Category Archives: Flood Insurance

Flood... Flip... FLOP!

Flood… Flip… FLOP!

The pitfalls of trying to renovate and resell flooded homes, which should also concern buyers.

After any major flood event, such as the great flood of 2016, there are generally many damaged homes available for purchase, often at low prices. While such homes may offer great opportunities, they also bring with them a higher than normal number of factors which must be carefully considered. This is true for both those who might want to renovate them, as well as purchasers.

As with any renovation project, the wannabe “house flipper” must evaluate the potential market value of the finished home, and compare it to their total costs. Those costs include acquisition, renovation, interest, permits, and sales commission. One must always allow for unexpected cost overruns, and plan accordingly while keeping Murphy’s Law in mind.

With a flooded house, there are even more factors in the equation. Continue reading

Town Hall Meeting on Flood Recovery 9/13/2016

Town Hall Meeting on Flood Recovery 9/13/2016

Notes and comments on the meeting

I attended this meeting last night, which was held at our beautiful Live Oak United Methodist Church. Those present included State Representative Valarie Hodges, Livingston Parish President Layton Ricks, Livingston Flood Administrator Chuck Vincent, several representatives of FEMA, SBA, the governor’s office, GOHSEP, and others.

Below is a summary of the notes I took during the meeting, along with my comments in italics.

Continue reading

After the 2016 Flood: What to Expect in Real Estate and Beyond

After the 2016 Flood: What to Expect in Real Estate and Beyond

Answers to important unresolved issues may change this, but as of now, here are our broad views on what lies ahead.

We broke down residential properties into 3 general categories, and offer our thoughts on issues related to each:

1. Homes which were untouched by the flood
As detailed in our previous article, we believe that prices for these homes should rise modestly (10-15%) over the next year. This is due to the simple law of supply and demand. Among these houses, those in so-called “no flood” zones (zones X, C, or B; properly called “moderate to low risk areas”) should be the most sought after. (Click here for a more complete explanation of flood zones.)

Undamaged houses in “flood zones” (zones A, AE, or V; properly called Special Flood Hazard Areas / SFHAs) will still be in demand, but because of their flood zone classification, they’re not quite as attractive.

2. Homes which received minimal flooding, and have never flooded before
These houses should still be very marketable after PROPER repair, especially those not in an SFHA. Sellers will have to disclose the fact that it flooded, of course. Homes such as these will take some time to repair, and once complete, probably won’t fetch quite as much as undamaged homes. However, they will have considerable value, since there are a limited number of homes which were completely untouched. It’s possible that bargains may be found among these once-flooded houses, if the owners decide to sell them as-is and move instead of repairing them.

3. Homes which received a significant amount of flood damage
Houses in this category have many potential issues to examine. Local governments are requiring inspections before issuing building permits. Also, higher water levels mean more damage, thus the “substantial repair” rules are more likely to apply. “Substantial repair” is a repair costing at least 50% of the property’s market value. FEMA mandates that properties requiring substantial repair must also be brought into compliance with current NFIP (National Flood Insurance Program) guidelines. In other words, if a house is below BFE (Base Flood Elevation) and “substantially damaged” then it must be elevated at least to the BFE in order to be compliant. Ascension and East Baton Rouge Parishes have even stricter requirements with regard to “substantial repair”. Ascension normally requires elevation to 1’ above the highest water level during a flood, and East Baton Rouge considers 40% to be the threshold for “substantial repair”. However, as of now, Ascension has relaxed their elevation requirement to 1’ above BFE, which is still tougher than FEMA’s standards.

Houses such as these will need a lot of work. If the owner had flood insurance, then they SHOULD receive sufficient funds to repair it, unless elevating is required. Flood policies include up to $30K of ICC (Increased Cost of Compliance) coverage to help elevate, but that might only pay to raise a small house on piers, and not much else. Mandated elevation is the number one concern on everyone’s mind right now! If a house needs “substantial repair” and lies below BFE, then the cost of elevation must be added to the already large repair cost. Even with flood insurance, the total is likely to be out of reach for many homeowners. People are justifiably upset about this. Some are talking about simply walking away from their homes, as they have no way to pay for everything.

