Flood Insurance for No-Flood Zone areas

short+sassy · August 2016

Or..."What We Can Learn from the Disaster in Baton Rouge"

I keep reading in articles about the flooding in Baton Route, that most of the victims didn't have flood insurance, because it has never flooded in their area and they are in an area designated by FEMA to be a no-flood zone.

The flooding in BR was caused by an especially rainy season, with back to back heavy rains. Essentially, nearby waterways just overflowed because they were too full.

FEMA will provide up to $33K in assistance to victims of flooding who 1) don't have flood insurance and 2) don't live in a flood zone. But here's the catch. The amount victims are entitled to is largely based on the number of victims (though not to exceed actual damages, of course). FEMA themselves say the assistance is not to make victims whole or to be a replacement for flood insurance. Even victims with tens of thousands in damage probably won't receive more than a few thousand bucks from FEMA. In Katrina, the average payout from FEMA for home damage was $8,000.

But here's the thing. If a person does not live in a flood zone, flood insurance is REALLY CHEAP!!!! Like a few hundred bucks a year.

As an example, the land my personal home sits on is in a flood zone and (the land) did flood in Katrina (though I didn't own the house back then). But the house itself is raised about 3' off the ground, which puts the house high enough to be above the flood zone. It was just built that way, it wasn't raised after the fact or anything. As such, even living smack dab in NOLA right in an area that flooded, my flood insurance is for $235,000 house and $50,000 contents. It is only $390/year.

My MM tip for the day is to think about/check out rates for flood insurance. It might be unlikely to happen to you...but then it was also unlikely to happen to some of those folks in BR.

And, as sympathetic as I am to the people without flood insurance in BR (and in NOLA during Katrina)...because it hugely sucks to have life altering, bad things happen that are also extremely expensive...I also don't think they should be given any government assistance for fixing their house that they chose not to insure.

As an aside, I bought a cheap rental house in March with cash. It flooded in Katrina, probably to the roof or close to it. I have chosen not to carry flood or named storm insurance on it. Not because I don't want it and don't realize the risk I'm taking. But because the value of the house vs. the potential damage expenses vs. the cost, made it not worth carrying those insurances. Instead, I just keep a larger safety cushion. However, that is the calculated risk I chose to take and would not expect a government hand-out if I've gambled wrong.

julieanne912 · August 2016

That same thing happened here in CO during the floods 3 years ago. So many people who lived along the rivers that flooded did not have flood insurance since it wasn't "required". If I lived anywhere near a body of water I would get it for sure.

abrewer5 · August 2016

I always wonder in these situations why it isn't considered "an act of god" on insurance. Isn't that a thing? For example: If a tornado blew thru my house in the middle of Maryland that is not a tornado zone, would insurance cover that as an act of god or would I not be insured at all because I didn't have tornado insurance?

I live close to a river, I should look into the cost of flood insurance on my house just in case.. It's not required, so it might be cheaper than I'm thinking.

There was recently a huge flood in Ellicott City in Baltimore and a lot of the businesses/homes that were destroyed were not covered as well because they did not have flood insurance. Very sad! The city itself has over $100 million worth of damages.

hoffse · August 2016

Agreed. Unless you live on top of a serious hill, you need to look at flood insurance. At the very least, it's worth pricing out.

We live on a hill and have that house that floods everybody ELSE's house around us because the water runs off of our property and onto theirs. You don't really notice it driving around, but our house is slightly higher and the grading is such that our house drains great... the ones at the bottom of the hill get everybody else's runoff. That's a serious issue in July and August because our summer storms are no joke.

So the follow-up to flood insurance is don't buy the house that's at the bottom of the hill.

bmo88 · August 2016

We live on what is essentially a "plains" area of Colorado. So rolling hills, very flat in some areas and going through a significant drought period. We still have occasional flash flooding in our area, but it doesn't pool or build up in our neighborhood and we are on a hill.

