Flood insurance

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Faisal
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Flood insurance

Post by Faisal »

After the most recent hurricane that just flooded the North East I am looking at getting flood insurance for the house. We have not been flooded yet but I do not want to take a chance since houses in our area and just down the street did get flooded. We are not in a flood zone from what I understand from our neighbours.

We have a very active and efficient subpump and have re-routed some drainage away from the house recently to help with water issues. Our neighbourhood is built in former farmland/orchid land so it retains water. Also neighbours have mentioned that the the houses on our side of the street may have a underground stream or some water source thus every house in our street has a subpump and others have more than 1 french drain to handle the water. Also other backyards get super squishy and retain water after a storm.

I was wondering if anybody could provide any general advice on getting flood insurance as a precaution and any thoughts you may have in general.
L84SUPR
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Re: Flood insurance

Post by L84SUPR »

Are you talking about a river overflowing and flooding your property, rain falling on your property or your neighbors' property and getting into your house, or subterranean water flow?

These are all different in the insurance world and may or may not be covered by a particular policy.

Flood insurance is generally for the first item I mentioned.
1/3rd VTWAX, 1/3rd Wellington, 1/3rd G Fund | All models are wrong. Some are useful.
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vanbogle59
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Re: Flood insurance

Post by vanbogle59 »

I have lived in FL for 30 yrs. I am in an evacuation zone (X).
I don't have flood insurance. My brain tells me I should (when I listen).
We have never had a problem. But I know plenty who have.
Unless you just CAN'T AFFORD it, the math is pretty compelling.
After all, it's subsidized out the whazoo, right?
If you had to buy it from Lloyds it would cost 5x.

Check your address here:
https://msc.fema.gov/portal/search
hoofaman
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Re: Flood insurance

Post by hoofaman »

vanbogle59 wrote: Thu Sep 23, 2021 11:28 am I have lived in FL for 30 yrs. I am in an evacuation zone (X).
I don't have flood insurance. My brain tells me I should (when I listen).
We have never had a problem. But I know plenty who have.
Unless you just CAN'T AFFORD it, the math is pretty compelling.
After all, it's subsidized out the whazoo, right?
If you had to buy it from Lloyds it would cost 5x.

Check your address here:
https://msc.fema.gov/portal/search
Is your home paid off or do you have a mortgage?

I know Florida is a recourse state for mortgages, but I was curious if the banks ever try to collect the outstanding debt from people who lose their mortgaged homes to a natural disaster not covered by the owners insurance policy. I assume banks would try to collect, but maybe they don’t in reality?
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vanbogle59
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Re: Flood insurance

Post by vanbogle59 »

hoofaman wrote: Thu Sep 23, 2021 11:43 am
vanbogle59 wrote: Thu Sep 23, 2021 11:28 am I have lived in FL for 30 yrs. I am in an evacuation zone (X).
I don't have flood insurance. My brain tells me I should (when I listen).
We have never had a problem. But I know plenty who have.
Unless you just CAN'T AFFORD it, the math is pretty compelling.
After all, it's subsidized out the whazoo, right?
If you had to buy it from Lloyds it would cost 5x.

Check your address here:
https://msc.fema.gov/portal/search
Is your home paid off or do you have a mortgage?
Paid. And I never had the insurance when I carried a mortgage.
Again, I'm an idiot. The math says you should have it. Someone else (US taxpayer) is paying to cover part of the actuarial cost.
Maybe this post will be what finally gets me to pull the trigger and act rationally.
neilpilot
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Location: Memphis area

Re: Flood insurance

Post by neilpilot »

It's been years since I had flood insurance, but back when I did it was a Federal program administered thru several insurance companies. If you were in a designated flood risk area, based on Federal maps, you could buy flood insurance. If you weren't in a flood zone, your could not buy that coverage.

As I said, that was a very long time ago so maybe it's changed.
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vanbogle59
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Re: Flood insurance

Post by vanbogle59 »

https://www.fema.gov/flood-insurance

"Flood insurance is available to anyone living in one of the 23,000 participating NFIP communities. Homes and businesses in high-risk flood areas with mortgages from government-backed lenders are required to have flood insurance."
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Watty
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Re: Flood insurance

Post by Watty »

Faisal wrote: Thu Sep 23, 2021 11:12 am I was wondering if anybody could provide any general advice on getting flood insurance as a precaution and any thoughts you may have in general.
If you can image there is any flood risk then get it.

