Flooding has long been the costliest and most devastating disaster in the United States. Ninety percent of all presidentially-declared disasters involve flooding. However, homeowner insurance policies do not cover flood damages. Spring showers are just around the corner – learn why flood insurance is an important part of protecting one of your largest assets.
Who has to get flood insurance?
The National Flood Insurance Program (NFIP) under the jurisdiction of the Federal Emergency Management Agency (FEMA) has mandated that any property located within a Special Flood Hazard Area (SFHA – a property with a 1% chance of flooding annually) must maintain flood insurance coverage for the duration of their mortgage. The NFIP requires all federally regulated lending institutions like Hills Bank to enforce the mandatory flood insurance purchase requirement for properties located in SFHAs. While flood insurance is not required by law on non-SFHA properties, NFIP policies are available for anyone to purchase, regardless of what flood zone they are located in.
What is a flood zone and who determines if my property is in one?
FEMA draws maps which rate a community’s chance of flooding. Properties are rated within zones:
- Zone A properties (SHFA) have a 1% chance of flooding annually and require flood insurance by law. Zone A properties are sometimes referred to as the 100 Year Flood Plain.
- Zone X properties have a 0.02% chance of flooding annually and are sometimes called the 500 Year Flood Plain. Zone X properties do not require insurance by law, but that doesn’t mean we couldn’t experience another 500 Year Flood like Eastern Iowa experienced in 1993 and 2008.
What are my chances of actually flooding?
If you live in a SFHA, you have a 26% chance of flooding at least once in the lifetime of your 30-year mortgage. Even if you live outside a SFHA, your property is still at risk for flooding. According to statistics taken from NFIP’s Mandatory Purchase of Flood Insurance Guidelines publication, over 25% of NFIP flood disaster claims are from non-SFHA properties.
How do I purchase flood insurance?
The NFIP offers subsidized flood insurance policies. Almost all insurance agents are able to write one of these policies for your property. Flood insurance policies are based on the Flood Insurance Rate Maps produced by FEMA; therefore two flood insurance policies with the same rating will have the same premium, no matter who writes the policy.
Just remember, there is a 30 day wait period before flood insurance goes into effect, unless you are purchasing it as part of a loan transaction.
Can I have my home reevaluated and potentially removed from a SFHA?
If you believe that your property is sufficiently elevated, you can hire an engineer to survey your property. Based on the elevation of your property, the engineer can submit a Letter of Map Amendment (LOMA) to FEMA and request that the property be removed from the SFHA. There are a number of excellent engineering and surveying companies in Eastern Iowa. If you believe your property might be eligible for a LOMA, we recommend researching the various options in your area to find a company that best suits your needs.
To learn more about flood insurance requirements, download these frequently asked questions about flood insurance. Please feel free to call 1-800-445-5725 (1-800-HILLSBK) or email FloodInfo@hillsbank.com to speak to a representative in our flood department and they will be happy to answer any questions you may have.Insurance products are not a deposit, not FDIC insured, not insured by any federal government agency, carry no bank guarantee, and may go down in value.