We priced out flood insurance and it would be an extra $500 per year ($300,000 home). Our Homeowner's Insurance is only $689 per year. It didn't make sense for us to purchase.

short+sassy · August 2016

abrewer5 said:

I always wonder in these situations why it isn't considered "an act of god" on insurance. Isn't that a thing? For example: If a tornado blew thru my house in the middle of Maryland that is not a tornado zone, would insurance cover that as an act of god or would I not be insured at all because I didn't have tornado insurance?
I live close to a river, I should look into the cost of flood insurance on my house just in case.. It's not required, so it might be cheaper than I'm thinking.
There was recently a huge flood in Ellicott City in Baltimore and a lot of the businesses/homes that were destroyed were not covered as well because they did not have flood insurance. Very sad! The city itself has over $100 million worth of damages.

Homeowner's insurance companies don't cover floods from water that happens outside the house. If you read the fine print in your policy, it will address that somewhere. The circumstances don't matter. They just don't cover it.

However, if there is water damage from something that happens inside your home (ie bathtub overflows, hot water heater breaks), than your homeowner's will cover that. Or at least usually does.

I don't know about tornados. Hmmm...I need to check on that! My area occasionally has tornados, but I've always assumed that is an item that is covered under my homeowner's.

Another separate piece of coverage is "named storm" coverage. Which means, without that coverage, if a storm...large enough that it literally has a name from the National Weather Service...causes damage to a house. None of that damage is covered.

Here's an example of the difference in price...keeping in mind NOLA has the second highest homeowner rates. My little cash rental house costs me $41/month for homeowner/liability insurance a month. Insured value $75K, no contents, $5K deductible...but without named storm coverage. If I'd included that coverage, it would have quadrupled in price to $123/month. And a named storm would have been a minimum $10K deductible. At least with that insurance company, they wouldn't even sell it with a lower deductible. Puh-leeze! The whole house and the land is worth $60K. I could buy a new roof twice for a $10K deductible, lol.

short+sassy · August 2016

hoffse said:

Agreed. Unless you live on top of a serious hill, you need to look at flood insurance. At the very least, it's worth pricing out.

We live on a hill and have that house that floods everybody ELSE's house around us because the water runs off of our property and onto theirs. You don't really notice it driving around, but our house is slightly higher and the grading is such that our house drains great... the ones at the bottom of the hill get everybody else's runoff. That's a serious issue in July and August because our summer storms are no joke.

So the follow-up to flood insurance is don't buy the house that's at the bottom of the hill.

This is a good point! NOLA is an exceedingly flat city. The house I lived in during Katrina was on a "ridge". Ridge is a hilarious term because, even riding a bicycle across the "ridge", you would never be able to tell you are in a slightly higher area.

But the flood waters could tell. The street I was living on at the time got 2'-3' of water. If you went 4 blocks away in either direction, it was 4'-6' of water. Fortunately for me, the house I was renting at the time was also a raised house and the flood waters did not get inside. We returned to see the water line two steps from the porch! Phew! Close call.

brij2006 · August 2016

As an insurance agent, I can not agree with this enough!

So many people don't realize that flood and earthquake are not covered under a regular homeowners insurance policy. Mostly because they're items only needed in specific areas. However, they're available to everyone everywhere. The lower rated "zone" you live in, the cheaper the coverage.
My parents have a home built into a hillside. We live in rural Illinois near the Iowa border. There's a fault line not too far from here, but only has very minimal activity every 10 years or so. My parents still purchased earthquake insurance because they know the odds of one of those pillars giving away in a small earthquake is a lot higher on their home built into a hill than one with a full basement underground. They pay $75/year for this coverage on a $400,000 home. Super cheap.

As for flood, it also doesn't matter whether or not you live near a body of water. Last month our town had 7 inches of rainfall within a 45 minute timeframe. That water has nowhere to go that quickly so it seeped into many basements. Our phones were ringing off the hook with people asking if it was covered. Even though that "flood" came from rainfall, not a river or ocean, it is still considered flood and is not covered by a typical homeowners policy. Yet flood insurance for our town is very cheap. I looked into it for our house and it's $250/year for $150k worth of coverage and a $5k deductible. Not bad at all.

