Earth Day 2021 and Flood Insurance

Despite some bumps along the road in the past year or two, we still get to dedicate a day to celebrate this big blue globe we call home. As we celebrate Earth Day, let's keep our heads up and eyes open since this day can be a great moment to understand how the current state of Earth and the impact of climate change will affect flooding across the country and flood insurance in general. 

Earth Day

We know the usual drill on celebrating Earth Day: turning the lights off for a certain amount of time, joining clean-up drives, donating to reforestation efforts or planting trees yourself, trying to reduce waste and carbon emissions, and many more. More than this, we should also understand the current condition of our planet and how climate change is impacting it. Like it or not, we're currently stuck here and we have to face whatever comes our way.

It's important to keep in mind that climate change has been directly contributing to higher sea levels, more frequent drought, storms, heat waves, melting glaciers, and as we go through the Spring season, it's important to see how the season and weather impacts your flood insurance.

Understanding Flood Risks

Seasonal Changes

We mentioned how seasons can affect flooding in a certain area and how ocean levels are rising. This is important because we have what we call spring thaw which a covert threat in this season other than spring storms and heavy rainfall here and there. Spring thaw is when the heat of the season starts to melt the collected snow and ice from the previous Winter. Now, it may seem that some of the snowmelt runs off to a nearby body of water or drainage system, but in truth it also seeps into the soil, saturating it, and eventually gets released to water formations.

This means that the land won't be able to naturally take in much water than usual. This can be very big when it comes to flooding since it's possible that rivers, lakes, and creeks can rise to unexpected levels given enough inches of rain. As greenhouse gases keep on heating the planet up, it's likely that spring thaw may become more devastating.

Sea Level

When it comes to sea levels, on the other hand, we have to take into account how ocean temperatures impact them. There are two major contributors to the rising sea level: melting glaciers and ice sheets adding water to the ocean and the volume of the ocean expanding due as the water warms. It's important to note that the average sea level rose to about 8 to 9 inches since 1880 and two years ago, the global sea level was 3.4 inches higher than the average of 1993. This means that coastal areas are facing more threat of possible storm surge or even high tides causing an overflow of the water to the general area.

Storms and Rainfall

Another flood risk is the constant and more frequent heavy rainfall due to storms. The National Oceanic and Atmospheric Administration (NOAA) recently announced the twenty-one names of the storms for this year. Now, we should preface that this number isn't a surefire count on the hurricanes coming in the country since we've seen how 2020 had more hurricanes than expected.

This means that if you're living near a body of water: lake, river, creek, or the coasts which are generally considered as Special Flood Hazard Area (SFHA), it's more likely to experience flooding during the storm season.

You can understand the risk of flood in your area through flood maps or Flood Insurance Rate Maps (FIRM) wherein the Federal Emergency Management Agency (FEMA) announces the movement of flood zones for properties and their respective expected flood insurance costs changes.

Flood Insurance

We want to cover the impacts of these expected flood risks on the cost of flood insurance policies and flood insurance options as preparation as well, but first, it's important to note that flood policy generally gets impacted by the overall data from flood risk, flood claims, and flood loss in order to determine the flood insurance premium for your property.

The NFIP

When it comes to federal flood insurance through the National Flood Insurance Program (NFIP) and FEMA, you can expect that being moved into the high-risk flood zone or the SFHA in flood map updates generally mean that your flood insurance premium's going to increase. Commonly, this is shown as flood zone and flood zone AE on flood maps.

This can go around five to fifteen percent depending on what state you're in. Generally, your property may be moved into a high-risk area if you're close to a body of water like creeks, lakes, and rivers.

This may also mean that you're going to have to carry mandatory flood insurance for your property by the mortgage industry. This is to make sure that the property and its value will be protected despite experiencing a flood which is why the mortgage industry generally has a rule that high-risk areas are to have a flood insurance policy in place.

On the other hand, if you're property is near the coasts which are considered also in the SFHA, you're going to get higher flood insurance premiums compared to those who are in flood zone A or AE. This zone is known as flood zone V.

This increase can range from ten to twenty percent compared to the average or low-risk area rates. You may also be required to carry an elevation certificate and other additional documents for your flood insurance purchase.

Flood insurance coverage with the NFIP maxes out at $250,000 for property or building coverage if you're doing a residential policy and up to $500,000 for commercial policies. This is with a $100,000 personal property coverage. It's important to note that additional living expenses, loss of use, and replacement costs aren't included. If your property experienced substantial damage or severe repetitive loss, you may be eligible to get an extra $30,000 for flood mitigation purposes through the Increased Cost of Compliance (ICC) coverage.

If you're planning to get federal flood insurance, you might want to really prepare for it ahead of time since there may be a 30-day waiting period before the policy takes effect on the property.

The Private Flood

On the other hand, when it comes to flood insurance rates, the private flood insurance which is provided by private insurance companies follows almost the same system on the cost of insurance rates however it's significantly cheaper compared to the federal flood insurance rates. This means that if you're in a high-risk flood zone, you're still going to pay for more expensive premium rates compared to low-risk areas.

Keep in mind that the private market won't ask for additional documents to properly measure the risk of flooding on your property since each carrier has developed its own set of approaches in doing so.

When it comes to private flood insurance coverage, there's no max amount which means you can get up to $10,000,000 for property coverage and $1,000,000 on contents. More importantly, private companies provide additional living expenses, replacement costs, and loss of use.

Flood insurance purchase with the private market is also significantly better since you only have to wait 15 days or less for your flood insurance policy to take effect. It's important to note that the waiting period on the private market generally depends on the carrier or the insurance provider. Yes, this means that you aren't really locked into one carrier when you move into the private market since there are multiple flood insurance providers out there. 

Earth is a very unique planet and we should be very happy that we get to celebrate it. Regardless of how climate change is negatively impacting everything around us, we have to keep our head up high and move forward with a smile. Climate change isn't really helping flood events across the world, but it's better to be prepared for things like this and secure the things important to you.

If you have any questions on flood insurance, feel free to click the links below to reach out to us or check out our YouTube channel where we post daily flood education videos.