Did you know that flooding – not fires, hurricanes, or earthquakes – is the number one natural disaster in the United States?
In fact, last year, the average insurance claim for flood damage was $66,295 and claims added up to about $3.5 billion – a number that’s sure to keep increasing this year. You may think, “I don’t need flood insurance because I don’t live in a low-lying area or near a river.” But that could be a costly mistake considering that 20% of all flood insurance claims in Sacramento County occur in low-risk areas. Consistent with that statistic is Federal Emergency Management Agency reports, which show that 25% of all flood insurance claims are filed on homes and properties in moderate or low-risk areas. We often focus on insurance that covers us in case of a home fire (as we should), but over the course of the typical 30-year mortgage loan, there’s a 300% greater chance that you’ll have a flood in your home than a fire.
While we might think of Florida, Texas, and New Orleans, etc. as flood prone states, all 50 states have experienced floods or flash floods over the past 5 years. For that reason, there are currently 5.3 million flood insurance policies in force among 22,00 neighborhoods and communities across the U.S. With sudden, heavy rains, flash floods can cause walls of water as high as 10 to 15 feet. But remember that a car (and anyone in it) can be swept away by rushing water as little as two feet deep. However, it doesn’t take a huge hurricane or massive levee failure to cause catastrophic floods, either. Just a few inch rise in the water level can potentially cause tens of thousands of dollars in damage to a home. While hurricanes, unusually heavy rains, etc. are the biggest cause of floods, normal winter storms and snowmelt can also cause flash flooding.
New construction and development contribute to flooding, as well, since any time land is developed, altered, or deforested, the natural path for water runoff is changed, increasing the potential for flooding. So let’s look at flood insurance as a remedy for damage. Who might get flood insurance? When you buy or refinance your home, your mortgage lender may require you to have flood insurance if: • Your home or property is located in a designated high-risk flood zone or, • Your mortgage loan came from a federally regulated or insured lender (like FHA, VA, etc.) What about if your mortgage is already paid off, your paid cash for your home, or your lender doesn’t require flood insurance? The good news is that you can still get a flood insurance policy on your home. To be clear, we’re not talking about homeowners insurance, as most homeowner’s insurance policies DON’T cover you in case of flood damage. Nationally, the average flood insurance policy is only $700 per year, but if your home is located in a designated moderate or low-risk area, you may be eligible for coverage at an even lower preferred rate. So who determines where these low, moderate, and high-risk flooding areas exist?
FEMA, or the Federal Emergency Management Agency, maintains special Flood Insurance Rate Maps for cities, rural areas, and every community in between across the U.S. Drawing these maps with the help of the U.S. Army Corps of Engineers and local flood control authorities, FEMA designates each home to be within a high, moderate, or low risk zone for flooding. FEMA designates these zones by a letter, like A99, AR, AE, and AO, or B, C or X, etc. While you don't need to memorize all of these letter grades, of course, it is good to know that in California, most mortgage lenders won't require flood insurance if your home is in a B, C or X flood zones. Of major concern is the fact that Sacramento sits low because it’s in a valley, and at the junction of two major rivers with water tables regulated by levees. Levees are certainly not indestructible (as we saw with Hurricane Katrina in New Orleans) and can be overwhelmed past capacity during a storm or heavy rainfall. For that reason, the City of Sacramento, Sacramento County, and FEMA suggest Sacramento property owners who live near levees to carry flood insurance even if it’s not required. But the good news is that Sacramento has done a lot to improve its flood management protection recently – efforts that have been recognized and rewarded by FEMA.
In fact, effective May 2013, FEMA upgraded Sacramento County to a “3” rating, which is the second highest for any California community and puts us among the top 1% in the nation. Thanks to this upgrade in flood management protocols, unincorporated Sacramento County residents can receive up to a 35% discount on their flood insurance premiums. Additionally, the redrawing of the FEMA flooding risk maps means that about Sacramento properties were reassigned from high-risk A99 flood zones to moderate-risk X flood zones – which means the Federal government no longer requires them to keep flood insurance. So what happens if you don’t have flood insurance and your home ends up being damaged? Don’t expect a big bailout or free federal money to fix your property. In fact, a Federal disaster loan may be your only option, which has to be paid back, just like a second mortgage. Additionally, the federal government has to designate it as a flood disaster area for these loans to be available.
It's much wiser and safer to get covered proactively with a flood insurance policy. Just remember that policies don't start providing coverage for 30 days after they are written, so plan well ahead of the rainiest and wettest season here in Sacramento! How do you get more information on flooding in Sacramento County, as well as flood insurance? If your property is located within the City limits, please contact the City of Sacramento’s Floodplain Information line at (916) 808-5061.
If your property is located in the unincorporated area of Sacramento County, please contact the County’s Flood Zone Information Hotline at (916) 874-7517.
If you have questions about levees or general questions about flood insurance, please contact Sacramento Area Flood Control Agency at (916) 874-7606. Check out the National Flood Insurance Program’s website at www.floodsmart.gov. Contact your homeowners insurance agent to find out if you are adequately covered.