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Know Your Flood Risk: Homeowners
Flooding is the most costly and repetitive natural disaster affecting the United States. During the life of a 30-year mortgage, there is a 26-percent chance that a home or business located in a mapped floodplain will flood, according to FEMA.
High Risk
High risk flood zones are denoted on the FIRMs by Zones A, AE or AH. If you live in a high risk area, you will be required to purchase flood insurance. You will also be required to get an elevation certificate to determine the elevation of the lowest enclosed floor and the Base Flood Elevation. This is the only way a flood insurance agent can determine your premium.
Moderate to Low Risk
Moderate to low risk flood zones are indicated by Zone X. If your home is located in this area, there is no technical requirement for flood insurance, but your lender may require you to purchase flood insurance in order to protect the lender's investment.
High Risk
High risk flood zones are denoted on the FIRMs by Zones A, AE or AH. If you live in a high risk area, you will be required to purchase flood insurance. You will also be required to get an elevation certificate to determine the elevation of the lowest enclosed floor and the Base Flood Elevation. This is the only way a flood insurance agent can determine your premium.
Moderate to Low Risk
Moderate to low risk flood zones are indicated by Zone X. If your home is located in this area, there is no technical requirement for flood insurance, but your lender may require you to purchase flood insurance in order to protect the lender's investment.
The Basics of Flood Insurance
- Most homeowners insurance policies do not provide coverage for damages due to flooding.
- Flood insurance is available through the National Flood Insurance Program, but can only be purchased through a licensed insurance agent. Rates are set by the NFIP and do not differ from company to company or agent to agent.
- Manhattan is part of the Community Rating System, which recognizes the community's efforts to implement effective floodplain management practices. As a result, Manhattan homeowners automatically qualify for a 10-percent discount. The average property owner saves approximately $73 per flood insurance policy per year.
- There is typically a 30-day waiting period for flood insurance policies to take effect. Don't wait until a flood occurs to try to get flood insurance.
- The average flood insurance premium is approximately $735 per year; however, lower cost policies are available for homes in moderate and low risk areas. Coverage for a homeowner's building and contents can be purchased for as little as $129 a year.
- Recently, the federal government enacted changes to the National Flood Insurance Program through the Homeowner Flood Insurance Affordability Act that was signed into law on March 21, 2014. FEMA has created a fact sheet to summarize the act. You should contact your flood insurance provider to determine how these changes will affect you.