Flood Insurance By Jeff Stewart, CCIM, SRES

FLOOD INSURANCE – Did you know that according to FEMA roughly 80% of the houses damaged by Hurricane Harvey did not have flood insurance? Of those homes which did have flood insurance, the average flood insurance claim was $116,000.   Are you properly insured? Are safe from flooding?

Perhaps, but consider that the Atlas 14 weather study determined that the 500-year flood zone in our area should instead be approximately what we currently call the 100-year flood zone.  Because of that study, the City of Austin has formally designated the FEMA 500-year zone as the 100-year zone in the City for development purposes. They fully expect the next FEMA maps to reflect similar changes.

The public has long misunderstood what those zones mean.  The 100-year zone is NOT an area with a 1 in 100-year chance of flooding.  Instead, it is an area that has been determined to have a 1% chance of flooding in any given year, which equates to a 26% chance of flooding over the life of a 30-year residential loan. Those figures remind me of the old joke where fellow asked the rancher how much rain do they get out at Snyder.  The old fella replied, “Justa ‘bout 28 inches a year . . . and boy-howdy, you ought to be here the day it comes.”

So going back to the 500-year flood zone . . . that sounds pretty safe doesn’t it?  I mean, the mortgage companies do not even require flood insurance in the 500-year zone.  Well, that are has a 6% chance of flooding over a 30-year loan.  Do you feel lucky?

PLEASE READ: Texas law requires all real estate licensees provide the Information About Brokerage Services (IABS)  to prospective buyers, tenants, sellers and landlords. Please see the link above. Consumer Protection Notice