Flood Insurance 101: Risk Zones, FEMA Rules, and Coverage Limits
Do I need Flood Insurance?
Technically, every home and business sits in a flood zone. The question is: how high is the flooding risk in that zone? If a flooding event occurs, the Army Corps of Engineers will map the entire community affected and place every property in a flooding zone with a specific level of risk. However, some properties sit in areas that are already identified as "high risk" or "moderate/low" risk for a flooding event. To determine if your property - or the property you are considering for purchase - sits in a currently defined flood zone, search the property address on FEMA's flood map portal: https://msc.fema.gov/portal/search
Properties located in "A" or "V" zones are HIGH risk.
Properties located in "B", "C", or "X" zones are MODERATE or LOW risk.
Can I be forced to purchase a flood insurance policy?
Yes, property owners may be required to purchase a flood insurance policy under the following circumstances:
If your property sits in a high risk flood zone and has a mortgage, the lender will require a flood insurance policy.
If your property sits in a moderate or low risk zone and has a mortgage, the lender has the right to require a flood insurance policy.
If you have applied for or have received federal disaster assistance for your property, FEMA will require you to purchase a flood insurance policy.
Why buy flood insurance instead of relying on federal assistance through FEMA?
In order to be eligible for FEMA assistance, the flooding event affecting your property must be declared a disaster by presidential order. Further, FEMA support is offered as a loan that must be repaid. And, any property owner receiving disaster assistance must maintain a flood policy until the loan is entirely paid in full. Flood insurance, however, provides financial assistance that does not need to be repaid and will cover flooding not caused by a federally-declared disaster (for example, when someone's car collides with the fire hydrant near your home.)
My property is in a "low" risk zone, why would I buy flood insurance?
Approximately 30% of flood claims filed annually in the U.S. are for properties located in "moderate" and "low" risk areas.
My property sits in an area that does not have a defined risk. What does that mean?
Your local area may be currently unmapped or undergoing a mapping review. Flood science - and weather patterns - are constantly evolving. Check with your local or county permitting departments as they may have more detailed mapping information for you.
Final facts to consider:
Properties located in "high" risk flood zones ("A" and "V") have a 26% chance of experiencing damage from flooding compared to a 10% chance of experiencing a house fire during the span of a 30-year mortgage.
Just 1" of standing water will cause an average of $26,807 in damage to the average single-family home. (Costs may vary according to state.)
Flood insurance is not designed to make clients "whole" and differs from home and auto insurance which provide enough financial assistance to fully replace a home or car lost in a catastrophic event. Flood insurance is a national insurance program, approved by Congress, that only provides enough financial assistance to help property owners get back on their feet after a flooding event. Throughout the U.S., the National Flood Insurance Program provides a maximum of $250,000 in claims coverage for a personal residence.
Flood insurance covers damage caused by the movement (flow) of water. It does not cover mudslides or landslides which are the movement of land or sediment.
Want to learn more about flood insurance options for your property? Just give us a call!