You can get many of your questions answered by going to the web sites www.floodsmart.gov or http://msc.fema.gov.
Flood zone designations X are considered minimal risk, lenders do not require flood insurance.
Flood zone designations A, AE or V are considered flood zones and lenders will require the home owner to carry flood insurance. A does not have a base flood elevation completed, AE has base flood elevation information available. V zones are coastal high velocity zones.
Base Flood Elevations (BFE) are the key to the new flood insurance rates that went into effect as a result of the bill passed by Congress this year to revise the "new" flood insurance reform bill of 2012. Homes built pre-1974, or PreFIRM, are the ones that have been receiving subsidized flood insurance rates for decades. Those are the ones most impacted by the revised flood insurance program.
Congress did just pass legislation that would cap the annual rate increases to 15% per year for primary residence owners & 25% per year on non-primary residences, but insurance rates will keep increasing on an annual basis for those properties until the owners are paying non-subsidized rates. To cover the cost of the changes to the flood insurance program, all flood insurance policy holders will also pay a $25/year surcharge on residential policies and $250/year surcharge on all non-primary residences and commercial properties.
Condos/townhomes that are within flood zones may be required to carry flood insurance on the buildings, depending on how the condo association documentation was set up. The flood insurance rates for condos will also be influenced by year of construction. The main difference is that the flood insurance costs would be shared by all unit owners through the monthly maintenance fees vs a single family home owner bearing the full cost of the insurance premium.
If you are considering the purchase of an older home (preFIRM), the best advice I can give is to contact at least one or two local insurance agents and get quotes for the current cost of flood insurance before you write an offer. Also, keep in mind that the current rates will be increasing (possibly significant) over the next few years under the recent changes to the flood insurance program.
If you are paying cash and are willing to self insure (ie assume all risk for flood water damages to your home as your hazard insurance will not cover flood damage), then you can assume that risk.
Anyone thinking of purchasing a home or commercial property located within a designated flood zone should definitely do more research before writing an offer.
Diane Christner, Realtor, GRI, SFR