exist in current flood zones (placing them at varying risk for moderate to severe flooding), flood insurance is not included in most standard insurance policies. As such, farmers and ranchers living in flood plains and flood zones will need to contact private companies or government agencies in order to protect their businesses from potential flooding. Detailed flood maps from across the county can be obtained from the Federal Emergency Management Agency (FEMA) at this website and community-rating systems broken down by state can be obtained here.
All FDIC insured banks and lenders in the United States require flood insurance on all mortgaged buildings and improvements with-in a 100 year flood plain. For farmers and agricultural property owners, this means that any mortgaged buildings located within a 100 year flood plain and having a value of over $500 must have flood insurance up to the replacement value on it. This requirement is important to discuss with your lender prior to scheduling your property appraisal. If you have questions about flood insurance on the property you are planning to secure financing for or refinance, contact the team at Farm Plus Financial and we can evaluate whether or not you will need flood insurance for your property.
Depending on the on the flood zone type and the elevation of the improvement, flood insurance rates can range from reasonable to somewhat costly. If a building or improvement is not located with-in the 100 year flood plain, flood insurance is usually reasonable. While flood insurance needs to be purchased separately from other insurance policies, farmers living in high-risk areas have the opportunity to obtain flood insurance policies subsidized by the US federal government. The National Flood Insurance Program, created in 1968, was originally designed to protect at-risk communities from flooding by subsidizing insurance premiums. As of 2010, more than five million homes were protected with NFIP policies (with the majority of them in Texas, Florida, and other Gulf States).[1] When the program was first created, few private companies were willing to insure residences and businesses built in at-risk areas. While NFIP allowed many individuals to obtain affordable coverage, it also encouraged development in at-risk and vulnerable ecosystems (critics have pointed out that some currently insured buildings have been flooded dozens of times). After the devastation of Hurricane Katrina (and the expensive fallout of federally backed flood insurance), Congress moved to raise premiums, passing legislation allowing premiums to reflect the actual flood-risk. Ballooning insurance premiums, however, forced Congress to pass one of its few bipartisan bills, limiting annual policy increase to eighteen percent.[2]
NFIP (National Flood Insurance Program) coverage includes personal and business property up to $500,000. Buildings and property covered under the NFIP include all agricultural structures that are walled and roofed and exist primarily above ground. In addition, it covers buildings and structures being constructed via development loans (including a wide array of federal agricultural development loans). While federal flood insurance also includes personal property and residences, it does not include unimproved land, roads, and dams.[3]
For more information on Flood Insurance for American Farmers and Ranchers, contact Farm Plus Financial at 866-929-5585 to discuss whether or not you will need it for your loan.


[1] Institute for Policy Integrity, “Flooding the Market: The Distributional Consequences of the NFIP,” 4.
[2] Thomas Ferraro, “Flood Insurance Bill Wins U.S. House Passage,” Reuter, March 4, 2014.
[3] FEMA, “National Flood Insurance Program: Summary of Coverage for Commercial Property”; FDIC, “Flood Disaster Protection.”