If communities are left with thousands of houses which are deemed both non-compliant and substantially damaged, and whose owners cannot afford to elevate them, it will be a disaster. The houses would stand empty, meaning we could be faced with entire neighborhoods of abandoned homes.

On a positive note, it is likely that there will be opportunities among houses with considerable damage. Some owners will want to simply get rid of their damaged homes quickly, and sell them at bargain prices. This would allow those willing to invest the money, time, and effort to acquire a house inexpensively. Doing so would benefit new homeowners, property flippers, or those wanting to use the house for rental income, thus bringing new life to these homes and neighborhoods. However, buyers need to be very diligent in evaluating “bargain” houses, as any potential issues such as elevation, etc. would be theirs to face. Non-compliant homes are especially problematic, because even a cash buyer could not purchase and renovate them, and simply choose not to have flood insurance. Parishes will not issue a building permit for the repairs on a non-compliant structure, so they’d still have to elevate if the house is below BFE.

The prospect of abandoned homes is something else to consider for those thinking about picking up flooded houses cheap. Suppose that the newly renovated property is surrounded by empty, gutted houses? It won’t have much appeal, and could turn out to be a bad investment. Nobody wants to live in the middle of abandoned homes or vacant lots.

We believe that there will be new activity among even the badly flooded homes. People have a way of bouncing back strongly from disasters like this, and often the neighborhoods end up being better than before. However, that activity could be severely limited by the FEMA/local elevation rules. After Katrina, there were Road Home grants which helped many people without flood insurance. As of now though, nothing similar seems to be available, and thousands of people are gravely concerned.

We’re not sure what the solution is, but the prospect of losing a substantial part of the population (thus the tax base) should motivate governments into action. Hopefully those in charge recognize the gravity of the situation, and will fight for a workable solution. Ultimately, it’s the federal government (as in FEMA and the National Flood Insurance Program) whose guidelines are the overriding factor, so they would have to either relax the rules, or cough up the money to help fix these houses.

If you want to know more about your specific situation, give us a call or send an email. We’ll help you in any way we can.

After the 2016 Flood: Now What?

After the 2016 Flood: Now What?

With the floodwaters gone, many are wondering what lies ahead for home sales and prices.

The devastating flood of 2016 laid waste to much of central Louisiana, on a scale not seen since Hurricane Katrina 11 years ago. More than 80% of the structures in Livingston Parish sustained flood damage, and 35% of those in East Baton Rouge. Other nearby parishes were severely affected as well.

As you may have seen in our 4-part series on flood insurance and related issues, our former home in St. Bernard Parish was completely flooded and lost to Katrina. While there are indeed differences between the flooding from Katrina and this year’s flood, there are many similarities as well. Just as in Katrina, entire neighborhoods have been devastated, and many thousands of homes have been made unlivable. As it was back then, everyone is asking with regard to houses: “Now what?”

There is no simple answer to that question, because issues such as FEMA payments, rebuilding requirements, and others remain unsettled. However, based upon our research of what happened in the years following Katrina, and our knowledge of the market, we can offer some informed analysis.

The main factor is that the supply of habitable houses is down, at least temporarily. There was already a shortage of available homes prior to the flood, and with tens of thousands damaged, that supply has now shrunk incredibly. The law of supply and demand will definitely apply, though with some limitations.

After Katrina, I saw some people raise the price of their undamaged houses ridiculously high just days after the storm, hoping to “cash in” on the sudden demand. However, since most home sales are financed, the price MUST be supported by an appraisal. This fact kept rampant price gouging to a minimum. At the same time though, there WAS a legitimate shortage of homes. Plus, buyers who had cash could afford to pay a reasonable premium to quickly get a house untouched by the hurricane. So, home prices indeed rose.

Danielle and I remain members of the New Orleans MLS, so I did some in-depth research of home prices before and after Katrina. I chose to compare homes which sold at a price of $250K or less; were in Very Good or Excellent condition; and were not foreclosures. I excluded St. Bernard Parish from the initial search, since EVERY structure in the entire parish (including our house) was declared uninhabitable after the storm.

