Know Your Flood Insurance
By Rion Moore, Windermere Insurance
Flood insurance is a critical component to properly protecting your property, particularly on the coast. The threat of tropical storms, hurricanes, and river flooding – seven rivers run near or through Georgetown County! – make us especially vulnerable to property damage from flood. Clearly, it is important for all property owners to understand at least the basics about flood insurance.
First, let’s discuss flood zones. You often hear people refer to a property as either being “in” a flood zone or “not in” a flood zone, as defined by the Federal Reserve Management Agency (FEMA). This is not entirely accurate and a little misleading. In our area, properties are located in one of three zones:
X Zone is defined by FEMA as being at a low to moderate risk for flooding. Many people refer to X Zone properties as “not being in a flood zone,” but this is incorrect. The primary reason for misunderstandings is that mortgage lenders typically do not require flood insurance on properties in an X Zone. However, reports indicate nearly a quarter of all flood damage occurs in X Zones.
An example of the X Flood Zone: Most of the area west of Highway 17 is in the X Zone. A newer home that was built on slab, without a requirement for elevation on pilings or crawl space, is an indicator that the home is indeed in the X Zone.
AE and VE Zones are designated Special Flood Hazard Areas (SFHA) and are considered high hazard areas, with V Zones being the highest hazard. Lenders require flood insurance in these zones.
Examples of AE and VE Flood Zones: AE Zones are often found around tidal creeks and low-lying areas near rivers and waterways. Additionally, AE Zones are commonly close to the beach—from second row homes out toward Highway 17. As for VE Zones, oceanfront homes are the best examples of properties located in this highest hazard zone.
Traditionally, most flood insurance has been obtained through the federally-backed National Flood Insurance Program (NFIP). The NFIP offers limits up to $250,000 for dwelling coverage and $100,000 for contents coverage. These limits, even for larger homes, typically satisfy most lenders. In cases where a homeowner wants to purchase higher limits than are available through the NFIP, we rely on the private market to obtain excess coverage over and above the NFIP limits.
In the last three to five years however, there has been a significant increase in the availability of private market options to compete with the traditional NFIP policy. In today’s market, many homes, particularly those in A or V zones, are rated much more favorably in the private market. The evolvement of the private market has created a shift in how we procure flood insurance on behalf of our clients. A few years ago, we almost exclusively used the NFIP to secure the base coverage limits ($250K dwellings and $100K contents) but the private market has now become much larger and more diverse providing homeowners with more, and often better, options.
Lastly, as of this writing, flood zones in the Lowcountry are being re-evaluated and adjusted. I encourage all home buyers and homeowners to learn how these flood map revisions will impact their particular property.
Please don’t hesitate to reach out with any questions regarding coastal insurance. We would love the opportunity to serve as your local resource.