By now everyone has seen footage of the devastating flooding in Southeast Texas from Hurricane Harvey. It seems like there’s always some catastrophic flooding somewhere in the US frequently. Various terms relating to floods and insurance are thrown around; such as 100 year flood, flood plain, FEMA flood maps, etc. It probably seems odd when you hear that some place has had a 100 year flood, but you remember how it seemed like yesterday that same place had another 100 year flood. How can that be? It was on the news that such-in-such area has a 1% risk of a 100 year flood, so the odds of that happening more than once in that short of time must be lottery like odds. Right?
If you haven’t figured out by now, there are many things related to floods that aren’t quite what they seem. After all, isn’t it natural to believe that since the bank told you that your building is not in a 100 year flood zone and you aren’t required to get flood insurance, you must not need it? Doesn’t FEMA makes those flood maps? It’s the federal government. Those maps have to be mostly right, don’t they? You even looked at a flood map for your location and saw that your business is nowhere near a high risk flood zone.
The reality is that It’s a myth that a 100 year flood means that there will be 1 flood on average of every 100 years. Fact is, that there’s a 26% chance that you will experience a 100 year flood over the life of the mortgage for your building. The term 100 year flood is used to describe high-risk flood zones. A high risk flood zone is an area of land that has a 1% chance of flooding in any year. This DOES NOT mean that a flood happens every 100 years on average.
Those FEMA flood maps that you looked at which showed that you were not in a high risk area? Those maps only delineate high risk flooding areas (100 year flood zones or higher). Amazingly roughly 30% of flood claims come from moderate to low risk areas. The FEMA maps that delineate 100 year floodplains are primarily used by banks and insurance providers to determine if you are required to purchase flood insurance. The FEMA maps are also used to create a FIRM, or Flood Insurance Rate Map/
Most businesses are not in high risk flood zones. They are in low to moderate risk flood zones. Because many banks don’t require building owners to purchase flood insurance if the building is not in a high risk zone, a majority don’t. This is why you hear about so many people who are left to fend for themselves after a flood. It’s because they haven’t purchased flood insurance. Just because the bank doesn’t require you to have flood insurance doesn’t mean that you don’t need it. The reality is that the only true way to know for sure if you need it, is after a flood happens. And by then if you haven’t purchased flood insurance, it’s too late.
So now that you know what a 100 year flood is and the risks of flooding in low to moderate risk areas, what are you going to do? Is the risk of not purchasing flood insurance something that you are okay with? Better yet, ask yourself if you’d be okay with that after a flood occurs? Floods and insurance is complicated. Get in touch with Insurance Associates, a Marsh & McLennan Agency LLC Company where our professionals have the knowledge and resources to lead you out of troubled waters.
Information about the Author: Before coming to Insurance Associates, a Marsh & McLennan Agency LLC Company, BJ spent twelve years working for several property and casualty insurance companies with four years in management. He completed his studies through The Institutes and earned the prestigious Chartered Property & Casualty Underwriter (CPCU) designation in 2012. BJ graduated at the gold level from ABC of Metro Washington’s Leadership Development Program. At Insurance Associates, a Marsh & McLennan Agency LLC Company, BJ is first and foremost an advocate for our clients. Whether it’s helping a client to lower their experience mod or using his expertise to get a claim paid for a client, he is always available to help a client with any of their claims needs. In his free time BJ is most likely to be found on the golf course.
William (BJ) Westner Jr., CPCU, CRIS
Senior Claims Consultant
Insurance Associates, a Marsh & McLennan Agency LLC Company