From January 1, 2005 through August 28, 2005 (the day before Katrina) sales of homes meeting my search criteria averaged $92.59 per Square Foot of Living Area (SFLA). In this period, 4,309 such homes were sold.

I then ran the exact same search, for the same period 1 year later, in 2006. The average sales price per SFLA was $105.85. The number (volume) of sold homes increased to 4,487.

So, the average sales price per SFLA for these homes increased by 14.3% after Katrina, with the sales volume going up about 4.1%.flood2016_now_what_graph1I  went back and applied the same search criteria to St. Bernard Parish. Prior to the storm, from 1/1/2005 through 8/28/2005, there were 246 sales, averaging $82.71 per SFLA.

Due to the utter devastation in the parish, it took a long time for rebuilding to begin, so only 7 (SEVEN) houses meeting my criteria were sold there in all of 2006! I therefore extended the post-Katrina comparison period through the end of 2007. During this time, 131 such homes sold, at an average price per SFLA of $92.28.

While the number of sales fell by 46.7%, the average price of those sales was 11.6% higher! It makes sense that the volume was down, since literally EVERY house had been damaged. It also stands to reason that prices went up, due to the low number of available homes. It is encouraging that even homes in an area which was completely destroyed, all of which had to be repaired, still sold on average for 11.6% more than before the storm.flood2016_now_what_graph2

In my opinion, our part of the state after the 2016 flood is a lot like New Orleans and its surroundings were after Katrina. Some areas were completely flooded, while others were untouched, and yet others fell somewhere in between. I think we will see a similar trend in prices, with non-flooded homes, and later, homes which flooded once and were well-repaired, increasing in price somewhere in the 10%-15% range. This estimate will NOT apply to homes which were heavily damaged and/or lie below Base Flood Elevation (BFE). Those will not fare so well, unfortunately.

The road back to full recovery from this disaster will be long and difficult. If you’d like to ask our opinion on your specific situation, we’ll be glad to do so. Just give us a call or send an email.

In my next article, I’ll talk about some of the issues, challenges, and opportunities you can expect with regard to real estate in the coming months.

How a faraway tropical storm or hurricane can affect your closing

How a faraway tropical storm or hurricane can affect your closing

Both buyers and sellers need to keep abreast of tropical storm activity, and plan ahead to avoid insurance issues.

The Atlantic hurricane season begins June 1 and ends November 30, meaning it is in effect for 6 months out of every year! Thus, there’s a 50% chance that you could be closing on a sale or purchase during hurricane season. There is an important aspect to be aware of regarding named storms, because even if a storm doesn’t threaten our area, it can still impact real estate closings in a major way.

If you are planning on buying or selling a property, always stay current on the status of tropical activity. The reason is that insurance companies use a “hurricane box”, shown on the map above, as a guideline for writing homeowners and flood policies. The area of the box may vary slightly from company to company, but this one, which begins at 20 degrees N latitude and 80 degrees W longitude, is a good example. Once a named storm enters the box, insurance companies will no longer issue new policies, nor increase coverage on existing policies. This status is sometimes referred to as “non-bind”. When an insurance company officially commits to a policy, they “issue a binder” or are “bound” to that policy. Thus, when they are in non-bind status, no policies are bound, and no insurance can be obtained. They stay in non-bind status until the storm is no more, which can take days.

As a real estate closing draws near, one of the crucial steps required by the buyer’s lender is the binding of the homeowners insurance policy. Also, if flood insurance is mandated, it must be bound too. Usually insurance is bound in the late stages leading up toward closing, but therein lies the danger. Should the insurance not be bound, and a named storm enters the box, the closing would likely be delayed, possibly for a considerable time. That in turn could cause the contract date to pass by, the buyer’s rate lock to expire, and/or many other problems. All of these issues are serious, and can make the entire sale fall through. Therefore, closing delays must be avoided at all costs. (Keep in mind that the government-mandated changes to closing procedures effective October 3, 2015 are another potential cause of delay.)

