If you reside in a high risk area, then you will need to get high risk flood zone insurance for your home. These policies generally consist of two separate coverage policies. Here is what you need to know about high risk flood insurance.
If you have a home in a high risk area, you will be required to obtain an insurance policy that covers both your property and the building. The dwelling coverage provides specific coverage for the home itself. If you own an investment property this coverage will provide protection for the individual units of a condo or apartment building. This coverage will not cover damage to any property you have in the home.
General Property Coverage
This is the part of the flood insurance that covers damage and loss to the property inside the home. If you have an investment property such as a duplex or condo, the renters will need to carry their own property insurance as well.
How the Rates Are Calculated
The rates of your premiums will depend on a variety of factors. The fact that you have high risk coverage will automatically make your premiums a little higher to begin with. The age of the building, the occupancy of the building, the number of floors, the actual flood risk, and the deductible that you choose will all factor in to the amount of money you will have to pay for your insurance. Even with high rates it’s still worth the money as it will be cheaper to maintain the policy than to have to rebuild everything from the ground up in the case of a major flood.
If you have a home in a high risk flood area and your mortgage is backed by a federally regulated bank you will be required to have flood insurance in addition to your homeowners insurance. The lender will want to see proof of coverage before they will even consider letting you sign the papers.
Finding Your Zone
FEMA has assigned flood risks with a letter and number category. The risk varies based on the zone you are in. Zones marked with B, C, or X are considered moderate to low risk. The insurance will be made available, but there is less than a 1% chance each year of flooding to occur.
Zones A, AE, and A1-30 are considered high risk, but still have an annual risk of 1%, or a 26% risk over the course of a 30 year mortgage. These are usually in area’s off of lakes or rivers.
Zones that begin with V are very high risk areas. These areas are usually coastal communities that are at risk for hurricanes and storm waves. You will pay more for your mandatory insurance premiums in these zones.
Living in a high risk area may offer you beauty and serenity. Having the flood insurance is just another way to allow you to enjoy your home without having to worry about damage or loss due to flooding.