Flood insurance: Are you in the zone?

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One common misconception is that flood coverage is part of homeowners insurance. It’s not. There’s also confusion about what it means to live in a flood zone and who should get flood insurance.

The Federal Emergency Management Agency (FEMA) estimates that 90 percent of all natural disasters in the U.S. involve some type of flooding. That includes inland flooding, flash floods, and flooding from seasonal storms.

No area is deemed safe from flooding, though it’s more prevalent in certain regions. The Insurance Information Institute (III) reports that 20 percent of all flood claims come from low to moderate flood risk areas.

“Floods are the nation’s most common and costly natural disaster and cause millions of dollars in damage every year,” says Janet Ruiz, director of strategic communications at III. “Floods cost America, on average, $8.2 billion each year (according to 2015 data). Recovering from just one inch of water inside your building can cost about $27,000.”

Key Takeaways

Flood insurance provides protection from flooding that stems from outside your home.
Home insurance may cover water related damage from bursting pipes or overflowing tubs/sinks, but does not cover weather-related flooding.
The average flood claim is more than $90,000.
Determine your flood zone and risk, but nearly everyone should consider purchasing flood insurance

On this page, we’ll review the issues of flood insurance and flood zones so you can figure out whether you need the coverage:

What is flood insurance?
What’s a flood zone?
Types of flood zones
Who should get flood insurance?
Limited government economic protection
Recovering from a flood

What is flood insurance?

Flood insurance covers you if you experience a flood from outside your home.

Meanwhile, homeowners insurance typically covers water-related damage from burst pipes or overflowing toilets, tubs, and sinks. You’ll likely get covered if your dishwasher explodes and shoots water and macaroni shells all over your kitchen, too. Also, if a thunderstorm blows the roof off your house and the rain damages the inside of your home, a homeowners’ policy probably covers you.

Think of it this way: homeowners insurance covers you if the damage comes from water from the sky or within your home. If it comes from the earth, such as from rivers, creeks, oceans, and flash flooding, you’ll need flood insurance.

The FEMA’s National Flood Insurance Program (NFIP) administers most flood insurance policies. Insurers can contract with FEMA to provide flood coverage.

Federal flood insurance is available “where the local government has adopted adequate floodplain management regulations under the NFIP — and many communities participate in the program,” III says.

According to III, in 2017:

The average annual flood insurance premium was $707
The average amount of flood coverage was $252,261
The average flood claim was $91,735, up from $62,247 the previous year
There were more than five million flood insurance policies.
Policies shelled out a little more than $8.7 million in flood loss insurance payments.

Loretta Worters, vice president of media relations at III, says the cost of flood insurance cost depends on many factors. That includes where you live. If your home is located in a low-to-moderate risk area, you’re eligible for Preferred Risk Policy (PRP) rates.

“These are standard for the amount of coverage you desire and come with a minimum $1,000 deductible. It also depends on if you have a basement or if you have to have your home elevated,” says Worters.

What’s a flood zone?

One aspect that influences flood insurance cost is your flood zone.

A flood zone is a geographic area that is more at risk than others for flooding, as determined by varying levels by FEMA. The zones are depicted on a Flood Insurance Rate Map (FIRM) or Flood Hazard Boundary Map and reflect the severity of flooding in that particular area.

Michael Hart, FEMA spokesperson, explains that flood zones are one of several pieces of information that work together to depict risk on a flood map. The NFIP makes flood insurance available to all property owners and renters in participating communities, even those in moderate- to low-risk zones.

“The flood zones identified on maps are designed to inform flood insurance rates and requirements and provide a basis for sound local floodplain management in high-risk areas. The maps show a minimum standard; they don’t show everywhere that it can flood,” Hart says.

You can refer to these flood maps to learn about flooding sources and other nearby hazards and to plan development, flood insurance, and hazard mitigation solutions to protect yourself and your property. Flood maps also provide a way to learn about your area’s flood control structures. That includes levees, which provide some protection from flooding.

Hart says FEMA uses science and technology to figure out zones. Flood maps are developed using:

Statistical information, such as hydrologic and hydraulic analyses
Data for river flow, storm tides, and rainfall
Topographic surveys

FEMA, the state, and community, as well as tribes and regional organizations, collaborate to create flood maps. Many factors drive map revisions, including construction projects, surface erosion, or the impact of natural events that affect the community’s floodplains.

“At any time, community officials can submit scientific or technical data to FEMA, and, provided it meets FEMA’s standards, it will result in a local flood map revision. FEMA encourages communities that participate in the National Flood Insurance Program to submit technical data that may influence the depiction of the flood hazard, as they are best able to monitor local development that happens in or near the floodplain,” Hart says.