To avoid problems due to named storms, both buyers and sellers MUST pay close attention to tropical activity. (Click here to reach an excellent website for monitoring the tropics.) If you’re a buyer and it seems even remotely possible that a named storm might enter the box around the time of closing, get the insurance bound IMMEDIATELY! If you are a seller, don’t rely on the buyer knowing about this and acting on it. Be proactive and have your agent contact theirs to make sure it is done. Otherwise, your sale could be in jeopardy.

By staying aware of potential storms, and taking care of the insurance binder(s) ahead of time, closings can proceed as planned, even if a named storm enters the box after the insurance is bound.

If you have any questions about how to handle this, give us a call or email!

Flood map changes

Flood Insurance part 4 – Flood map changes, and how they can affect you

Flood insurance rate maps (FIRMs) are periodically updated. Those changes can dramatically affect your flood insurance rates.

Part 4 of a 4-part series: Part 1   Part 2   Part 3   Part 4

As you saw previously in our series on flood insurance, the flood zones as defined on the official Flood Insurance Rate Maps (FIRMs) are a huge factor in determining flood insurance rates. Be aware that FIRMs are periodically reviewed and updated. Doing this is a long and complex process, in which scientists study the elevation and topography of the land, the adjacent bodies of water, manmade developments, etc. All this produces (hopefully) a map which indicates the likelihood of flooding in any given area. Flood maps and flood zones are very controversial, because sometimes it seems that areas which have never flooded are considered high risk zones, and vice versa. Nevertheless, the federal flood maps are the official standard used.

Since these maps change periodically, that means the flood zone designation for a given location can also change. This can be a good or a bad thing. It is possible that a house which had been in a high risk zone is now located in zone X on the new map. More often, it seems that the opposite occurs. A house which may have been in flood zone X for years could suddenly fall into zone AE, meaning flood insurance would be required. This happened to our own house with the new Livingston Parish flood map which came out in April 2012. However, since we already had a policy in place, we are allowed to keep it and receive the preferred (low-risk) rate, at least until the government changes its mind.

The flood map shown here is for a portion of north Walker. White areas are flood zone X; blue areas are the high risk zones (AE) according to the 2001 flood map; red areas are the current high risk zones from the 2012 map. Note how some areas improved while others got added to the high risk zones.

When flood maps change, the base flood elevation (BFE) for a particular area can also change. If it is determined to be higher than it was before, that can have a massive impact on the cost of flood insurance. As we discussed in part 3, rates are determined by how high (or low) a house lies relative to the BFE. If a house was at +2, and the new map raises the BFE by 2.5’, the insurance would go from a few hundred dollars a year to a few thousand!

When a home is reclassified as being in a high risk flood zone, the lender will require the owner to purchase a flood insurance policy if there is not already one in place. Currently, they are allowing such homes (like ours) to either continue or purchase a policy at the preferred rate, as long as certain requirements are met. Click here for details. This is a special form of “grandfathering.”

Other types of grandfathering are currently allowed. Owners of houses built before a FIRM existed for that location can elect to pay a “pre-FIRM” rate instead of getting a flood elevation certificate and paying the standard rate based on that elevation. Houses which were built above grade at the time of construction (builders are not allowed to construct homes which lie below the base flood elevation) but whose elevations are later changed on new flood maps can also receive a grandfathered rate. Grandfathering is a good, sometimes absolutely necessary, choice for homes which otherwise would have very high standard rates.

Unfortunately, grandfathering has, at least for now, come to an end! The Biggert-Waters Act was signed into law and took effect in October 2013. The short version is that the federal government has discontinued all forms of grandfathering for flood insurance! No matter how high it would make the cost for the homeowner, they want all flood insurance policies to be based on standard rates and elevations. Many people are in an uproar about this. Homeowners in some areas are being told that their policies are soon going to cost tens of thousands of dollars per year! If fully implemented, this will be a catastrophic blow to a lot of homeowners, as it will make their homes unaffordable for themselves along with anyone who might want to buy them. This is an impending disaster.

