If you do not personally know someone who has been impacted by a flood, you have no doubt seen images of the impact of flooding—video and pictures of raging torrents of water wiping homes off their foundations or low-lying suburban streets turned into still, brown canals while families wade through the water or wait patiently for help atop their roofs. As vital as water is to existance, it can also transform into a fast moving threat to property and life. From the slow advance of accumulated runoff to the speed and ferocity of a flash flood, the end result is the same—labor intensive and costly cleanup followed by the long and arduous task of rebuilding and returning to normal life.

What many people do not realize is that it isn’t only residents of coastal regions that are impacted by floods. In fact, the National Flood Insurance Program (NFIP) states that last year one-third of flood claims paid by the NFIP were for homes in low-risk communities. A flash flood can occur anywhere a large volume of rain falls within a short time. Also, with the decrease in forests and grassy areas, the land’s natural ability to absorb rainfall is decreasing. The NFIP adds the following statistics regarding residential flooding:

• Flash floods happen in all 50 states.
• Between 1997 and 2006, the average claim amount paid was $46,168.
• Your home has a 26% chance of being damaged by a flood during the course of a 30-year mortgage, compared to a 9% chance of fire.

The NFIP defines a “flood” as a temporary condition of partial or complete submersion of normally dry land or property from an excess of water or mud.

For many homeowners, flood insurance isn’t a choice—it is a necessity. According to the NFIP, if you have or are trying to get a federally backed mortgage on a home located in a high-risk area, you are required by federal law to purchase flood insurance. If you have received a federal grant for previous flood losses, you must also have a flood insurance policy to qualify for future aid.

For your own safety and the safety of your family, you should be aware of the flood zone status of your home. If you own your home or are about to purchase one, knowledge of the flood zone designation is ultimately your responsibility. If you are buying a home, verify the property’s flood zone designation with the bank, your mortgage lender, and your homeowners insurance carrier. Make certain all parties involved are stating the same flood zone designation. Then, as added verification, you can check the flood zone map of your property on your own by visiting the Federal Emergency Management Agency’s (FEMA) website at www.fema.gov. Choose the “flood maps” option from their “flood” category and then enter the address of the property to view the flood zone designation for your property and the neighboring vicinity.

For those about to purchase a home, it is important to note that there is a wide cost variation between the yearly cost of a “preferred” flood policy, which applies to lower-risk areas, and a “standard” flood policy, which applies to high-risk flood zone areas. It is possible for neighbors living next door to each other to fall under different flood zone designations. Yearly flood insurance can range from $300 to $1700 per year. Since insurance is factored into many mortgage payments and is held in escrow, the flood insurance required on your mortgage could be as little as $25 per month or as much as $140 per month. That amount is in addition to your mortgage principal, interest, regular homeowners insurance, and any private mortgage insurance that you may be required to carry. Also keep in mind that a flood insurance policy does not go into effect until 30 days after it is purchased. Therefore, if a policy is required on a property you are in the process of buying, schedule the flood insurance purchase so the policy is in effect at the time you anticipate closing.

The NFIP notes that everyone lives in a potential flood zone and that most homeowners insurance does not cover flood damage. When just an inch of water can cause costly damage to your property, you owe it to yourself and your family to educate yourself on flood insurance. After all, “an ounce of prevention is worth a pound of cure.”

Consult with your financial advisor, insurance agency, or mortgage lender concerning any questions or concerns regarding flood insurance requirements for your property.

Sources:
National Flood Insurance Program:—www.floodsmart.gov

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