Flood Insurance 101: What You Need To Know
Do you have flood insurance?
FEMA (Federal Emergency Management Agency) notes that “floods are the most common natural disaster in the United States… There is a 26 percent chance of experiencing a flood during the life of a 30-year mortgage, compared to a four percent chance of fire.”
You don’t have to be directly on the coast or near water to experience flooding. Many conditions, such as heavy rains, hurricanes, and other weather events, can cause flash flooding and a rapid accumulation of water. While certain areas are prone to flooding, it can happen anywhere.
Though most lenders will require borrowers to have at least a basic level of homeowner’s insurance, damage from a flood is not typically included under this coverage. Even just inches of standing water in a home can require extensive repairs and renovations, which can be extremely costly if you have to pay for it all out of pocket.
Owning a home is often the biggest investment most people will make; flood insurance may be crucial to protecting this investment.
If you are considering flood insurance:
Know your zone
As mentioned, flooding is possible anywhere, but knowing if your home is more prone to flooding, in general, is important.
If you are considering buying a new home, get a general understanding of whether or not your area has flood zones that will require flood insurance. Click here to see what flood zone you are in, according to FEMA.
| Zone | Flood Insurance Requirements |
| Zones A, AE, A1-30, AH, AO, V, VE, V1-30 | These zones designate high-risk areas known as Special Flood Hazard Areas (SFHAs). Flood insurance is mandatory for structures with mortgages from federally regulated or insured lenders. Strongly recommended for all structures. |
| Zones B, C, X, shaded X | These zones designate moderate- to low-risk areas. Flood insurance is not federally required, but recommended. Some lenders may require flood insurance. |
| Zone AR | This zone designates an area where a levee is determined to no longer provide sufficient flood protection, but is in the process of being restored. Flood insurance is mandatory for structures with mortgages from federally regulated or insured lenders. Strongly recommended for all structures. Rates are the same as those in the B, C, X zones. |
| Zone A99 | This zone designates an area where a federal levee is under construction and can demonstrate adequate progress. Flood insurance is mandatory for structures with mortgages from federally regulated or insured lenders. Strongly recommended for all structures. Rates are the same as those in the B, C, X zones. |
It is possible that, if you are purchasing a new home, your lender will require you to obtain flood insurance from the outset. However, if you’ve been in your home for several years and the flood map has been recently updated you may not yet be covered.
Depending on where you find yourself using the tool above, you may benefit from adding a flood insurance policy to your homeownership arsenal.
Consider your coverage needs
Some flood insurance policies will cover the structure of your home but not any of the contents (such as some appliances, furniture and your personal belongings). This can leave homeowners in quite a predicament in the aftermath of a flood. Take time to consider your ability to replace these items out of pocket vs. obtaining a policy that makes allowances for such things when researching policies.
Additionally, if you are in an area that requires flood insurance, there may be steps you can take to lower your premiums. This could include adding special vents to your crawl space, elevating HVACs, furnaces and ACs, or even going as far as raising your entire home.
Think beyond your zone
As mentioned above, flooding is still possible even in areas outside of designated flood zones. Even if you are not in a zone that requires insurance, it may still be a good option for you if:
- Your house isn’t technically in a flood zone, but the zone line is next door or close by
- You live in an area that, while not coastal, experiences hurricanes on occasion
- Your mortgage has been paid off, but you are still in a flood zone
If you are NOT in a flood zone, flood insurance is typically a very inexpensive add-on that can give you peace of mind in the event of a natural disaster.
Talk to an agent or lender about your options
OVM’s Loan Officers are well-versed in working with insurance agencies to get borrowers covered. They’ll be able to walk you through the steps and documentation you’ll need, as well as direct you to a reputable flood insurance agency to help you protect your biggest investment.
Flooding can happen to anyone, so it’s best to be prepared. Give us a call today if you are considering flood insurance to talk over your options.