In our opinion: With Biggert-Waters, the federal government is pulling the rug out from under hardworking American homeowners. We can understand them not wanting to keep paying out billions in flood claims on risky properties. However, we believe they should not have gotten into the insurance business in the first place! Now that they are though, they should honor the promises they made on existing homes. If they want to avoid insuring high-risk properties, they should do so from here on out, but NOT penalize homeowners who trusted them to provide the coverage they promised.

In conclusion:

  • If you are planning to buy a house, look CLOSELY at flood zones. We are extremely careful about this when working with our buyers, as it is a very important factor, especially today.
  • If you get a house under contract, be sure to ask your insurance agent to check it for any prior history of flooding. Past flood claims on a house may cause new claims to be denied!
  • Keep abreast of the Biggert-Waters Act, and the current efforts to modify or block it. Though it may not affect you right now, remember that flood maps change, and those changes, along with provisions of the Biggert-Waters Act, could someday apply to you.


The uproar about Biggert-Waters, and its potential impact on housing, were so bad that Congress had to pass the Homeowner Flood Insurance Affordability Act (HFIAA) in 2014. This law rolled back much of Biggert-Waters, and perhaps most importantly, restored grandfathering. This means that a house properly built to the flood standards effective at the time of construction can remain rated by those standards (such as elevation and zone) even if the maps change. HFIAA also enforced accountability on the NFIP, and set an absolute cap on residential rate increases of 18% per year.

Here is an excellent summary of Biggert-Waters and HFIAA as presented by the National Association of Realtors.

NOTE: As we have stated many times, we believe carrying flood insurance is critical, even in X zones! As you saw, our former house in St. Bernard was completely flooded by Katrina. It was in an X zone, and we had elected to carry maximum flood coverage. For a cost of $317, we were saved from financial ruin. (That same policy today is only about $450.)


Many of the provisions for grandfathering etc. are only allowed when continuous coverage has been maintained. For example, if you were in an X zone without coverage, and a new map change rezones you into AE at a low elevation, your policy will be rated by the new standards. The fact that it was previously an X zone will not count at all!

We are a prime example. We bought our house in Walker in 2005. At the time, it was in an X zone, and we purchased maximum coverage which we have kept continuously in force. When the map changed in 2012, the line between X and AE now cuts through 1 room of our house, so technically we’re in zone AE now. However, because we have maintained continuous coverage, we still pay the X rate.

Following the 2016 flood, issues with regard to flood insurance are more important than ever! Be sure to subscribe in order to get our updates, both here and on Facebook as well.

Flood Insurance part 3 - How flood insurance rates are calculated

Flood Insurance part 3 – How flood insurance rates are calculated

Flood insurance rates are based on what flood zone you are in, and in some zones, also depend on the elevation of your house.

Part 3 of a 4-part series: Part 1   Part 2   Part 3   Part 4

First of all, keep in mind that flood insurance is provided by the National Flood Insurance Program (NFIP). No matter which insurance company writes the policy, the actual insurer is NFIP. (In other words, you and I, the American taxpayer.) As long as its coverage is the same, and is calculated correctly, the cost of a flood insurance policy will be identical no matter which company writes it. If one company claims they can “save you money” on your flood insurance, it’s because they are reducing the coverage. Be careful to check your new or existing policy for contents coverage! Remember that lenders only require that the HOUSE be insured, not your personal possessions within. Sometimes buyers were sold flood policies which only covered the house, only to realize after a disaster that their contents were uninsured. As you saw in part 1 of our flood insurance series, we lost our house and everything inside it. Contents coverage was a lifesaver.

When flood insurance is required, its cost is determined first by the flood zone in which the property is located. If it’s in a lower risk zone such as B, X500, C, or X, the rates are determined by a straightforward chart, based on coverage amounts. That chart is located here.

When located in a Special Flood Hazard Area (SFHA) such as zone A or AE, the cost is determined not only by the amount of coverage, but by the elevation of your house compared to the base flood elevation (BFE) for the immediate surroundings. In general, the higher your property is above the BFE, the lower your insurance rate. (For an explanation of the flood zone codes, BFE, etc, see part 2 of our series.)

