A representative from the Federal Emergency Management Agency delivered a webinar to Texas REALTORS® in December about flood terminology, flood events, risk information, and flood-related questions on the Seller’s Disclosure Notice.
The whole country is a floodplain—but some areas have a higher risk of flooding than others, according to Gilbert Giron, regional flood insurance liaison with FEMA. About 80% of homes damaged during Hurricane Harvey did not have flood insurance, and of those, 65% were not in a high-risk flood zone. All property owners—not just those in designated flood zones—benefit from learning more about flood risks, terminology, insurance, and disclosure.
The Risks Are Bigger Than Many People Realize
Just one inch of flood water can cause more than $25,000 of damage to a home, and a FEMA grant alone may not deliver the funds needed to rebuild. A FEMA disaster grant is designed to provide food and shelter immediately after a flood, but a flood insurance claim payment goes much further toward rebuilding your home, according to Giron. For example, the average grant after Hurricane Harvey was $6,000, while the average flood insurance claim payment was $116,000.
Misunderstanding flood-related terms can lead property owners to underestimate their risk and need for appropriate insurance. FEMA has moved away from the term 100-year flood, as many people thought this meant that a property would flood only once in 100 years. However, a home in the 100-year floodplain has a 1% chance of flooding in any given year, which equates to a 26% chance of flooding over the life of a 30-year mortgage, according to FEMA. FEMA refers to this as the base flood. A flood that has a 0.2% chance of occurring (often called a 500-year flood) has a 6% chance of flooding over the course of a 30-year mortgage.
Resources For You and Your Clients
Property owners can use FEMA’s Map Service Center (MSC) to find a flood map of the area including their property and a range of other flood hazard products and tools. The National Flood Hazard Layer (NFHL)—a database with current flood hazard data—is accessible through the MSC as are Flood Insurance Rate Maps (FIRM), which show flood zones and areas for insurance rating purposes.
Flood insurance maps do not predict where floods will happen, Giron says. There are no “no-risk” areas on a FIRM. Everyone lives in an area with some flood risk—it’s just a matter of whether it’s low risk or high risk.