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. 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 — usually 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 zone
Flood risk
Flood source
Flood 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% or greater 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 living in one of the flood zones, regardless of risk.

However, you must purchase a policy if you have a federally backed mortgage on a home in any zone more hazardous than B, C or X. The policy can come from the NFIP or from a private insurer that meets federal standards.

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, a home in a V zone can cost 100% or even 200% what it costs to insure a home in a B, C or X zone. If a property covers two or more flood zones, the insurer will rate the premiums based on the most hazardous zone.

Zone
Building coverage (rate per $100)
Contents coverage (rate per $100
A99, B, C, X$1.12$1.73
AO, AH$0.30$0.38
AE, A1-A30 (+1 above BFE)$0.80$0.41
AE, A1-A30 (0 above BFE)$1.79$0.77
AE, A1-A30 (-1 below BFE)$4.40$1.8
VE, V1-V30 (+1 above BFE)$2.68$1.95
VE, V1-V30 (0 above BFE)$3.29$2.55
VE, V1-V30 (-1 below BFE)$4.04$3.29

Base Flood Elevation.

Another factor that impacts flood insurance costs is its base flood elevation (BFE). The BFE is the elevation at which the NFIP estimates there is a 1% chance of floodwaters reaching or surpassing in any one year. We found that rates for a property in the same flood zone but with a different BFE can differ by nearly $600 a year.

Zone
Annual Premium
A99, B, C, X$4,530
AO, AH$1,130
AE, A1-A30 (+1 above BFE)$2,410
AE, A1-A30 (0 above BFE)$5,245
AE, A1-A30 (-1 below BFE)$12,800
VE, V1-V30 (+1 above BFE)$8,650
VE, V1-V30 (0 above BFE*)$10,775
VE, V1-V30 (-1 below BFE)$13,390

An elevation certificate features your property's BFE and other information that determines its risk. Without an elevation certificate, your insurance agent will not be able to adequately assess risk and will charge you more expensive rates to compensate.

For example, if you have an elevation certificate — and your Zone AO or AH property was built after the first flood map for your community went into effect (usually 1974) — rates are $0.30 for every $100 of building coverage and $0.38 for every $100 of contents coverage.

Without an elevation certificate, rates for these same properties are $1.71 for building coverage and $0.84 for contents coverage — a 470% and 121% increase, respectively.

Risk Rating 2.0 and flood map changes

FEMA works to improve flood maps every year, and property owners and communities can ask the agency to change their flood zone designations. New York City, for instance, successfully petitioned FEMA to revise flood maps after a third-party analysis in 2016, saving many city property owners expensive flood insurance rate hikes.

Given that more than 20,000 communities use these maps to determine flood risk, however, and that FEMA operates under significant budgetary limitations, this revision process is slow. A physical map revision (PMR), one of FEMA's methods to update flood maps, can take up to a year and a half.

Starting in October of 2021, FEMA and NFIP plan to implement a new methodology** called Risk Rating 2.0. This new method will set flood insurance rates based on an individual property's risk instead of determining risk by the property's location on a flood map. This system is intended to address the growing demand for a resilient system capable of meeting the challenges of climate change.

The flood map methodology represents a significant step forward for the flood insurance industry as it has remained essentially the same since its original development in the 1970s, even as technology advanced and awareness of climate change grew. Risk Rating 2.0 will harness new technology, powered by data sets from FEMA, other federal agencies and third-party contributors, to give homeowners rates that more accurately reflect their risk.

FEMA continues to work on its actuarial tables and cannot yet offer policyholders an estimate of how this new method will impact rates. The rates described in the above are subject to change as the agency switches to Risk Rating 2.0.

Methodology

To calculate flood insurance premiums, ValuePenguin used the "basic" rates (as opposed to the "additional" rates) from the tables published by FEMA. These rates are scheduled to go into effect on either April 1, 2021, or January 1, 2022; implementation date varies by flood zone.

Our sample property was a single-family home built in 2000 with more than one floor and no basement or enclosure. It requires $250,000 of building coverage and $100,000 of contents coverage — the maximum amount available from the NFIP. The rates displayed for Zones VE and V1-V30 are for an elevated building free of obstruction and have a replacement cost ratio of 0.75 or more.

We did not factor in other elements that could raise or reduce rates, such as a discount for a deductible or Community Rating System, a probation surcharge or Federal Reserve Fund assessment or a Federal Policy Fee.

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