August 13, 2008 Flood Insurance A to V

Flood zones: love them or hate them, it doesn’t matter, you live in one. But what does it really mean to live in a flood zone? How are they determined? What is the difference between zone A and zone X? Do you really need flood insurance? Without getting too detailed, let’s visit some key areas in the “wet and wild” flood insurance world to answer three important questions: how are flood zones determined, what do the different zones mean, and most importantly, are you covered?

Flood zones are defined by the Federal Emergency Management Agency (FEMA). They describe a specific area of land in terms of its flood risk. The National Flood Insurance Program (NFIP) then uses these different FEMA flood zones to determine one’s risk. However, different zones indicate different levels of risk and have a direct impact on lender’s flood insurance requirements.

Understanding the phrase ”major flood” is vital in comprehending how the flood insurance industry functions. A major flood is defined as “a flood with a 1% annual chance of occurring.” In other words, there is a 1% chance of a 100 year flood occuring every year. A 100 year flood describes the peak stream height above normal levels a stream, lake, river, etc. would reach, which statistically, is supposed to occur once every 100 years. This is determined by the recurrence interval, a tool used to predict the probability and severity of floods in any given year. That’s everything you need to know about flooding in the context of flood insurance but to understand more on flooding, please view this website.   More on floods

Low-to-moderate risk zones are defined as having minimal exposure to major flooding.  These zones are Zones B, C, and X. These zones include all areas outside the 1% annual flood risk floodplain. Hence, these areas are outside the 100 year floodplain. In these areas lenders don’t require property owners to carry flood insurance. 

High-risk zones are categorized into zones A and V with numerous subdivisions in each zone. The zone A’s include all areas with a 1%, or greater, annual flood risk. In other words, areas that are located within the floodplain of a 100 year flood are zone A. The zone V’s include the same type of areas, but with the additonal hazard of storm waves. In these zones, all property owners are required to obtain flood insurance in order to get a loan from a federally regulated lender.

Live Asset Insurance offers flood insurance in low-to-moderate risk zones but not in high-risk zones. But how do you know if you need flood insurance? There are many variables to consider when making this decision. At the same time, many policies are very vague at explaining what exactly does flood insurance protect. To more thoroughly investigate whether or not you need flood insurance you can visit the NFIP website or call your local insurance broker who can help you determine your flood zone.