To see how this works: Suppose the elevation of your house, which is calculated from the lowest floor surface of the living area, is 50.8’ above sea level, and the BFE is 50’. That makes your house 0.8’ above BFE. Rounded to the nearest foot, it would be considered a +1’ for insurance purposes. If the house were instead at 50.1’ above sea level, it would round to 50.0’, which a +0’, or even with BFE.

Anything lower than BFE causes the rates to skyrocket. This is understandable, because a house that lies below BFE is lower than the predicted level of the floodwaters should a flood occur. It is true that some houses which lie below BFE have never flooded, and may never flood. However, insurance is based upon risk probabilities, and that is what we must deal with. A couple of our clients had homes which fell below BFE due to map changes (more on that next time) and their flood insurance premiums rose to $3,000 – $4,000 per year! This is a huge financial burden for the homeowner, and an enormous obstacle for potential buyers.

Besides the cost and higher risk for a house which lies below base flood elevation, such homes are not eligible for financing with a USDA Rural Development (RD) loan. RD will finance houses located in a SFHA (“flood zone”) but NOT if they lie below grade.

The elevation of a house is determined by a surveyor. They measure the height of the lowest floor surface of the living area and compare it to the BFE for that location. The document generated is called a Flood Elevation Certificate. Be very wary of multi-level houses, homes with enclosed carports/garages, sunken living rooms, etc. Although they often measure from the top of the slab outside, surveyors are supposed to find and use the lowest spot to calculate the elevation. If they do so, such lower areas could make a HUGE difference in the flood insurance premium.

Next time we’ll talk about how maps can change, how to deal with those changes, and the Biggert-Waters Act, which is causing drastic effects on flood coverage for many homeowners.

Sample flood map

Flood Insurance part 2 – Flood zones and what they mean

The rates and requirements for flood insurance are determined by what flood zone you are in. We will explain the most common flood zone designations.

Part 2 of a 4-part series: Part 1   Part 2   Part 3   Part 4

Above is portion of the flood map for the city of Walker, LA. This was taken from the flood mapping site we use all the time, and which also appears on our Links page. While it may look complicated, this is fairly representative of a typical flood map. You can see sections which are clear (zone X), sections which are shaded with blue dots (zone AE), and sections which are shaded with gray dots (zone B). Each of these colors represents a different flood zone classification. As you can see, they follow the contours of the land, and can lie in close proximity to one another.

While there are many different flood zone classifications, we will deal with those which are most commonly encountered. (For a full tutorial on flood zones, click here.)

Flood zone A or AE: These designations are for areas of higher flood risk, which are considered to have a likelihood of flooding once every 100 years, thus an annual probability of 1%. These are what are commonly known as “flood zones”, because lenders require that properties in these zones have flood insurance. Officially they are called “Special Flood Hazard Areas”.

Flood zone B: This designation denotes areas considered to have a likelihood of flooding once every 500 years, thus an annual probability of 0.2%. I have also seen these areas referred to as zone X500.

Flood zone X or C: These are the best flood zone classifications. They represent areas considered to be subject to flooding less than once every 500 years.

Flood insurance is not required for properties located in zones B, X500, X, or C. However, as we discussed in part 1 of our series on flood insurance, it is possible for any location to experience a flood, so we firmly believe that flood insurance should always be carried. Outside of Special Flood Hazard Areas, the cost of flood insurance is very inexpensive. Our house, which was utterly destroyed by the floodwaters of Hurricane Katrina, was located in flood zone C! Thankfully, we had flood insurance.

Also on the sample map, within the AE zones, you can see gray wavy lines with a number on them. These indicate the approximate Base Flood Elevations (BFE). Think of the BFE as being the surface of the floodwaters if it were to flood. BFE is expressed as a height in feet above sea level. The exact BFE for a specific location is determined by a surveyor.

Base Flood Elevation is a crucial factor in calculating the cost of flood insurance for properties located in Special Flood Hazard Areas. In our next discussion, we will look at how flood insurance rates are determined.

Our house after Katrina

Flood Insurance part 1 – Why it’s so important

Flood insurance is required if you are in a higher-risk (flood) zone. However, you can flood no matter where you’re located, as we learned firsthand.

