Flood Insurance Questions & Answers
Who Can or Must Buy Flood Insurance?
- Who CAN Purchase Flood Insurance?
Anyone who lives in a community that participates in the National Flood Insurance Program (NFIP) can buy flood insurance. More than 93% of all Minnesotans live in a community enrolled in NFIP.
NOTE: It is NOT NECESSARY for your property to be mapped in a high flood risk area (1% annual chance or "100-year" floodplain) in order to be eligible to purchase flood insurance.
- Can Renters purchase NFIP flood insurance?
YES! NFIP flood insurance is sold separately for contents coverage. Renters can purchase up to $100,000 coverage for contents.
- Who is REQUIRED to get flood insurance?
Property owners are required to purchase flood insurance if the insured structure is located within the high flood risk area (1% annual chance or "100-year" floodplain) and if the property has a mortgage or loan on it from a federally regulated institution. This includes most types of mortgages, home equity loans, etc.
NOTE: Flood insurance is mandatory if the STRUCTURE is in the high flood risk area. It is NOT mandatory if just unimproved land is in the high flood risk area, however, a lender may have a policy of requiring flood insurance.
- Where do I buy NFIP flood insurance?
NFIP flood insurance is sold through private insurance companies and agents, and is backed by the federal government. Check with the agent with whom you have your home or automobile insurance. You can also go to www.floodsmart.gov and choose "Agent Locator" under the "Resources" section.
- How Much Flood Insurance Should I Buy?
For federally secured financing in the FEMA-mapped high flood risk area (i.e., the mapped 1% annual chance floodplain, aka the 100-year floodplain or Special Flood Hazard Area (SFHA)), the law requires flood insurance in an amount equal to the outstanding principal balance of the loan, the value of the building, or the maximum coverage available, whichever is less. It also requires flood insurance to be maintained for the life of the loan.
While the law requires coverage only for the loan balance, you should consider protecting your equity. It is wise to insure primary residences, and businesses, in sufficient amounts to fully protect your building and its contents.
The NFIP provides up to $250,000 coverage for single-family residential buildings and up to $100,000 coverage for contents. Businesses can obtain up to $500,000 coverage for buildings and up to $500,000 coverage for contents. Other residential property owners can also obtain flood insurance.
What Communities Participate? How Does a Community Get in the Program?
- How do I find out whether my community is enrolled in the National Flood Insurance Program (NFIP)?
FEMA's list of communities participating in the NFIP
(Participating communities are listed first, on pages 1-14, then non-participating communities where high flood risk has been mapped are listed on pages 15-16).
List of Minnesota communities and whether they participate in the NFIP
(Alphabetical list includes communities that do not have mapped high risk areas, and who do not participate in the NFIP, so are not in the FEMA list in the above link).
- How Many Flood Insurance Policies are there in Minnesota?
As of February 2015 there were just over 12,000 policies in Minnesota, representing an increase of 3000 from February 2009. Of the 12,021 policies in February 2011, 41% were for structures in an "A Zone", the high flood risk area that is also called the "100-year" or 1 percent annual chance floodplain. That means that more than half of the flood insurance policies in Minnesota were in the medium flood risk (the "500-year" floodplain) or the low flood risk (no mapped flood risk) zones. Since FEMA does not map small ponds or streams, those with the policies in the "low risk" areas may realize that the local conditions really put them at a higher risk than acknowledged on the FEMA maps; those landowners are wise to take advantage of the lower flood insurance premiums available to them since they are in the low risk areas on the FEMA map.
Summary of the Number of Policies by Community
Summary of the Number of Policies by Community
Summary of the Number of Policies by Community
- What are the effects of a community NOT participating in the NFIP?
Enrollment in the National Flood Insurance Program (NFIP)
(scroll to 2nd section)
- My community doesn't participate in the National Flood Insurance Program. Can I still get flood insurance?
If you live in a community that is not enrolled in the NFIP and want to purchase flood insurance, you will have to search for an agent or company willing to underwrite a private policy. Those policies are usually much more expensive than the policies available through the NFIP. Alternatively, you could contact your local officials and urge them to enroll your community in the NFIP (see link to the process above).
What Does Flood Insurance Cover?
- Doesn't my Homeowners Policy cover flooding?
NO. In most cases, flood damage is NOT covered by homeowners' policies.
- Does NFIP flood insurance cover contents?
YES, but NFIP flood insurance is sold separately for building and contents coverage. Home and business owners need to ask questions if it is unclear whether the NFIP flood insurance includes the building coverage, contents coverage or both. (The exception is with a "Preferred Risk Policy", or PRP, where the building and contents coverage is bundled together in set increments.)