You can hop online and go to FEMA’s Map Service Center to look at the official flood map, find flood hazard products, and use tools to understand flood risk better. You can plug in an address, a place, area of interest, or even longitude/latitude coordinates to research products in the area and its history.

FEMA is tasked with updating the flood map every five years. Any changes or updates made to these flood maps are the result of three primary methods:

A FEMA-initiated study or restudy of flood hazards
A community-initiated revision of the NFIP regulations
A Cooperating Technical Partners (CTP) initiative

When FEMA makes changes, your property’s classification may shift. You may wind up with a higher risk classification or a lower one. That re-classification could result in being required to get flood insurance — or pay more or less for coverage.

Types of flood zones

FEMA classifies risk by using three overarching flood zones based on the likelihood of flooding in that area.

There are three overarching types of flood zones:

High-risk or Special Flood Hazard Areas are letters A or V — flood insurance is federally required. Zone V is the most hazardous flood zone, and it is usually found in beachfront and coastal areas.
Moderate risk areas are Zones B and X.
Low-risk areas are Zones C and X.

Now, let’s dig deeper into the zones.

High-risk coastal: The Vs

Flood insurance is mandatory for coastal areas designated Zone V.

Zone V: These are coastal areas that have at least a 1 percent or greater chance of annual flooding. This zone also has the additional hazard of storm waves. During a 30-year mortgage, Zone V properties will have at least a 26 percent chance of flooding.
Zones VE and V1-V30: These zones have at least a 1 percent or greater annual chance of flooding, as well as the potential for storm wave hazards. There is at least a 26 percent chance of flooding throughout the course of a 30-year mortgage. Zones VE and V1-V30 are differentiated from other high-risk coastal zones because of detailed analyses conducted on base flood elevations.

The As are “high risk”

As with Zone V properties, flood insurance can be mandatory for homes in Zone A. High-risk zones are designated with the letter A and further broken down into the following classifications:

Zone A: These areas have at least a 1 percent annual chance of flooding. Over the course of a 30-year mortgage, properties in Zone A have at least a 26 percent chance of flooding.
Zones AE and A1-A30: Like Zone A, these areas also have at least a 1 percent annual chance of flooding, as well as at least a 26 percent chance of flooding during the course of a 30-year mortgage.
Zone AH: Properties in this zone are at risk of shallow flooding with average water depths from one to three feet. As with other A zones, there is at least a 1 percent annual chance of flooding and at least a 26 percent chance over the course of a 30-year mortgage.
Zone AO: These areas pose a river or stream flooding hazard or have greater than a 1 percent annual chance of shallow flooding at average water depths of one to three feet. There’s also at least a 26 percent chance of flooding over the course of a 30-year loan.
Zone AR: Unlike other A zones, these areas have only a temporarily increased risk of flooding. Generally, they are located in an area where a flood-control system, such as a levee or dam is being constructed or restored. While flood insurance is still mandatory for these areas, premium rates may be capped.
Zone A99: These regions have at least a 1 percent annual chance of flooding but will also benefit from a federal flood-control system once development reaches a certain level.

Zones B, C, and X: moderate to low risk

Zones designated as B, C, or X fit one of the following criteria:

Areas with less than 1 percent annual chance of flooding.
Areas with a 1 percent annual chance of sheet-flow flooding and average water depths of less than one foot.
Areas with a 1 percent annual chance of stream flooding and drainage areas of less than one square mile.

While flood insurance may not be required in these zones, you can buy coverage to protect your home and assets in the case of a catastrophic flooding event.

Undetermined: D

There’s one more flood zone to review:

Zone D: If your property has been designated Zone D, there has been no flood hazard analysis conducted for your area. There may be the possibility of flooding, but the risk has not yet been determined.

Floodplains across the nation are both unique and dynamic, and the maps that depict them represent a snapshot in time, according to information provided by FEMA. You can learn more about flood zones on FEMA’s Map Service Center by calling the FEMA Map Information eXchange, toll-free, at 877-FEMA-MAP.

Who should get flood insurance?

Everyone should at least explore whether flood insurance makes sense for them. Experts at the NFIP have a mantra: “Everyone lives in a flood zone.”

“Homeowners, renters, and businesses should get flood insurance,” Hart says. “Every state and 98 percent of counties have experienced a flooding event, and FEMA estimates that more than 95 percent of residences do not carry a flood insurance policy, leaving entire households and communities financially vulnerable to floods.”

