What is a flood?

Floods: Nature's Most Common Disaster

Every year, flooding impacts thousands of property owners across the United States. Most of them don't expect it because their property "isn't in a flood zone."

The truth is: Everyone lives in a flood zone.

Just because a property has a low risk of flooding doesn't mean there's no risk.

• Flooding can happen anywhere at anytime, whether it's a flash flood from heavy rains in the desert, an overflowing river, or simply water with nowhere to go because of urban construction.
• One in four insurance claims for flood damage comes from low-to-moderate risk flood zones.
• Properties in high-risk flood zones have a 26% chance of flood damage over the period of a 30-year mortgage.

Flooding has many causes.

Properties don't have to be near bodies of water to be at risk for flooding. Besides overflowing lakes and rivers, causes of flooding include:

• Heavy rainfall
• Melting snow
• Coastal storm surge
• Tidal activity

Put simply, a flood is an excess of water (or mud) in an area that's normally dry.

Return to Top

How does the federal government designate flood zones?

How Flood Zones Are Mapped.

Over the past several decades, the Federal Emergency Management Agency (FEMA) has compiled the results of extensive flood studies into more than 100,000 Flood Insurance Rate Maps. Covering all U.S. communities, these maps project the level of flood risk for any given area and assign a flood zone designation as well as insurance premium rates.

The highest risk areas are called Special Flood Hazard Areas (SFHAs). These areas are part of the so-called "100-year-floodplain"—but that doesn't mean they flood every 100 years. It means that an area has a one percent or greater annual chance of flooding. In fact, some geographic areas have had multiple "100-year" floods several years in a row.

Return to Top

What is the impact of FEMA's remapping?

How a Property's Flood Risk Can Change.

Many of the nation's Flood Insurance Rate Maps have become outdated due to urban development, changes in natural landscapes, and other factors. While some maps have been updated at various times, many are 10, 15, even 20 years old.

In 2005 FEMA began the Map Modernization Initiative, a massive, multi-year project of re-examining the nation's flood zones and issuing new maps. The new maps will be based on more accurate, current data and employ the latest mapping technology.

New Flood Insurance Rate Maps have already been issued for many communities, and additional maps will be completed throughout the course of the project.

FEMA estimates that in 2007, 26% of the U.S. population will live in communities slated to receive new flood maps, and another 19% in 2008.

All this map revision activity means there's an increasing chance that the flood zone status of a home may have changed since the previous owner purchased it, or may change in the near future.

By including a Flood Analysis with the home inspection process, you give the homebuyer the most current flood zone information available.

Return to Top

What do home inspectors need to know about flood insurance?

What Home Inspectors Need to Know About Flood Insurance.

Historically, most private insurers have been unwilling to write flood insurance policies because of the risk. As a result, most homeowners looked to the government to assist them in the event of a flood.

In 1968, Congress created the National Flood Insurance Program (NFIP) to make flood insurance coverage available to U.S. property owners. Funds to pay NFIP claims come from premium dollars collected, not from tax dollars.

Having a basic understanding of how flood insurance works can help you show your customers the value of a Flood Analysis.

Here are some key points:

• Flood damage is generally not covered by a homeowner's insurance policy, but many policyholders aren't aware of that fact. The best way to protect a property from a flooding disaster is to obtain a separate NFIP flood insurance policy. These policies are sold and serviced on behalf of the NFIP by many different insurance companies and agents.
  
  For additional information about flood insurance, contact America's Innovative Insurance Solutions, Inc., at (800) 862-2070 or visit them online at www.floodinfo.com/insurance.
• Many homeowners think federal disaster assistance will help them after a flood, but that's usually not the case. Federal aid is typically in the form of a loan that must be paid back with interest. Those loans become available only if the flood warrants a disaster declaration by the President, which typically occurs in less than 10% of natural events.

The "Mandatory Purchase Requirement" for Flood Insurance.

When a homebuyer obtains a mortgage from a federally-backed lender, the lender is required by law to determine if the property lies within a high-risk flood zone according to the Flood Insurance Rate Map for the area. If so, the lender must ensure that the buyer purchases and maintains flood insurance on the property. This is known as the "mandatory purchase requirement." In rare cases, a lender may require flood insurance even if the property is outside of a designated high-risk zone.

How Homeowners Can Save Money on Flood Insurance.

• The "Grandfathering" Rule

  When FEMA map revisions for a given community take effect, homeowners could find that while their home was outside a high-risk flood zone before, it's now inside. For these individuals, FEMA provides a regulatory practice called "grandfathering."

  Under specific circumstances, the "grandfathering" rule enables a flood insurance policyholder to obtain a lower premium rate-one based on the home's previous, lower-risk zone rather than the new, higher-risk zone. This rule only applies if flood insurance coverage is in place before the effective date of the new map, so it's wise for all homeowners to purchase flood insurance now rather than after the local map has been revised.

