Between 1996 and 2019, 99% of counties in the United States experienced some kind of flooding.
That bears repeating: 99%. As in everywhere. Yet only about one in six American households have dedicated flood insurance.
Are you prepared and protected?
From hurricanes to flash floods, a tide of water-related disasters are making headlines around the world. In the U.S., 90% of all natural disasters involve flooding, making it the most common and the costliest type of natural disaster.
"Flood zones and insurance coverage might feel like a topic that's only discussed when you're purchasing a new home, but with the number of flood-related claims on the rise, it's an important topic for home and business owners everywhere to revisit regularly," said Kathy DeGrandchamp, risk management consultant with BOK Financial Insurance, Inc.
"It's important to realize that
So what is a flood zone?
The Federal Emergency Management Agency (FEMA) designates high-risk areas as flood zones (published in FEMA's Flood Insurance Rate Maps). If a property sits within a designated flood zone, property owners are required to carry flood insurance before they're able to secure a mortgage.
While there are private options for insurance, the most common is through the National Flood Insurance Program (NFIP), which provides eligible owners and renters access to purchase federally backed flood insurance.
And yet 25% of flood claims each year are for properties outside of those designated areas, DeGrandchamp said.
"Considering the increasing frequency and severity of storms in recent years, the increasing costs to repair and rebuild, it is prudent for consumers to consider some flood insurance coverage to protect their valuable assets and give them peace of mind," she added.
Consider your risk
Mortgage lenders are responsible for ensuring that borrowers hold a flood insurance policy if their property is included in a FEMA-designated flood zone for the duration of the loan, but DeGrandchamp recommends digging a little deeper. While a property may not technically require coverage, she said there's almost always a risk.
If you're looking to purchase a new home, real estate agents can help identify properties that fall under the flood insurance requirements as well. Designated flood zones can differ from street to street or neighborhood to neighborhood.
For homeowners, it's important to note that flood insurance is rarely included in your homeowners insurance policy. However, according to FEMA, in areas of high to moderate risk of flooding, there's a 26% chance of experiencing a flood over the term of a 30-year mortgage.
What counts as a flood?
"If you have a pipe burst inside your home or you have something that overflows inside your home, that does not constitute a flood," said Vicky Nelson, consultant for private risk and select business at BOK Financial Insurance. "But when the water source is coming from the outside, such as with a torrential downpour, storm surge or an overflowing river or lake, that would constitute a flood."
Personal home flood insurance from NFIP covers homes with $250,000 for the building and up to $100,000 for its contents. On average, just one inch of water inside a building can cause more than $25,000 in damage.
In addition to repair costs, the appropriate coverage can account for unexpected expenses related to a flood disaster as well, Nelson said. "Consider things like an alternate place to live during repairs or mold issues resulting from water damage. Those costs may be covered by flood insurance."
Business owners should also know that NFIP has commercial plans, which cover up to $500,000 for the building and $500,000 for the contents. But typically, businesses will opt for private flood insurance to meet their unique needs, DeGrandchamp said.
In either case, she said, it's time to check in with your insurance advisor. "The NFIP is announcing new rates in October for new policies and early next year for renewals," she said. "It's important to make sure your coverage is adequate for your home or business, and that you are getting the best rate."
Learn more about flood insurance through a short video series.