Something to keep in mind is that if you think that the house might flood once in 200 years then that does not sound too bad. The thing to realize is that if you live there for 20 years then there is about a 10% chance that it will flood while you are living there.

You also need to keep in mind that flood maps are not all that accurate. Most areas don't have more than 50 years of good data that is available when satellite mapping started being done. Even without climate change when house and roads are built upstream the building roofs and pavement change the runoff patterns which can make flooding more likely.

You can look up the statistics but as I recall a large percentage of houses that have flood damage each years are not in areas where flood insurance is required.

I once owned a house that was on top of berm that was about 20 feet high that overlooked a seasonal wetland. It was maybe a quarter of a mile from a sluggish river that normally was about 20 fee wide and five feet deep.

I researched the flood maps and flood insurance was not required and I thought there was no chance of it flooding or I would not have bought the house.

Maybe seven or eight years later I was refinancing and they had redrawn the flood maps so flood insurance was now required so I reluctantly bought it even though I thought it was not needed.

A few years after that there was a freak weather pattern where there was over a week of below freezing weather so the ground froze hard, then there was snow, which was not all that common there. The final thing was that there was a warm stream of tropical rain called the Pineapple Express that dumped steady heavy rain for several days in a row. That melted the snow but the ground was still frozen it everything ran off.

Each of the hard freeze, snow, and Pineapple Express were not that uncommon there, it was just that they all happened one right after the other which was uncommon.

That 20 foot wide river flooded and was over a mile wide in places. Our house was sandbagged but it did not help much since the water just came up through the ground and flooded our crawlspace. The was within 6 inches of the floor and if it had gotten into the floor there would have been major flood damage.

In today's dollars there was maybe $30K of damage but the flood insurance covered most of that since the mitigation effort helped cover the deductible.

I have moved since then and my current house has no risk of flooding so I do not have flood insurance.

It would be good to get a quote for flood insurance. If it is expensive and you do not want to pay that much, or you cannot afford it, then I would seriously consider moving. If flood insurance for your house is expensive then there is likely a good reason that it is expensive.
runner3081
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Re: Flood insurance

Post by runner3081 »

We are in AZ, initially when we bought with a mortgage, were in the AO zone and had flood insurance - as required.

About 6 years in, the city made significant work to re-work washes and drainage, our house was moved into the X500 zone and flood insurance was not required.

We ended up keeping the insurance and now that the mortgage is paid off, we continue to keep the coverage. It is pretty cheap and provides us with options if there is a flood. The climate is changing and it is hard to see so many other areas of the country, not in flood zones, being flooded every year.

To keep the premium low, we have a very low "personal belongings" coverage. The rate is <$500 per year.

Every year, I really want cancel it, but end up extending it.
talzara
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Re: Flood insurance

Post by talzara »

vanbogle59 wrote: Thu Sep 23, 2021 11:47 am Paid. And I never had the insurance when I carried a mortgage.
Again, I'm an idiot. The math says you should have it. Someone else (US taxpayer) is paying to cover part of the actuarial cost.
Maybe this post will be what finally gets me to pull the trigger and act rationally.
The National Flood Insurance Program has a cumulative loss ratio of about 100%. On average, NFIP policyholders have broken even. The subsidy from taxpayers only pays for loss adjustment and other expenses.

Even though you only break even on average, it is still a good deal. It's not often that you can buy insurance with an expected value of 1. Homeowners insurance has an industrywide loss ratio of only 60%.

The NFIP rates are not actuarially sound. High-risk properties receive a larger than average subsidy, and low-risk properties are subsidizing the other properties. It makes the most sense for high-risk properties to buy flood insurance, which is one of the main reasons that the program is in trouble.
Reubin
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Re: Flood insurance

Post by Reubin »

Don't hesitate. Get the flood insurance and don't take a chance. I found out the hard way.
gamboolman
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Re: Flood insurance

Post by gamboolman »

Get Flood Insurance !

