How Flood Zones Impact Insurance

Is your property located in a flood-risk zone? Some locations are inevitably more prone to flooding than others. The closer a piece of property is to the ocean, river, or another body of water, the higher the risk is.

To make it easier to identify areas at risk, the Federal Emergency Management Agency (FEMA) has classified specific regions more prone to flooding into one of many flood zones. Their official website has identified these hazard zones, so property owners will know whether they need to purchase excess flood insurance.

It’s important to know if your business is located in a designated high-risk flood zone. Many property owners overlook this important detail and regret not purchasing insurance early on.

Determining your property’s flood risk

It’s always best to be prepared for flooding. If you want to know if your property is situated in a flood zone, you can check FEMA’s website. There you can input your address or coordinates, and the map will automatically focus on your location, showing how close you are to the nearest flood zone.

FEMA’s official website may take a while to load all the data you’re looking for, so be patient. There is plenty of information to digest, so you might want to set aside a few minutes to learn more about the agency and browse through the flood hazard maps and fact sheets.

How flood risk affects insurance

To ensure that your property is covered against floods, it’s advisable to purchase a separate special flood insurance policy. Most property owner policies don’t cover this and are limited only to the water damage caused by burst pipes and similar factors.

Keep in mind that the higher the risk for flooding, the pricier your insurance policy will cost. Location‒and even elevation‒is a significant factor in determining the price you have to pay for insurance.

Check out the FEMA website, and you will see zones categorized by letters. These aren’t assigned randomly‒each letter represents the flood risk of each area.

Zones designated with the letter “V” are the most expensive to insure, followed by zones with the letter “A”. Zones with the letter “C” or “X” have the lowest premiums and may not even require flood insurance.

Below is a table of the different zone areas and flood risk and insurance necessity:

Flood zoneFlood riskSource of floodFlood insurance requirement
V, VE, V1-V301% or greater annual chance of flooding and 26% chance over the lifetime of a 30-year mortgageStorm waves and other hazards nearby the coastal areasRequired
AO1% annual chance of flooding and a 26% chance over the lifetime of a 30-year mortgageStreams or rivers
AH1% annual chance of flooding and a 26% chance over the life of a 30-year mortgageShallow sources of flooding
A, AE, AR, A1-A30, A991% annual chance of flooding and 26% chance over the lifetime of a 30-year mortgageUndefined
C & X<0.2% chance throughout the yearUndefined lesser hazardsNot required
B & X0.2% – 1% chance throughout the year

This table represents the entire area of each particular flood zone and not individual homes. When assessing personal risk, consider your property’s location inside the zone.

Insurance cost per flood zone

Below is a table detailing the insurance cost for each flood zone:

Flood zoneBuilding coverage (cost per $100)Contents coverage (cost per $100)
VE, V1-V30 (-1 below base flood elevation)$4.04$3.29
VE, V1-V30 (0 above base flood elevation)$3.29$2.55
VE, V1-V30 (+1 above base flood elevation)$2.68$1.95
AE, A1-A30  (-1 below base flood elevation)$4.40$1.8
AE, A1-A30  (0 above base flood elevation)$1.79$0.77
AE, A1-A30 (+1 above base flood elevation)$0.80$0.41
AO, AH$0.30$0.38
A99, B, C, X$1.12$1.73
Flood zoneAnnual premium
VE, V1-V30 (-1 below base flood elevation)$13,390
VE, V1-V30 (0 above base flood elevation)$10,775
VE, V1-V30 (+1 above base flood elevation)$8,650
AE, A1-A30  (-1 below base flood elevation)$12,800
AE, A1-A30  (0 above base flood elevation)$5,245
AE, A1-A30 (+1 above base flood elevation)$2,410
AO, AH$1,130
A99, B, C, X$4,530

Knowing your property’s flood zone designation is essential for determining your need for flood insurance. But even if your business is located in an area with a low risk of flooding, you might want to consider getting insurance if there are mitigating factors that could put your investment at risk.

About Snyder Specialty

Snyder Specialty, LLC is a New York-based underwriting facility that provides a range of property and liability solutions for personal and commercial lines. Specializing in coastal properties and hard-to-place risks, Snyder Specialty expands your current capabilities with proven solutions for complex risks. Find out more about the company’s range of services by calling (718) 362-8039.