Part 1 of a 4-part series: Part 1   Part 2   Part 3   Part 4

The picture above shows the interior of our house after Hurricane Katrina. We lived in St. Bernard Parish at the time. The floodwaters were over 10′ deep, and our house was a single story, so it was a complete loss. Our furniture and belongings were virtually unrecognizable, looking as if they’d been thrown into a giant blender with mud, then scattered randomly around the house. Covering it all was a thick layer composed of fallen sheetrock from the ceiling and insulation from the attic.

Thankfully, we had evacuated about 2 days before the storm, taking our most valuable possessions with us. However, anything we couldn’t fit into our 2 cars remained, and suffered the fate you see here.

We were also grateful that we had a flood insurance policy in effect, with maximum coverage. When we’d bought the house in 2000, our wonderful insurance agent (who is STILL our insurance agent) informed us that it was located about 100′ inside flood zone C, which is a low risk (“no-flood”) zone. He told us how inexpensive flood insurance would be. Maximum flood coverage of $250,000 on the house, and $100,000 on the contents, would only cost us $317 a year. His advice saved us financially, as we chose to purchase that policy. It was still in place when disaster struck in 2005.

Even though almost 9 years have passed, that same policy only costs $414 annually today, an increase of less than $100. Remember, this is for a home located in a low risk (“no-flood”) zone, typically noted as zone B, C, or X. It’s a small price to pay for the peace of mind and the protection it provides. (Of course, flood insurance in higher risk zones does cost more. We will explain the differences in flood zones in part 2 of our series.) Click here to see the official rate chart.

I shudder to think of where we would be today if we had not had flood coverage. Even with that coverage, losing our house and everything in it was an experience we never want to go through again. That is one of the many great reasons we bought a house in Walker after the storm. We are now 65′ above sea level, and in flood zone X. However, we still carry maximum flood coverage, and happily pay that small premium when it comes due each year!

Unfortunately, many people did not receive the same great advice we did, advice which we always give to our clients. We learned about one family who bought a house in St. Bernard about 2 weeks before Katrina. (We did not know them at the time.) Their realtor and/or insurance agent and/or loan officer told them, “You’re in flood zone B! Why waste $200 a year for flood insurance you don’t need?” Soon afterwards, their house was utterly destroyed by the floodwaters from the hurricane.

Keep in mind though that it doesn’t take a hurricane to flood your house. A flood is considered rising water, no matter what the source is! If a pond overflows, or a water tank ruptures, or a reservoir breaks, and your house gets damaged by rising water, the damage will only be covered by flood insurance, NOT your homeowners policy.

Case in point: We were told of a lady who had built a nice, brand-new house somewhere in Mississippi. She was advised not to get flood insurance. Those giving her this (bad) advice said, “You’ll never flood here! It’s a no-flood zone! It has never flooded, so don’t worry about it!” Not long afterwards, another builder was clearing a lot down the street, and bulldozed the trees and mud into the ditch, blocking it. At some point later, a heavy summer thunderstorm sprang up, and her brand-new home was flooded to a depth of 18 inches! She lost all her furniture, had to rip out the bottom 3-4 feet of sheetrock and insulation, etc. The damage came to $40,000.00. When she tried to file a claim on her homeowners insurance, she learned that it did not apply, since this was caused by a flood. Since she lacked any flood insurance, her only recourse was to file suit against the builder. We do not know if she was successful, as that is a long and difficult process.

In summary, we believe that everyone should carry flood insurance on their home. Regardless of what the map says, or what zone you’re in, the fact is that your home can be flooded. If you live in a high-risk zone (A, AE, etc.) and have a mortgage, flood insurance is required by the lender. However, too many people, including realtors and loan officers, don’t stress the importance of flood insurance when you’re in a so-called “no-flood” zone. (According to, the official site of the National Flood Insurance Program, people in these lower-risk areas file over 20% of claims and receive one-third of disaster assistance for flooding.) The cost of coverage is very low for such zones, and if you need it, as we did, the benefits can be lifesaving.

Flood insurance is crucial to home ownership, which is why we are devoting a multipart series of discussions about it. Next time, we will explain what the different flood zones mean, how they can change, and how they affect you.