Recent flood events in Eastern Kentucky and the West Coast have returned flood headlines to the front pages of every media outlet. These events prompt many insurance buyers to evaluate their policy coverages and ask if they need flood insurance.
Flood is not a covered peril in property policies.
The typical homeowner’s policy or commercial property policy excludes coverage for flood. Unless you as the policyholder request coverage, it will not be included. Your lender may require you to purchase flood insurance if your property is in a Special Flood Hazard Area. These areas are defined by Federal Emergency Management Agency (FEMA) maps that support the National Flood Insurance Program (NFIP). Compulsory flood coverage is placed to protect the interest of the lender.
Flood Maps can be misleading and outdated.
It is comforting to look at a flood map and see that your property is above the Base Flood Elevation (BFE) as defined by the flood model. Newer flood maps have elevations with decimals, so the impression is that the data is precise. You can request a Letter of Map Amendment (LOMA) to remove your property from the flood zone by showing that it is above the BFE. Elevation above the BFE exempts you from compulsory flood insurance.
This precise measurement process would suggest that the flood hazard is clearly defined. That is simply not the case. Over 30% of flood claims come from areas outside the mapped flood hazard zones. There are several reasons for this variance.
1 — The flood data depends on accurate elevation data. According to FEMA the best-case elevation data has a 9 to 13 inch accuracy range and the worst case has a 3 foot 2 inch to 4 foot 9 inch accuracy range. This level of elevation uncertainty means that the elevation numbers used have a significant range of variability. Being a small distance above the BFE may not eliminate the risk of flooding.
2 — The flood model is a point in time model. Changes in the topography, level of development and growth of impermeable surfaces on the flood panel will affect the accuracy of the model. In many cases upstream development with increased paved surfaces & additional roofs will have a negative impact on the flood model. The age of the flood panel is a key part of your evaluation.
3 — The flood model was based on a point in time estimate of precipitation. Recent temperature trends suggest that the atmosphere can hold more water vapor as the temperature has risen. This can cause heavier rainfalls in shorter periods of time. This can create a water input into the system that was greater than the design flow. Additional flooding is the result.
4 — There are different flood models that are acceptable to FEMA. Competing flood models can have dramatically different results. Flood maps are part of a political process. Depending on your specific jurisdiction, the flood model can vary from worst case to a best-case predictions. Unless you participate in the adoption of the flood panels, you will not know this answer.
To address some of these variables the State of New jersey has proposed adding two feet to the flood elevation data in their state. This amount would help address the inherent accuracy issues as well as increased storm inputs and development changes. This proposal is being met with opposition from many sources.
Data Sources
If the FEMA flood maps are not the best evidence of hazard, what are the choices available to the insurance buyer?
A hazard tool is available that offers some guidance. Visit RiskFactor.com to get a location specific hazard analyses for flood, wildfire, and extreme heat. You can create an account to access a single location report for free.
Unfortunately, the best data sources are behind paywalls and the costs to get location specific data is $100 per report. This places the data outside the reach of most policyholders and insurance companies.
The best source of information may be the local emergency management agency, fire department, public works, or stormwater management agency. They may have historic records regarding flood events that have occurred at your location. Many flood events are not insured events, so insurance data may be incomplete.
Google Earth has add ins that import FEMA data. You can use these as well as elevation tools within Google Earth to assess flood hazards.
The Driehaus Difference
We know that flood events occur outside of the flood hazard zones mapped by FEMA. We evaluate the flood elevations, the range of accuracy for mapping and the age of the flood maps to make our estimate of the hazard and our recommendation for coverage.
We suggest you order a RiskFactor.com report for your location and we can work with you to evaluate that data. The flood damage models may help you determine your risk tolerance for a flood event.
Floods happen and the ensuing damage is generally worse than expected. Let us help you evaluate the risk and help you build the right insurance program for this hazard. Call us at 513-977-6860 or contact us via the internet at www.driehausins.com.