@abrewer5 A typical homeowners insurance has certain covered perils. Wind, hail, and fire are usually the top 3 listed in any policy verbiage. A tornado is covered under wind.

short+sassy · August 2016

@brij2006, thanks for the verification about tornadoes. After I posted, I had a vague memory of asking my agent about it and her telling me I was covered for tornadoes.

I don't remember the phrase, but I'm also covered for a sewer mishap/backup. Which she told me is often not covered, unless it is added for a small additional cost.

Basements, haha. I've seen them on HGTV shows. No one has them where I lived in So CA, because of earthquakes. And no one has them in NOLA, because of the high water content in our ground, ie living in a swamp.

Xstatic3333 · August 2016

This is a really important thought. I am on a little bit of a hill, but with the numbers you guys are sharing I'm guessing flood insurance would be pennies for us. These types of severe storms are only going to get more common. Thanks for bringing this up!

abrewer5 · August 2016

@short+sassy & @brij2006 thanks for the info! That's definitely good to know. H and I need to start shopping insurance anyway, now might be a good time.

LillibetteV · August 2016

short+sassy said:

@brij2006, thanks for the verification about tornadoes. After I posted, I had a vague memory of asking my agent about it and her telling me I was covered for tornadoes.
I don't remember the phrase, but I'm also covered for a sewer mishap/backup. Which she told me is often not covered, unless it is added for a small additional cost.
Basements, haha. I've seen them on HGTV shows. No one has them where I lived in So CA, because of earthquakes. And no one has them in NOLA, because of the high water content in our ground, ie living in a swamp.

My friend's mom was visiting last year and had never seen a basement! And mine is a proper creepy New England basement with lower ceilings, a giant rock in the corner that the house was built around, and plenty of spiders. She was SO EXCITED to go down there and investigate the marvel that is a basement. It was cracking me up lol.

brij2006 · August 2016

I'm going to become insurance nerd for a second.
But here's the "basic form perils" covered by a homeowners insurance policy. Every policy at least covers these 11 items.
HO-1 Basic Perils
Fire Or Lightning   Vehicles
Smoke      Glass Breakage
Windstorm Or Hail    Vandalism & Malicious Mischief
Explosion      Theft
Riot Or Civil Commotion   Volcanic Eruption
Aircraft

This is the most basic of homeowners coverage though.

smerka · August 2016

I was told they won't cover water that comes over the top of the foundation. We have a sewer backup rider on our policy and have had to use it. Definitely worth it if you have a basement.

julieanne912 · August 2016

smerka said:

I was told they won't cover water that comes over the top of the foundation. We have a sewer backup rider on our policy and have had to use it. Definitely worth it if you have a basement.

Hmmm... I wonder if they would consider water coming in window wells to be "over the foundation"... even though it's technically below the top of the foundation?

During our floods here 3 years ago, that's what caused a lot of damage in basements in areas not near the rivers, water came down so fast it filled up window wells and came in through the basement windows. I'm sure @brij2006 knows!

short+sassy · August 2016

It's also a good idea every few years to review the amounts you are insured for, both for contents and what it would cost to rebuild your home (not the land value).

For the two BR people I know whose houses flooded, they fortunately had flood insurance. However, one of them had no coverage for contents and the other had $15K for contents. I have to admit, I usually think of contents as my personal belongings (shoes, clothes, knick-knacks, etc.). But contents also includes big ticket items like kitchen appliances, washer/dryer, mattresses, and furniture.

brij2006 · August 2016

julieanne912 said:

smerka said:

I was told they won't cover water that comes over the top of the foundation. We have a sewer backup rider on our policy and have had to use it. Definitely worth it if you have a basement.

Hmmm... I wonder if they would consider water coming in window wells to be "over the foundation"... even though it's technically below the top of the foundation?

During our floods here 3 years ago, that's what caused a lot of damage in basements in areas not near the rivers, water came down so fast it filled up window wells and came in through the basement windows. I'm sure @brij2006 knows!

