If your home is located in a flood zone, your mortgage lender or financial institution may require you to have an active flood insurance policy as a condition of the loan. If this is the case with your home, you may not have the option to refuse flood insurance. On the other hand, if you own your home outright, neither home nor flood insurance are required, but if you refuse this coverage, you would have to pay for the full repair or replacement amounts out-of-pocket in the event of what would otherwise be a covered loss.