When obtaining insurance for your property, one of the most important things to understand is your flood risk. Standard property owners insurance policies do not provide coverage for flood damages. Depending on where you live, you may need to purchase flood insurance in addition to your homeowner’s insurance policy.
Flood insurance covers water damage that stems from heavy rains, storm surges, high tides and other natural disasters. While obtaining flood insurance can increase your annual premium by several hundred dollars, its benefits can well outweigh the costs if your property was to suffer flood damage. The good news, however, is that you don’t have to leave the question of whether you should leave flood insurance to guesswork. FEMA flood zone designations are available to assess a property’s flood risk, and will go a long way in helping you decide if you need flood insurance for your property. FEMA flood zones are indicated on a community's flood map, which helps property owners understand their flood risk. Here’s what you need to know about the different FEMA flood zones (including Florida Keys flood zones), and what they mean for your flood insurance needs. These designations also play a crucial role in determining flood insurance requirements for property owners.
FEMA determines flood hazard based on the likelihood that an area will experience one flood during a 100-year period — or in other words, that an area has a one percent chance of experiencing a major flood event in any given year. Of course, there are many locations that could experience flooding on a much more frequent basis. These flood zone designations are crucial for determining flood insurance requirements, including the use of Flood Insurance Rate Maps (FIRMs) to set mandatory purchase requirements and building code requirements for high-risk areas. The 100-year floodplain standard (also known as the base flood) is the baseline for determining an area’s risk for flooding, and plays a direct role in whether an area will be given a high-risk or moderate to low-risk designation. Within these broader categories of high-risk and low-risk flood zones, there are several letter designations that explain in greater detail the severity and type of flood threat an area may face. Consulting with an insurance agent is a necessary step for property owners to navigate the complexities of flood insurance, especially in high-risk areas.
When a decertified flood control system is undergoing restoration, there are several subcategories that may also be used. Zone AR/A indicates a Zone A area is at temporarily heightened risk because the SFHA exists in tandem with a flood control system that is currently undergoing repairs or decommissioned. Zone AR/AE and Zone AR/A1-A30 apply in areas where base flood elevations and depths were previously measured. Zone AR/AO applies when rivers or streams may present an additional risk to some properties in the AR region.
Areas with a “moderate” flood risk have been determined to have a risk between a 100-year “base flood” and a 500-year flood — or a 0.2 to one percent chance of flooding in any given year. Due to the lower risk in comparison to other flood hazard areas, there are fewer designations for these areas of moderate risk.
Minimal flood hazard areas are not part of any SFHA, and are considered to have a 0.2 percent chance or less of flooding in a given year. This means that flooding probably doesn’t even occur every 500 years in this particular area.
Finally, Zone D is used to designate areas that have not been mapped by FEMA to evaluate their flood risk. However, it is believed that there is still some flood risk for properties in that area, though the exact level of the risk is unknown.
These areas typically remain unevaluated because they are undeveloped and sparsely populated. Because the flood risk for the area is uncertain, insurers will typically charge higher rates than they would for homeowners who live in an area that has been determined to have low or moderate risk.
Rural areas with levee systems will sometimes be designated Zone D on FEMA community's flood map.
If you own your home outright, you technically aren’t required to purchase flood insurance. However, if you have a mortgage and live in a high-risk flood area, you will typically be required to obtain flood insurance. It is actually a federal requirement if you have a government-backed mortgage.
Even if you don’t have a government-backed mortgage, you will still probably need to obtain flood insurance if you live in a high-risk area. Similar to how mortgage lenders require that borrowers obtain home insurance for their property, lenders will also require that you obtain flood insurance if you live in a high-risk zone. Some lenders may also require flood insurance if you live in an undetermined risk area, based on local conditions.
If you refuse to obtain flood insurance when a lender requires it, they won’t lend to you.
In Florida Keys flood zones, most communities are part of the government’s National Flood Insurance Program (NFIP), which facilitates the purchase of flood insurance in exchange for the community adopting efforts to manage the local floodplain and reduce the area’s flood risk. NFIP policies are sold and administered by private insurers, and typically take effect 30 days after you sign the policy. Private flood insurance also exists outside the NFIP program, which may offer more control and flexibility over your policy.
While your mortgage lender may not require flood insurance if you live in a moderate or low-risk area, it is still worth considering based on your knowledge of local conditions. According to FEMA, roughly 25 percent of all flood claims come from areas that were designated as low to moderate risk. If your property is located in Zone B or Zone X (shaded), flood insurance may still be a good idea, even if your lender doesn’t require it.
By purchasing flood insurance for your property, you will have much-needed financial protection should flooding ever take place — and you can have peace of mind knowing that your assets are secured.