You are correct.
Water is such a grey area in insurance. If water seeps in through the foundation or windows, not covered. If it comes up from a drain in the floor of a basement and you have "bakup of sewer and water" coverage added then it's covered up to that amount. If your dishwasher malfunctions and overflows causing damage, that's covered.

short+sassy · August 2016

brij2006 said:

I'm going to become insurance nerd for a second.
But here's the "basic form perils" covered by a homeowners insurance policy. Every policy at least covers these 11 items.
HO-1 Basic Perils
Fire Or Lightning   Vehicles
Smoke      Glass Breakage
Windstorm Or Hail    Vandalism & Malicious Mischief
Explosion      Theft
Riot Or Civil Commotion   Volcanic Eruption
Aircraft

This is the most basic of homeowners coverage though.

That one always strikes me as such a crazy one. Like, "I'll be definitely be there unless a plane falls out of the sky, haha."

Yet, though thankfully rare, it happens! I read an article recently that was talking about the "miracle baby" from a horrific plane accident that happened outside the NOLA airport in 1982, shortly after takeoff. If I remember correctly, the plane seriously damaged 11 residences (but more tragically, killed everyone on board and 8 people on the ground).

The "miracle baby" had been in one of the homes directly in the path of the crash. Her crib had flipped over upside down with her still inside and then a couch was pushed on top of it. These items kept her safe from the house falling down around her and she only had minor cuts and bruises. Unfortunately her mother and sister died in the accident. Needless to say, rescue workers at the time were astonished to hear the faint cries of a baby coming from the enormous pile of debris that had once been a house.

smetter04 · August 2016

short+sassy said:

brij2006 said:

I'm going to become insurance nerd for a second.
But here's the "basic form perils" covered by a homeowners insurance policy. Every policy at least covers these 11 items.
HO-1 Basic Perils
Fire Or Lightning   Vehicles
Smoke      Glass Breakage
Windstorm Or Hail    Vandalism & Malicious Mischief
Explosion      Theft
Riot Or Civil Commotion   Volcanic Eruption
Aircraft

This is the most basic of homeowners coverage though.

That one always strikes me as such a crazy one. Like, "I'll be definitely be there unless a plane falls out of the sky, haha."
Yet, though thankfully rare, it happens! I read an article recently that was talking about the "miracle baby" from a horrific plane accident that happened outside the NOLA airport in 1982, shortly after takeoff. If I remember correctly, the plane seriously damaged 11 residences (but more tragically, killed everyone on board and 8 people on the ground).
The "miracle baby" had been in one of the homes directly in the path of the crash. Her crib had flipped over upside down with her still inside and then a couch was pushed on top of it.  These items kept her safe from the house falling down around her and she only had minor cuts and bruises. Unfortunately her mother and sister died in the accident. Needless to say, rescue workers at the time were astonished to hear the faint cries of a baby coming from the enormous pile of debris that had once been a house.

That's an incredible story! So sad, though, that the baby then had to grow up without her mother and sister.

We live 11 miles away from the airport and our house is directly under a flight path. Sometimes when we are outside, we need to stop talking until the plane passes overhead because we can't hear each other. The house I grew up in is also near the flight path. To be honest, the thought of a plane crashing on or near our house, or at least dropping debris, has always been an irrational worry shoved to the back of my mind.

brij2006 · August 2016

short+sassy said:

brij2006 said:

I'm going to become insurance nerd for a second.
But here's the "basic form perils" covered by a homeowners insurance policy. Every policy at least covers these 11 items.
HO-1 Basic Perils
Fire Or Lightning   Vehicles
Smoke      Glass Breakage
Windstorm Or Hail    Vandalism & Malicious Mischief
Explosion      Theft
Riot Or Civil Commotion   Volcanic Eruption
Aircraft

This is the most basic of homeowners coverage though.