  You may want to advise your customers to check with their insurance agents, or contact America's Innovative Insurance Solutions, Inc. at (800) 862-2070 to see if grandfathering might apply to the home they're purchasing.

• The Preferred Risk Policy

  For properties in low-to-moderate risk flood zones, the NFIP offers a lower-cost policy called a Preferred Risk policy. For example, $100,000 in property coverage and another $40,000 for contents coverage can cost a homeowner as little as $250 per year.

Regardless of a property's flood zone and whether flood insurance is required, buying flood insurance coverage is always a good investment for peace of mind.

Return to Top

Key Terms

Understanding the following flood-related terms can help you sell FREA's Flood Analysis.

Assessor's Parcel Number (APN)

Property number that enables a researcher to locate that property on tax plats.

Base Flood

A flood event that has a one percent chance of being equaled or exceeded in a specific location during any given year. Sometimes called the "100-year" flood, this hypothetical flood serves as the benchmark for FEMA's risk assessments.

Base Flood Elevation (BFE)

The water level that would result from the Base Flood, usually expressed as a number of feet above sea level. There is a one percent chance that flooding would reach that level in a given year.

Coastal Barrier

An area such as a barrier island or sand dune that has been designated as providing significant protection to the coastline. In the interests of conservation, the Coastal Barrier Resources Act (CBRA) prohibits most expenditures of federal funds—including federal flood insurance—for building or development in these areas

Community

A political entity, such as a county, parish, town, city, or township that has the authority to adopt and enforce floodplain ordinances for the area under its jurisdiction.

Community Number

A six-digit designation identifying each community to the National Flood Insurance Program (NFIP).

Flood

According to the NFIP, a "flood" is defined as a partial or complete inundation covering two or more acres of land that is normally dry OR of two or more properties (at least one of which is the policyholder's property), due to one or more of the following:

• Overflow of inland or tidal waters
• Unusual and rapid accumulation of runoff water from any source
• Mudflow
• Collapse or sinking of land along the shore of a lake or similar body of water.

For a property to be eligible for a claim payment under an NFIP insurance policy, the building must suffer damage caused by a flood according to this definition.

Flood Insurance Rate Map (FIRM)

Official FEMA map of a community, showing both the Special Flood Hazard Areas and the flood insurance premium zones.

Floodplain

Any land area susceptible to being inundated by floodwaters from any source.

Floodway

The regular channel of a river, stream, or other watercourse, plus the adjacent land areas that must be reserved—that is, kept free of fill or construction—in order to help control flooding.

100-year Floodplain

Another term for a Special Flood Hazard Area, referring to any area that has at least a one percent annual chance of flooding. On FEMA's Flood Insurance Rate Maps (FIRMs), these areas are darkly shaded and labeled with zone designations that begin with "A" or "V."

500-year Floodplain

An area that has between a 0.2 percent and one percent annual chance of flooding. When shown on FEMA flood maps, these areas are lightly shaded in gray and labeled with zone designations "X" or "B."

Geographic Information Systems (GIS)

Software that links geographic information (where things are) with descriptive information (what things are). Unlike a paper map where "what you see is what you get," GIS maps are digitized and can present many "layers" of different information.

Legal Description

Descriptive statement identifying the location and boundaries of a parcel of land.

Map Revision

A change in the FEMA flood map for a community reflecting revised zone, base flood, or other information.

NFIP (National Flood Insurance Program)

A federal program created by the U.S. Congress in 1968 that makes flood insurance available in communities that enact and enforce satisfactory floodplain management ordinances.

Parcel Number

Any official sequence of numeric and/or alphabetic characters that identify a specific lot. (Also known as tax ID, plat number or APN.)

Property Address

Street address that is accurate, complete and in compliance with U.S. Postal Service standards.

Property Identification Number (PIN)

Unique number assigned to a property, used in conjunction with plats to locate the property.

Section

Square mile tract of land (640 acres). A section is 1/36th of a township.

Special Flood Hazard Area (SFHA)

An area that has at least a one percent chance of flooding in any given year. On typical Flood Insurance Rate Maps, these areas are darkly shaded and labeled with a zone designation starting with "A" or "V".

Township

1. Square tract of land six miles on one side.
2. Political municipality created to serve the population of a specific geographic area.
3. Longitudinal component of the section-township-range coordinate system.

Zone Designation

The label assigned to a geographical area, shown on a Flood Insurance Rate Map or Flood Hazard Boundary Map, that reflects the severity or type of flooding in the area.

Return to Top

Helpful Links

• Foundation of Real Estate Associates (FREA)
• America's Innovative Insurance Solutions
• Federal Emergency Management Agency (FEMA)
• Institute for Business and Home Safety (IBHS)

Return to Top