WARNING: For federally secured loans, federal law mandates purchase of flood insurance if the insurable STRUCTURE is in a FEMA mapped high-risk flood zone. (NOTE: The federal mandate to purchase flood insurance is not applicable if part of the lot, but no insurable structure, is in the high flood risk area.) However, the lender only has to require building flood insurance coverage. Home and business owners should be aware that contents coverage must be purchased separately.
- Does NFIP flood insurance cover groundwater seepage?
In most cases, the answer is NO. NFIP flood insurance covers direct physical losses caused by "flood". For the NFIP flood insurance program, a "flood" is defined:
A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is your property) from:
- Overflow of inland or tidal waters;
- Unusual and rapid accumulation or runoff of surface waters from any source;
- Mudflow*; or
- Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.
* Mudflow is defined as "A river of liquid and flowing mud on the surfaces of normally dry land areas, as when earth is carried by a current of water .. "
- Can I get covered for landslides caused by heavy rainfall?
Unfortunately, as several homeowners learned in SE Minnesota after the 2007 flood, neither NFIP flood insurance nor most homeowners' insurance policies cover landslides.
- Does NFIP Flood Insurance Cover Sewer Backups?
NFIP flood insurance only covers sewer backups if it can be shown it was directly related to a general condition of flooding in the area. Sewer backup is not usually covered by standard homeowners' insurance. A separate endorsement is available from most insurance companies, but you may need to specifically ask about its availability.
- What is the Deductible and Should I Consider a Higher Deductible?
The standard deductible is $500 for flood insurance coverage in the low and medium flood risk areas, and when the structure is "post-FIRM" (i.e., built after the first FEMA Flood Insurance Rate Map was published). The standard deductible is $1,000 for "pre-FIRM" structures (i.e., the structure was built before FEMA mapped the high flood hazard area, and is "grandfathered").
It is possible to reduce the annual premium cost by choosing a higher deductible, however, you should carefully consider whether that is a good option based on the type of flooding and damage you are most likely to experience. In the past, one of the most common types of flooding damage for homeowners in Minnesota has been basement flooding that resulted in the need for replacement of their furnace, water heater and similar utilities. Many homeowners have been upset when they realized they had a $5,000 deductible, meaning a minimal insurance claim.
- Does the NFIP flood insurance offer any type of basement coverage?
Yes it does. The NFIP defines a basement as any area of a building with a floor that is below ground level on all sides. While flood insurance does not cover basement improvements (such as finished walls, floors, or ceilings), or personal belongings kept in a basement (such as furniture and other contents), it does cover structural elements and essential equipment.
What is insured under Building Property coverage?
- Foundation walls, anchorage systems, and staircases attached to the building.
- Central air conditioners.
- Cisterns and the water in them.
- Drywall for walls and ceilings.
- Nonflammable insulation.
- Electrical outlets, switches, and circuit breaker boxes.
- Fuel tanks and the fuel in them, solar energy equipment, well water tanks and pumps.
- Furnaces, hot water heaters, heat pumps, and sump pumps.
What is insured under Personal Property coverage?
- Washers and dryers.
- Food freezers and the food in them (but not refrigerators).
- Portable and window air conditioners.
What is not insured by either Building Property or Personal Property coverage?
- Paneling, bookcases, and window treatments such as curtains and blinds.
- Carpeting, area carpets, and other floor coverings such as tile.
- Walls and ceilings not made of drywall.
- Most personal property such as clothing, electronic equipment, kitchen supplies, and furniture.
The NFIP recommends both building and contents coverage for the broadest protection.
- It Will Cost Me Extra to Meet the Local Regulations When I Rebuild. Will NFIP Flood Insurance Cover That Cost? (Or What is Increased Cost of Compliance - ICC - Coverage?)
NFIP flood insurance includes a rider to the policy for Increased Cost of Compliance (ICC). The ICC coverage is applicable if: the structure is in the FEMA mapped high flood hazard area, there was flooding, and the local community determines that flooding caused the structure to be substantially damaged (the cost to bring it to the pre-disaster condition is more than 50% of the structure's market value).
ICC provides up to $30,000 for the additional cost to bring the structure into compliance with local floodplain management regulations. ICC can pay the cost to elevate, demolish, move or floodproof (non-residential only) the structure.
Cost of Flood Insurance
- How Much Does Flood Insurance Cost?
In Minnesota, the average annual premium is $802 (as of February 2015), but can range from $129 annually for building & contents coverage through a Preferred Risk Policy outside of the high flood risk area to even tens of thousands of dollars for non-compliant post-FIRM structures (built after FEMA Flood Insurance Rate Map showed area as high flood risk).