That one always strikes me as such a crazy one. Like, "I'll be definitely be there unless a plane falls out of the sky, haha."
Yet, though thankfully rare, it happens! I read an article recently that was talking about the "miracle baby" from a horrific plane accident that happened outside the NOLA airport in 1982, shortly after takeoff. If I remember correctly, the plane seriously damaged 11 residences (but more tragically, killed everyone on board and 8 people on the ground).
The "miracle baby" had been in one of the homes directly in the path of the crash. Her crib had flipped over upside down with her still inside and then a couch was pushed on top of it.  These items kept her safe from the house falling down around her and she only had minor cuts and bruises. Unfortunately her mother and sister died in the accident. Needless to say, rescue workers at the time were astonished to hear the faint cries of a baby coming from the enormous pile of debris that had once been a house.

That is so crazy!

Not long after 911 there were documents we had to send out with all of the homeowners insurance renewals about acts of terrorism. It was weird and we had to send them up until just a couple of years ago.

short+sassy · August 2016

smetter04 said:

short+sassy said:

brij2006 said:

I'm going to become insurance nerd for a second.
But here's the "basic form perils" covered by a homeowners insurance policy. Every policy at least covers these 11 items.
HO-1 Basic Perils
Fire Or Lightning   Vehicles
Smoke      Glass Breakage
Windstorm Or Hail    Vandalism & Malicious Mischief
Explosion      Theft
Riot Or Civil Commotion   Volcanic Eruption
Aircraft

This is the most basic of homeowners coverage though.

That one always strikes me as such a crazy one. Like, "I'll be definitely be there unless a plane falls out of the sky, haha."
Yet, though thankfully rare, it happens! I read an article recently that was talking about the "miracle baby" from a horrific plane accident that happened outside the NOLA airport in 1982, shortly after takeoff. If I remember correctly, the plane seriously damaged 11 residences (but more tragically, killed everyone on board and 8 people on the ground).
The "miracle baby" had been in one of the homes directly in the path of the crash. Her crib had flipped over upside down with her still inside and then a couch was pushed on top of it.  These items kept her safe from the house falling down around her and she only had minor cuts and bruises. Unfortunately her mother and sister died in the accident. Needless to say, rescue workers at the time were astonished to hear the faint cries of a baby coming from the enormous pile of debris that had once been a house.

That's an incredible story! So sad, though, that the baby then had to grow up without her mother and sister.

We live 11 miles away from the airport and our house is directly under a flight path. Sometimes when we are outside, we need to stop talking until the plane passes overhead because we can't hear each other. The house I grew up in is also near the flight path. To be honest, the thought of a plane crashing on or near our house, or at least dropping debris, has always been an irrational worry shoved to the back of my mind.

I know! The one silver lining was her father had just left for work only five minutes before the crash, so she at least didn't lose both her parents. But that poor man and his baby girl.

The other piece of luck, if one can call it that, is the crash happened a little after 4PM on a weekday. Most of the people with damaged/destroyed houses had still been at work when it happened.

MommyLiberty5013 · August 2016

Great post/thread.

I am going to contact my home owner's insurance company with a list of questions about water and loss and what's covered and what's not.

We are not in a flood plain. However, the land on which our home sits, used to be quite wet...the nearby farmers had drain tile installed in their fields and now it's as dry as can be. We are not in a low area necessarily, but I'm fairly sure the water table is higher here. Our well is only dug to 41 feet, which is fairly shallow for this area of MN.

However, this conversation here got me thinking...

What if there is a huge amount of rain and the drainage tile backs up? Or, what if there's a lot of rain and the water table rises? The well hits decent water at 41 feet, but I am sure there's water above that level. Also, what about septic back-up?