I am from East Texas and have lived along the Gulf Coast all my life, except for the last 20 years before retirement when we worked/lived in Africa.

One of my earliest memories is of my Aunt/Uncles house in Ft. Worth Texas being covered up - well you could see the roof - by the Trinity River flooding.

I have been sensitive to Topography and High Ground since then and every house we have bought I made sure to check the Flood Zone Classification and the Elevation and the topography.

We have had water get up in our yard one time in Slidell, Louisiana during one of the dozens of hurricanes we have endured over the last 43 years - but we had bought the highest lot in the subdivision - we saw our neighbors flooded.

Have seen homes destroyed by floods in Mobile Bay when we lived there. Houston, ha - people buy homes in low ground that has a history of flooding and then complain when they get flooded !

In Africa, homes and many lives were lost during the Wet Season and resultant flooding (Equatorial Guinea and Nigeria) when we lived there.

Get Flood Insurance !
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vanbogle59
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Re: Flood insurance

Post by vanbogle59 »

talzara wrote: Thu Sep 23, 2021 2:12 pm
vanbogle59 wrote: Thu Sep 23, 2021 11:47 am Paid. And I never had the insurance when I carried a mortgage.
Again, I'm an idiot. The math says you should have it. Someone else (US taxpayer) is paying to cover part of the actuarial cost.
Maybe this post will be what finally gets me to pull the trigger and act rationally.
The National Flood Insurance Program has a cumulative loss ratio of about 100%. On average, NFIP policyholders have broken even. The subsidy from taxpayers only pays for loss adjustment and other expenses.

Even though you only break even on average, it is still a good deal. It's not often that you can buy insurance with an expected value of 1. Homeowners insurance has an industrywide loss ratio of only 60%.

The NFIP rates are not actuarially sound. High-risk properties receive a larger than average subsidy, and low-risk properties are subsidizing the other properties. It makes the most sense for high-risk properties to buy flood insurance, which is one of the main reasons that the program is in trouble.
Ah, yes. I used to know that and forgot. :oops:

I learned it a few years back when there was a threat of it being cancelled, or maybe it was cancelled for a short time, IDK.
Anyway, in FL, many many many waterfront homes became instanty unaffordable. Private insurance would have been like 3-5x. Mortgages would have been impossible. The state tried to put something together, but it was just too damn expensive, IIRC.
Then, it was re-instated, and all those homeowners could breath again.

(This board does not allow comments about the appropriateness of government subsidies for the wealthy. So, I will shut up.)

But, yes, flood insurance is cheap and protects your economic life. I really need to get off my arse and get it.
So do you.
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illumination
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Re: Flood insurance

Post by illumination »

If its a question, get it. It's essentially subsidized by the federal government.

I had some relatives that lived in a dry, desert climate (so of course you wouldn't need flood insurance) and had a "flash flood" type situation that caused significant damage. Did not have flood insurance, it was only something like $700 a year. It could have been a "life ruining" moment for some people. It's incredible the amount of damage water can do if it gets into the house. Had a 2nd flood a few years later, this time they had the flood insurance. Maxed out the policy at $250k. Significant changes had to be made to property. Biggest issue was the lot was sunk down below street level.

If people nearby have had flooding issues where it gets in the home, I would get it. It doesn't cover things like your yard or landscaping getting ruined, it basically covers the structure of your house and contents. Its just a judgement call, but relatively speaking, it's cheap insurance.
dandinsac
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Re: Flood insurance

Post by dandinsac »

It is really hard to gauge how much money to spend on insurance versus risk, especially with government subsidies that distort the true risk.

I used to live in Sacramento in an area protected by levees. My wife was worried about flooding, so we bought it. Happy wife, happy life!

Now I live in a slightly more earthquake prone area, but I haven’t bought earthquake insurance yet. But, if my wife…
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pfrank
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Re: Flood insurance

Post by pfrank »

Faisal wrote: Thu Sep 23, 2021 11:12 am After the most recent hurricane that just flooded the North East I am looking at getting flood insurance for the house. We have not been flooded yet but I do not want to take a chance since houses in our area and just down the street did get flooded. We are not in a flood zone from what I understand from our neighbours.

