Flood insurance worth considering for homes outside flood plain

A whooping 94% of flood damage reports to the National Weather Service since 1995 were from properties that weren’t in the 100-year floodplains.

I recently participated on behalf of PAR in two flood insurance panel discussions hosted by the Pennsylvania Emergency Management Agency in Pittsburgh and Reading. As presentations were made, I found several interesting facts about flooding that I think are important for Realtors® to know, so we can make sure our clients understand when they’re buying a home.

One of the National Association of Realtors® legislative efforts priorities over the last several years has been to extend and reform the National Flood Insurance Program, which provides insurance for properties in the floodplain. Congress recently extended the program until Sept. 30.

However, weather records show heavy rains have increased recently and, in the Northeast region, there’s been a 74% increase in flooding, according to Tom Hughes, PEMA hazard mitigation division chief. Last year was the wettest on record and we’re already ahead of that record level rainfall just midway through the year.

Hughes said it’s important for homeowners to understand that just because a home isn’t located in the floodplain, doesn’t mean it isn’t at risk to flood. In fact, the Federal Emergency Management Agency has started to use the catch slogan, “Anywhere it can rain, it can flood.”

Heather Davis-Jenkins, a mitigation specialist with FEMA, said it’s also a misconception that if you’re located in the 100-year floodplain, that floods only happen once every 100 years. She noted that statistically, during a 30-year mortgage, a property in a 1-percent-annual-chance floodplain has a 26% chance of flooding at least once. While that may seem like it’s not a great risk, it’s actually a much higher risk to a home than the combined risk of house fire and burglary (which is only 9%). Homebuyers can search on the FEMA flood map service center online to see where properties fall within the flood map.

And those statistics are relevant because as the Northeast is experiencing more heavy rain incidents, more homeowners may experience flooding.

Both PEMA and FEMA representatives are encouraging all homeowners to consider purchasing flood insurance, even if they’re not in a high-flood-risk area. That’s because just one inch of flooding in a home can cost, on average, $25,000 to recover and their research shows that 61% of Americans don’t have enough savings to cover $1,000 in emergency repairs.

David Buono, insurance consumer liaison from the Pennsylvania Insurance Commission, notes that many homeowners don’t understand that their insurance policy does not include flood coverage and a separate policy may be required. The commission has created a tremendous resource page for homeowners at insurance.pa.gov, where they provide answers to flood insurance questions, as well as resources for private insurances.

In addition, NAR’s website also gives some excellent resources for brokers and agents in marketing and selling properties which may require flood insurance.