Why get flood insurance? FEMA offers four reasons:

Insured survivors can begin their recovery more quickly than their uninsured neighbors.
Insured survivors don’t have to wait for, or worry about, federal disaster declarations for access to aid.
Insured businesses can open their doors and get back to work faster.
Communities with insured survivors and insured businesses come back faster and more completely because they’ve built their resilience to disasters.

But, of course, those who live in areas of higher risk not only should consider it; mortgage lenders require coverage for those who purchase homes in designated flood plains to buy flood insurance. Most lenders won’t require you to get flood insurance if you’re not located in these designated areas, but remember that III says more than one-fifth of claims for flood damage originate in homes that are in low-to-moderate risk areas.

“Yes, everyone should purchase flood insurance,” stresses Ruiz. “Floods can happen anywhere.”

Who sells flood insurance?

You can only purchase flood insurance through an insurance agent or insurer participating in the NFIP. You can contact the NFIP referral call center at 800-427-4661 to request an agent referral.

“Start with your homeowner insurance company, which can help you to obtain flood insurance,” says Ruiz.

The NFIP provides coverage for:

Up to $250,000 for the structure of the home
Up to $100,000 for personal possessions.

Private flood insurance is available for those who need additional insurance protection. It’s known as excess coverage. The private insurance covers over and above the basic policy or for people whose communities don’t participate in the NFIP.

Ruiz says it’s a good idea to get excess coverage if your home would cost more than $250,000 to rebuild.

“If you’re a new homeowner, you need to be aware of what the risks are in your community to flood. Also, Congress has mandated federally-regulated or insured lenders to require flood insurance on mortgaged properties that are located in areas at high risk of flooding. But even if your property is not in a high-risk flood area, your mortgage lender may still require you to have flood insurance,” Ruiz says.

There are 59 private participating insurance companies in the Write-Your-Own (WYO) program that sell and service the NFIP policies through insurance agents. Flood insurance is also offered directly through the NFIP by the NFIP Direct.

There are approximately 5 million policyholders nationwide. The NFIP is the nation’s largest single-line insurance program, providing nearly $1.3 trillion in coverage against flood.

Limited government economic protection

We interviewed Dr. Xiao, Associate Professor in the Toulan School of Urban Studies and Planning at Portland State University, to understand government efforts to minimize economic impact from natural disasters, such as floods.

Yu Xiao

Associate Professor, Urban Studies and Planning, Portland State University

Resilience is not the only goal, sometimes it’s competing with economic development and that’s kind of a secondary goal.

Q. What does the federal government do to protect the economy from the impact of natural disaster?

A. Professor Xiao explains that “government is not really doing too much.” She describes a balancing act between wanting people to be prepared without causing a community to feel too unsafe. Xiao notes that the Federal Emergency Management Agency, FEMA, must collaborate with state and local government offices and there can be opposing objectives. “Resilience is not the only goal, sometimes it’s competing with economic development and that’s kind of a secondary goal,” observes Xiao. “In reality, how much funding are you going to use for mitigation and reinforcing buildings? That’s a strategic choice. Whether that’s enough or how much should be in [the government’s] everyday operations is a big question mark.”

Recovering from a flood

Xiao notes that there are different factors that can contribute to flooding. Heavy rainfall resulting in a river flooding into a nearby community can create serious but localized damage whereas floods caused by hurricanes can create widespread havoc.

Q. What factors influence a community’s ability to bounce back after a flood?

A. Xiao explains that a community’s structure and mix of businesses can make it easier or harder to recover after a flood. “If a place has more manufacturing businesses, they tend to be more resilient than, for example, retail businesses because inventory can be so badly damaged, as well as the infrastructure,” Xiao observes. “There is research that shows when you have more diverse sectors, you probably see more resilience in the local economy.”

The level of damage contributes to recovery speed. According to Xiao, “When one sector or major industry gets hit really hard, it makes it difficult for the community to bounce back.”

People are also an important element to flood recovery. “Do they want to come back and rebuild or does everyone want to move away?” There can be politics involved, particularly when buyout programs are available. In cases where most in an area prefer to “take the money and leave,” Xiao finds that the community may shrink in size.

To inquire about purchasing a flood insurance policy whether you’re in a high-risk flood zone or not, contact your local agent, visit FloodSmart.gov or call the NFIP help center at 800-427-4661.

Charlene Arsenault

Public Relations Associate

Charlene Arsenault is a seasoned journalist with more than 30 years experience in both print and online media, covering topics that range from human interest to arts and entertainment to hard news. Over the past decade or so, her efforts and concentration have shifted to the public relations sector, both as a PR associate for QuinStreet and as the founder and president of the animal welfare nonprofit Pet Rock Fest, Inc.