Flood insurance: to buy or not to buy?
After disastrous flooding in 2008, many homeowners have questions about flood insurance, including whether or not they should purchase this coverage for their property. The City of Iowa City Neighborhood Services Division offers the following information from FEMA and other sources.
In some situations, flood insurance is mandatory. Structures in the 1% annual-chance flood hazard area that are financed with federally-insured loans, and homes that have been flooded and repaired with federal funds regardless of whether or not they’re in the 100-year flood plain, all require flood insurance.
The purchase of flood insurance is optional if the property is located in an area where there is a 0.2% chance of flooding in any given year (commonly referred to as the 500-year flood plain). Homes located in the 100-year flood plain can also opt out of mandatory flood insurance if the home was purchased without a federally insured loan.
To find out whether a home is located in a flood plain, homeowners can review a Flood Insurance Rate Map on the FEMA website. On the map, properties in the 100-year flood plain are identified as Zone A; those in the 500-year flood plain are listed as Zone X. Local flood plain maps are also available on the Johnson County website at www.johnson-county.com. Select the county’s Desktop GIS Map Viewer, enter an address in the fields shown, or select a region by putting your curser on the map of Johnson County and zooming in. Use the toolbar at the top of the map to select the most recent Aerial view, and go to Layers for the FEMA folder. Check the box next to “FEMA” and then select the type of flood information you want from the pull-down menu that opens when you click on the arrow to the left of the FEMA box. If the color of the land changes, the property is in a flood hazard area. To find out whether a property flooded in 2008, select the 2008 Flood box.
In the floods of 2008, many homes that were damaged or destroyed were located outside of mandatory flood insurance areas – and yet these homes took on three or more feet of water. Most did not carry flood insurance. FEMA reports that this is common practice – 90% of the time, people who aren’t required to carry flood insurance don’t purchase this coverage. However, as last year’s floods demonstrated, that decision can have a devastating, long-lasting impact on a homeowner’s property, livelihood, and financial stability.
All homeowners in Johnson County can purchase flood insurance. Premiums are less expensive for homes outside of the 100-year flood plain. The cost of premiums differs depending on the amount of coverage required by the lender, whether or not the home has a basement, whether the homeowner opts for contents coverage, and other factors. Insurance that is purchased at the time a homeowner closes on a loan will be effective on the loan closing date. Otherwise, there is a 30-day waiting period before coverage begins. In Iowa City, flood insurance premiums are automatically discounted by 20%, for structures in the 1% annual-chance flood hazard area.
Property owners whose homes are not located near a body of water may also benefit from flood insurance coverage, as according to FEMA, a flood isn’t just an event that occurs when a river or stream goes over its banks. FEMA’s definition of “flood” includes four scenarios under which a flood can occur, one of which is an unusual and rapid accumulation or runoff of surface waters from any source. In a heavy storm, rainwater that courses across your lawn and into your house is considered a flood, whether or not the water came directly from a river or creek.
For more information, call Julie Tallman at 319-356-5132, or contact your insurance provider.