Good discussion!

vlagrl35 · August 2016

we just talked about flood insurance last night. It rained so hard in our area - flash flood warning. I will be getting quotes again this year from different companies and will definitely ask the rates here.

brij2006 · August 2016

@MommyLiberty5013 If the drainage tile packs up and water gets into your basement then that's still considered flood.
The septic back-up is different since it's a physical water line coming into your home. There's a coverage called "backup of sewer and water" that can be added to a homeowners policy to cover it. I know in our area only $2,500 is automatically on the policy, but I will say that if your basement is finished this is nowhere near enough coverage. I've had a few clients have water mitigation done to their finished basement and it was around $15-20k.

brij2006 · August 2016

@MommyLiberty5013 If the drainage tile packs up and water gets into your basement then that's still considered flood.
The septic back-up is different since it's a physical water line coming into your home. There's a coverage called "backup of sewer and water" that can be added to a homeowners policy to cover it. I know in our area only $2,500 is automatically on the policy, but I will say that if your basement is finished this is nowhere near enough coverage. I've had a few clients have water mitigation done to their finished basement and it was around $15-20k.

MommyLiberty5013 · August 2016

brij2006 said:

@MommyLiberty5013 If the drainage tile packs up and water gets into your basement then that's still considered flood.
The septic back-up is different since it's a physical water line coming into your home. There's a coverage called "backup of sewer and water" that can be added to a homeowners policy to cover it. I know in our area only $2,500 is automatically on the policy, but I will say that if your basement is finished this is nowhere near enough coverage. I've had a few clients have water mitigation done to their finished basement and it was around $15-20k.

That's what I was thinking. Our basement is about 75% finished space including a full bath. I need to call.

kmurphy2131 · August 2016

MommyLiberty5013 said:

brij2006 said:

@MommyLiberty5013 If the drainage tile packs up and water gets into your basement then that's still considered flood.
The septic back-up is different since it's a physical water line coming into your home. There's a coverage called "backup of sewer and water" that can be added to a homeowners policy to cover it. I know in our area only $2,500 is automatically on the policy, but I will say that if your basement is finished this is nowhere near enough coverage. I've had a few clients have water mitigation done to their finished basement and it was around $15-20k.

That's what I was thinking. Our basement is about 75% finished space including a full bath. I need to call.

Ditto. I didnt even think of that. Our basement is >50% finished too.

brij2006 · August 2016

kmurphy2131 said:

MommyLiberty5013 said:

brij2006 said:

@MommyLiberty5013 If the drainage tile packs up and water gets into your basement then that's still considered flood.
The septic back-up is different since it's a physical water line coming into your home. There's a coverage called "backup of sewer and water" that can be added to a homeowners policy to cover it. I know in our area only $2,500 is automatically on the policy, but I will say that if your basement is finished this is nowhere near enough coverage. I've had a few clients have water mitigation done to their finished basement and it was around $15-20k.

That's what I was thinking. Our basement is about 75% finished space including a full bath. I need to call.

Ditto. I didnt even think of that. Our basement is >50% finished too.

Hope I didn't scare you girls. It's just a coverage that so many people don't realize usually has a max payout and they don't know/think/understand exactly what that little coverage is for. It's also one of those things that you don't realize how expensive it really is to take care of until it happens.
We personally only have the $2,500 automatic coverage on our homeowners policy. But where the sewer line comes into our house is at, that room has a dirt floor. Our basement is unfinished and our furnace is put up on cinder blocks just in case we get water in the basement. So that's really the only thing we're concerned about having covered.

MommyLiberty5013 · August 2016

Nope. You didn't scare me. I'm thankful. Information like this is good for decision making.

smerka · August 2016

We had a basement flood after the float on our sump pump got stuck. Ruined our Pergo floor and about the bottom six inches of drywall. We only had $5,000 in coverage at the time. We had to do the work on the new floor ourselves because the $5,000 didn't cover everything. We now have a $10,000 limit now

short+sassy · August 2016

I wouldn't have known about sewer back-up insurance limitations, except my agent at the time mentioned it as a "perk" for the company I selected (Lloyd's of London). I don't remember the exact amount ($30K or $50K, something like that), but their policy automatically comes with a much larger amount than what is typical for a sewer back-up.

No basements here. My house doesn't even sit on the ground. So I guess a sewer back-up would just roll into my house itself. I'm putting that thought back behind the locked door in my brain and go back to pretending anything like that could ever exist, lol.

Flood Insurance for No-Flood Zone areas

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