We have a very active and efficient subpump and have re-routed some drainage away from the house recently to help with water issues. Our neighbourhood is built in former farmland/orchid land so it retains water. Also neighbours have mentioned that the the houses on our side of the street may have a underground stream or some water source thus every house in our street has a subpump and others have more than 1 french drain to handle the water. Also other backyards get super squishy and retain water after a storm.

I was wondering if anybody could provide any general advice on getting flood insurance as a precaution and any thoughts you may have in general.
If you are on municipal water, I would install a water powered sump pump as a backup.
pennywise
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Re: Flood insurance

Post by pennywise »

vanbogle59 wrote: Thu Sep 23, 2021 11:47 am
Paid. And I never had the insurance when I carried a mortgage.
Again, I'm an idiot. The math says you should have it. Someone else (US taxpayer) is paying to cover part of the actuarial cost.
Maybe this post will be what finally gets me to pull the trigger and act rationally.
Here's another good reason to get flood insurance: FEMA is currently redrawing flood maps in Florida which may cause major impacts in flood insurance cost and availability for homeowners. And political pressure is a constant factor-government subsidized flood insurance, especially for coastal homes, is not a terribly popular concept for landlocked legislators.

And the capper: flood insurance is one of the rare instances in which a policy is transferable upon sale of property. Advice from experts where I live in the Florida Keys is to buy insurance now while it is affordable, keep it as long as you own the house and then you won't have buyers who someday can't afford to buy your house because the flood insurance is exorbitant or impossible to purchase. Not to mention YOU may well regret not having insurance if/when your home is affected by a flood event.

You're welcome.
Topic Author
Faisal
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Re: Flood insurance

Post by Faisal »

Thank you all. I will be getting the flood insurance some time next week just as a precaution to ensure we are covered.
pshonore
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Re: Flood insurance

Post by pshonore »

Supposedly major changes are coming Oct 1 as subsidies are being eliminated according to this NYT article:
https://www.nytimes.com/2021/09/24/clim ... -cost.html
talzara
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Re: Flood insurance

Post by talzara »

pshonore wrote: Fri Sep 24, 2021 2:48 pm Supposedly major changes are coming Oct 1 as subsidies are being eliminated according to this NYT article:
https://www.nytimes.com/2021/09/24/clim ... -cost.html
Only on new policies. Rate increases are capped at 18% per year for existing policies, so they will still be subsidized for a long time to come. The $480 policy in the article that is actuarially priced at $7,147 will only be paying $566 at the next renewal, so the taxpayer will still be paying 92% of the premium.

If Risk Rating 2.0 actually goes into effect on October 1, then it will be the first time that anything has happened on schedule.

The National Association of Professional Insurance Agents supports Risk Rating 2.0, but it wants a 6-month delay because the computer system is not ready:
PIA supports the NFIP’s progression toward risk-based pricing; ... However, the prodigious efforts of the Write Your Own (WYO) carriers, vendors, and agents were not enough to overcome the tremendous gaps in FEMA’s rollout process. RR 2.0 is not ready for its scheduled Oct. 1 implementation. ...

Evidence of this flawed process include:
  • The effective unavailability of the rating engine to agents until Sept. 1, despite FEMA promising widespread availability, first on Aug. 1 and then on Aug. 16
  • The routine failure of the FEMA rating engine’s functionality, which continues to lead to the issuance of provisional (temporary) rates ...
https://piaadvocacy.com/2021/09/15/pia- ... mentation/
talzara
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Re: Flood insurance

Post by talzara »

Faisal wrote: Fri Sep 24, 2021 10:00 am Thank you all. I will be getting the flood insurance some time next week just as a precaution to ensure we are covered.
Friday is October 1, 2021, when Risk Rating 2.0 is scheduled to go into effect. Therefore, buying a flood policy next week could depend on timing.

Ask the agent to price it out both ways, under the legacy rates and also under Risk Rating 2.0.

If Risk Rating 2.0 gets delayed again, then you might be able to get grandfathered in on the legacy rates. This could save you thousands of dollars over the years that you own your house.
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