Are you thinking about purchasing a home in a flood zone? Do you currently own a home that has been extended into the flood plain and the mortgage company is now making you carry flood coverage? These are the two most common reasons we receive calls about Flood Insurance at our office. Unsure if you are in a flood zone? Click on this link (https://msc.fema.gov/portal/home) to go to the FEMA flood map and type in the address on the top of the page. This will show you what flood zone the property entered will be in.
Hooper Insurance always suggests not to purchase a home/property in a flood zone. This is our own personal preference after seeing the cost of the flood policies rise over the past 20+ years. Flood zones have continued to grow into previously unlisted areas. The zones continue to expand and will only cause more homeowners to be required to purchase flood coverage. If you have no liens against your home then you do not have to carry any additional flood coverage, but if your residence does flood your homeowner policy will NOT cover the damages. If you want to be covered for floods you must purchase a separate flood policy.
There are two options for flood insurance in Tennessee: Private Flood Insurance & the National Flood Insurance Program (NFIP; FEMA backed). Yes, there is a HUGE difference in the two as far as price. On average, we see NFIP being 2 to 3 times more expensive then the private flood companies. However, the private flood companies can be very selective on where the property is located in relation to the flood zones. For instance, if you are in a spill way or zone AE they will probably not write a policy for that property because of the high risk of flooding. The other thing you need to think about is what if the private company in 5 years says, “We are non renewing your policy because your property is now in a zone we do not cover.“ At that point your premium would probably double, if not more, when you have to switch over to the NFIP because that’s the only flood provider left. It’s scary to think about, but as an insurance agent that cares about educating my clients I feel it’s necessary to bring these scenarios up prior to making the purchase because most people have never had to deal with flood insurance.
Overall, we hope this blog educates anyone in Tennessee to really think about all the details involved with flood insurance before purchasing a home/property in a flood zone. Take the time to shop around the rates and find out what will be covered on the policy. Ask the surrounding neighbors about their policies and really look at the area to see if there is potential for the flood zone to be expanded in the years to come. If you can afford it, great, but we project that flood insurance will only increase in the future. No matter what decision you make we will be here to guide you through it. Give us a call today at 432-472-1744.
Tennessee Flood Insurance: 10 Things You Need To Consider
How much is it going to cost each year (private vs. NFIP)?
What if the flood zone is updated to a higher rating?
Can you obtain private flood insurance or can the property only be insured by the NFIP (FEMA)?
How much will flood insurance cost in 20 years?
How hard will it be to sell the home down the road?
Has the property ever flooded in the past?
Is there an elevation certificate?
What if your private flood insurance company non-renews your property in 2 years?
If located by a pond, creek, river, or other body of water what feeds the water supply? If there is construction up stream it can cause more, or less, water to accumulate. Normally this means more water will flow down the body of water giving it a greater chance of breaching the banks as well as your flood zone changing.
Tennessee had a recording setting 2018 with 72” of rainfall.
*BONUS: if buying a house in a flood zone ask the current owner who they have their policy through and how much it costs. (they may or may not disclose, but it is worth asking)