Flood Zones & How They Affect Insurance

Flood Zones & How They Affect Insurance

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It's no surprise that some homes are at a higher risk of flooding than others — properties that are closer to the ocean or another body of water are more likely to suffer damage during a storm. To quantify this risk, the Federal Emergency Management Agency (FEMA) categorizes communities that have a higher risk of flooding into one of several flood zones. If your home resides in a high-risk flood zone, you may be required to purchase a flood insurance policy to qualify for some types of mortgage; doing so will protect you from financial loss, too.

How to find out your home's flood zone

FEMA maintains a Flood Insurance Rate Map (FIRM), which you can use to look up your property's flood zone. The agency updates the flood maps every five years, although they have sometimes fallen behind in that schedule. When a revision is made, you may find your home reclassified from one level of flood zone to another that confers either a higher or lower risk of flooding, according to the agency.

To look up the map for a specific address, visit FEMA's flood map lookup page. On the homepage, enter your property's address at the top of the page.

Be patient with this map and website, as it can sometimes take a little while to load. Once it has finished loading and you can see your address on the map, your flood zone will be displayed in close proximity.

What do flood zones mean in terms of risk?

Flood zones indicate the likelihood of a flood occurring in a particular area. Even in the most flood-prone communities, the likelihood of flooding in any given year are low — between 0.2% and 1.0%. However, a 1% annual risk translates into a 26% chance of being flooded at least once over the 30-year lifetime of a mortgage.

Flood ZoneFlood RiskFlood SourceFlood Insurance Available/Required?
B and X (shaded)Moderate. 0.2% - 1% chance in any given year.Undefined lesser hazards.Available, Not Required.
C and X (unshaded)Moderate. < 0.2% chance in any given yearUndefined lesser hazards.Available, Not Required.
A, AE, AR, A1-30, A991% annual chance of flooding and 26% chance over the lifetime of a 30-year mortgage.Undefined.Available & Required.
AH1% annual chance of flooding and 26% chance over the life of a 30-year mortgage.Ponds and other sources of shallow flooding.Available & Required.
AO1% annual chance of flooding and 26% chance over the lifetime of a 30-year mortgage.Rivers or streams.Available & Required.
V, VE, V1-V301% annual chance of flooding and 26% chance over the lifetime of a 30-year mortgage.Coastal areas, associated with storm waves and other hazards.Available & Required.

Keep in mind that these percentages reflect the odds of flooding for your area as a whole, not your individual home. Your personal exposure to flood risk depends on the severity of the flood, your home's location in the zone and the level of flood protection you've added to your home.

NFIP flood insurance is available to all residents living in the flood zones listed above. You can also buy a policy from a private insurer, but private insurers may not offer coverage to homeowners in the highest-risk areas. The National Flood Insurance Program (NFIP), a division of FEMA, will sell a policy to any homeowner regardless of risk. Many mortgage lenders require that you purchase a policy if you own a home in any zone more hazardous than B, C or X.

How flood zones affect home insurance costs

The type of flood zone you live in has a huge effect on the price of your flood insurance. In the most extreme cases, you may pay more than 300% as much to insure a house in a Zone A area than a Zone V one.

As with all lines of insurance, the greater the chance of a loss happening, the more an insurer will charge to cover that loss. Homeowners who find these rates to be exorbitant can seek out alternatives from private flood insurers.

Here are some sample rates for an NFIP flood insurance policy sold in Pennsylvania.

Zone

Rate per $100 Building CoverageRate per $100 Contents Coverage
V, VE, V1-V30$1.30$2.00
A, AE, A1-A30, AO, AH (No BFE)$0.59$1.00
A, AE, A1-A30, AO, AH (BFE 0)$0.59$0.30
A, AE, A1-A30, AO, AH (BFE* 1 or Greater)$0.29$0.21
B,C, X$0.10$0.14

*Base Flood Elevation

If a home straddles two or more flood zones, the insurer will rate the premiums based on the most hazardous zone.

To better illustrate the impact your flood zone has on your monthly premium, we calculated the annual cost for a sample home built in 2000 and requiring $250,000 in structural coverage and $100,000 of contents coverage. The policy has a $1,000 deductible.

Zone

Annual Premium
V, VE, V1-V30$6,987
A, AE, A1-A30, AO, AH (No BFE)$3,296
A, AE, A1-A30, AO, AH (BFE 0)$2,365
A, AE, A1-A30, AO, AH (BFE 1 or Greater)$1,248
B,C, X$523

Joe Resendiz

Joe Resendiz is a former investment banking analyst for Goldman Sachs, where he covered public sector and infrastructure financing. During his time on Wall Street, Joe worked closely with the debt capital markets team, which allowed him to gain unique insights into the credit market. Joe is currently a research analyst who covers credit cards and the payments industry. He earned a bachelor’s degree from the University of Texas at Austin, where he majored in finance.

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