Flood zones, FEMA maps and Massachusetts flood insurance
There are a lot of scary stories floating around in the media these days about flood insurance and crazy increases in insurance premiums. Much of this is exaggerated because the media is into scaring and shocking people so they'll watch or read the news. Even a story like this one from the Boston Globe that tries to be balanced can, at this point, seem scary because people are either genuinely unsure about what will happen or flipping out about what they think is happening!
Still, this news needs your attention if you are in or near a flood-prone area. A quick check about the situation in your area should reassure you that the reality isn't nearly as bad as the Chicken-Little news media make it out to be.
The risk of floods in coastal, waterfront and low-lying areas in Massachusetts is increasing. That's a fact. That risk is likely to continue to rise in the future if more extreme weather becomes more common. Lenders and insurers are acting to protect their interests. Home owners may be required, but at least need to consider whether, to protect their properties against the risk of flood.
It bears mentioning that you don't have to live in a flood zone. That's your choice. If you bought waterfront property on a beach, you really did understand what you were buying, right? You were aware that flood was an existing risk and that your exposure to that risk could change, right? I have greater sympathy for those few people who bought in low-lying inland areas and didn't really understand their exposure. Still, if you think the value of your home might be adversely affected by rising rates, or might plummet to zero after an actual flood, and you don't want to pay to insure against those risks, you should move now.
This article will lay out the basic information home owners and home buyers need to understand to make informed decisions about buying and insuring homes in flood-prone areas in Massachusetts. FEMA, the Federal Emergency Management Agency, has recently drawn up new flood zone maps that are being adopted by cities and towns across Massachusetts. Many properties are affected, not only those on the ocean, a lake, a river or a pond, and there are costs involved in determining how the reality of higher flood risks, and the flood insurance laws, will apply in your situation.
If you have a mortgage on a home you already own and the new FEMA map shows that it is in a flood zone, you have most likely already received a notice from your lender requiring further action. At a minimum, you will need to protect your lender's investment in your home. That may mean buying flood insurance for the first time, or increasing the amount of flood insurance you already have. In addition to the amount your lender requires, you should also consider the amount of flood insurance you want to carry to protect your equity and your personal belongings.
If you are considering buying any home, especially a waterfront or coastal home, you will find that, to get a mortgage, you will need to find out whether you need flood insurance no matter where you are buying or how remote the chance of flood.
You can buy flood insurance whether you are in a flood zone or not. Your premium will reflect the risk so, obviously, someone who chooses to buy flood insurance on an inland home at a relatively high elevation won't pay much.
If you own your home outright, without a mortgage, you aren't required to have flood insurance. Even if you live in a marsh with an ocean view, you are completely free to choose whether you want to take the risk. Your freedom to take that risk on your own ends when your choice could adversely affect a third party, in this case, the lender who probably advanced most of the funds you needed to buy your house.
If you do have a mortgage, you should be able to see why your lender will want to protect itself. Lenders will only lend on - and you can only afford to own - your home if they have the best possible assurances that they will get their money back. They can't evaluate every property individually, so they use the FEMA maps as a starting point.
To determine whether you are required to have flood insurance, you or your lender will start with the FEMA map for your property.
Look here to find your property on a FEMA map. The site is a bit slow because the maps are very big and information intensive
This is the link to the FEMA Map Service Center website. Use the general information links to get specific instructions on how to use the site
You'll look for your property on a FIRM: a flood insurance rate map. If your property is not in a flood zone, you won't need insurance, although, again, you may want to buy it anyway.
If your property is clearly in a flood zone, or it is not absolutely clear whether you are in or out of a flood zone, you'll need an elevation certificate.
An elevation certificate is what a surveyor will give you that tells you where your property is relative to the flood zone. Different parts of your property may be in different risk areas. Your flood insurance premium will be based on the likelihood of flood and the value of the land and buildings. An elevation certificate usually costs between $500 and $1,000.
The elevation certificate may show that you are not in a flood zone, and that would mean that you don't have to buy insurance.
If you do need insurance, you are required to cover the amount of your mortgage. You may buy, and you should seriously consider buying, additional coverage to protect your own equity in your real estate, and your personal belongings.
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