The main factors are your level of risk, the amount of coverage you need, the elevation of your lowest floor compared to the calculated 1% annual chance ("100-year") flood, and whether your structure was built (or substantially improved) before (pre-) or after (post-) the FEMA first Flood Insurance Rate Map (FIRM) mapped the area as a high flood risk area.
See www.floodsmart.gov for a "One-Step Flood Risk Profile". This profile will help you ...
- determine whether you are in a high, medium or low flood risk area
- give you estimates of flood insurance premiums for your situation
- find an insurance agent
Rate Comparison Information Sheet
FEMA Map Update-Related Questions
- My county is getting a new FEMA Flood Insurance Rate Map (FIRM). How will that affect me?
Converting a standard rated policy to a PRP
(For properties shown in high flood risk areas that will be re-mapped to medium or low flood risk - August 2005)
NFIP Map and Zone Grandfather Rules
For properties shown in medium or low flood risk areas that will be re-mapped to high flood risk - January 2008)
What's My Risk? Should I Get Flood Insurance?
- How can I find out the level of flood risk on my property?
- Go to the "One-Step Flood Risk Profile" at www.floodsmart.gov to find your level of risk on the official FEMA Flood Insurance Rate Map (FIRM) for your community. Not all communities have a FIRM. Areas with lower flood risk, and that were not anticipated to have much development when maps were done in the 1970s and 1980s were not mapped.
- Then, even if the FIRM (the FEMA floodplain map) shows your property in the low flood risk area, think about any small ponds or streams near or on your property, or areas that don't drain well. Keep in mind that FEMA only maps streams that drain at least one square mile and larger basins.
- Think about how your property drains (or is drained upon!). Many unmapped areas get flooded when there are very intense rains, or floods larger than the 1% annual chance flood (or "100-year flood"). Floods can happen almost anywhere! We've had several isolated areas of 12-15 inches of rain in Minnesota in the last 20 years. See a summary of storms since 1970 with more than 6-inches of rain in a 24-hour period in Minnesota.
- Can't I just get disaster assistance if a flood occurs?
NOT NECESSARILY. Federal disaster assistance is only available if the President of the United States formally declares a disaster in that county. Even if your county is declared, most disaster assistance is in the form of a loan that you have to repay, with interest, in addition to your mortgage loan that you still owe on the damaged property. If your home is flooded and disaster assistance isn't offered, you'll have to shoulder the damage costs alone.
The Benefits of Flood Insurance versus Disaster Insurance
(FEMA Publication F-217 - November 2008)
- My property is protected by a levee. Does this mean that I don't need flood insurance?
NO! Flood insurance still provides important protections for the property owner. Levees are artificial structures that are designed to protect against floods of certain magnitudes. It is always possible for a flood to exceed the design magnitude, resulting in overtopping of the levee and flooding behind it. In addition, levees are artificial structures requiring regular maintenance: they can and do fail.
Many levees were constructed at the time of flooding with available materials, and were never certified to meet the federal standards for protection from the 1% annual chance (or "100-year") flood. They were not high enough, or were not constructed with the types of materials or methods needed to be able to meet the standards for certification. Areas behind these emergency levees will be shown as high flood risk areas. It's as if these levees don't exist when it comes to the mandatory flood insurance requirements.
Some of these emergency levees are eligible for PL 84-99 "Non-Federal Flood Control Works Inspection Program" (PL-84-99), which is administered by the U.S. Army Corps of Engineers. Through this program, the Corps assists with regular inspections and recommendations to the community on operations and maintenance. These levees can provide important flood protection, especially when properly maintained, but the properties behind these levees will still be considered to be in the high flood hazard area (1% annual chance flood area).
If a levee has been accredited as providing satisfactory protection against the 1% annual chance flood event, FEMA considers property behind the levee to be out of the floodplain for insurance purposes and any affected property owners would be able to purchase flood insurance at reduced rates. Such levees are included on Flood Insurance Rate Maps, with the affected area mapped as Outside of the Floodplain (Zone X on the maps) but shaded to indicate the area's flooding potential in the event of levee failure; such maps also display a note warning of the consequences of levee overtopping or failure.
These levees are aging. Many were built in the 1960s, or earlier. As FEMA updates the flood risk mapping for a county, the levees are being re-evaluated to verify they still meet the certification standards in 44 CFR Section 65.10 (the federal regulations that lay out the technical standards).
FEMA fact sheets concerning levees and flood insurance:
- The NFIP and Levees: Frequently Asked Questions
- Living Behind Levee Systems: Information for Property Owners
- Levees and Flood Insurance: Information for Insurance Industry Professionals
- Levees and Flood Insurance: Information for Mortgage Lenders
- The NFIP and Levees: Frequently Asked Questions