8 Things To Understand Before You Buy A Home In A Flood Zone
Flooding is the most common natural disaster in the United States, and if you own a home, you’re probably at risk from water damage. Because recent Federal Flood Insurance Reform has caused flood insurance premiums to soar — from $2,500 a year to $9,500 a year and more depending on your zone, it’s important to know whether your new home is in a flood zone. Whether you’re a buyer, seller, or real estate agent, you can learn more about flood insurance through FEMA’s website.
Weather Isn’t The Only Cause Of Flooding
Floods can happen anywhere in the U.S. at any time of the year, and weather isn’t the only cause of flooding. It doesn’t have to be a raging river, or torrential rains that destroy your home. It’s possible to have your home flooded by poor water diversion from new construction on your street. Something as simple as a clogged storm drain can flood your ground floor in a matter of hours. According to Floodsmart, more than 20% of flood claims come from places where the flood risk is low, so beware.
Know Before You Buy
Find out before you buy if your potential home is in a flood zone, and get a quote on what flood insurance for your home, over the life of your mortgage, will be. Ask your real estate agent, insurance agent, or lender about the property’s flood status before closing. Flood zone disclosure is not mandatory so many homebuyers don’t find out about flood zones until their closing, or even afterwards! (If it’s too late, and you already bought your house, here are 10 things you can do to prepare your home for a flood.)
Low Flood Risk Is No Guarantee You Won’t Need Insurance
Even if the risk for flooding is low, most lenders will require their borrowers to pay for flood insurance on the property. When a property is at risk of flooding (even when that risk is relatively small), their collateral is at stake – and their risk needs to be mitigated, which means you will pay extra to live in a flood zone. Find out if the property you’re looking at is in a flood zone through FEMA or by visiting Free Flood. If you are in a rural area, or area under new construction, your address may not have been evaluated yet.
Homeowners Insurance Rarely Covers Flooding
Even the best, most expensive homeowners insurance rarely covers flooding. Considering that floods can occur from spring thaws, snow melt, blocked storm drains, burst pipes, construction overflows, flash floods, rain, tornadoes, and hurricane waters your chances of flood damage are real even if you’re miles from a natural water source. Can you afford not to have flood insurance?
Your Entire Property May Not Be At Risk
Freeflood lists the details of each flood designation, but more importantly, their flood maps show the flood risk zone. Check to see if the entire property is in a flood zone, or if it’s a corner of your lot that doesn’t include the home. That can determine the price of the insurance as well.
You Don’t Always Have A Choice About Not Buying Flood Insurance
You may feel okay about taking a risk and not buying flood insurance, but the federal government is more cautious. Under federal law, flood insurance is mandatory for all federal or federally related financial assistance for the acquisition and/or construction of buildings in high-risk flood areas, known as Special Flood Hazard Areas (SFHA).
Check with your mortgage company to find out if the property you’re considering falls under mandatory flood insurance laws. If the property is in a low-to-moderate risk area, federal law doesn’t require flood insurance.
Understand Your Flood Risks When Buying a Home in a Flood Zone
According to the Wise Insurance Group in Texas:
- Nearly 20% of all flood insurance claims come from moderate to low-risk areas.
- There is a 30 day waiting period for all new flood policies unless it’s required for closing on a new home purchase.
- Flash floods are the number one weather-related killer in the US.
- According to the National Inventory of Dams 1994 survey, there are over 74,000 dams in the US. Nearly 1/3 pose a significant risk to life and property if they collapse.
- Average flood insurance policy costs more than $600 a year. Properties in high-risk areas can cost more than $10,000 a year.
- In high-risk flood areas, there is at least a 1-in-4 chance of flooding during a 30-year mortgage.
- From 2007 to 2011 the average residential flood claim amounted to almost $30,000.
- Disaster assistance, if it’s available, is typically provided as a loan that must be repaid with interest. This applies to those who qualify for assistance but did not have flood coverage.
- The average cost of flood damage for a 1000 square foot home is $10,600 for 1 inch of water, $20,150 for 6 inches of water, $27,150 for 1 foot of water and $39,950 for 4 feet of water. In a 2,000 square foot home, the loss amounts are roughly double.
Water Damage isn’t the Only Flood-Related Disaster
Finally, flooding does more than cost you for repairs and replacement. You must also find a place to live while your home is being repaired. You and your family’s lives will be disrupted and there’s a chance your vehicles, livestock, pets and other property fixtures will be damaged or destroyed as well. Your home will be at risk for mold and other complications arising from the flood. Do your homework. Learn all you can about flood zones, flood insurance, and flood precautions before you buy your home.
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