What kind of insurance do you need?

Understanding Flood Insurance

By David W. Crump

Introduction

Flood Insurance protects your house & possessions from loss by rising water from the outside. Think about a river or creek overflowing into your home… a frightening thought. Homeowner’s and other property insurance specifically exclude this peril.

If you own a house in a known flood risk area (i.e., the 100-year floodplain) with a bank loan, your mortgage bank will require flood insurance. Beyond this bank loan requirement, you have the option of including flood insurance protection for your home contents.

Over 25% of flood damage happens each year to properties outside of a known flood risk area (100-year floodplain). One Central Texas example of an “out-of-the-blue” storm was the Halloween 2015 flood which inundated much of the in the Del Valle / Airport area with 14 inches of rain in four hours. A “Preferred Risk Flood Insurance Policy,” available to homeowners beyond the 100-year floodplain, can protect your home and possessions at a very modest price.

Mansfield Dam Colorado River

Mansfield Dam Jun 2016
Three Floodgates Open due to flooding.

Austin is part of the Central Texas “Flash Flood Alley” and has a long history of major flooding along its creeks and the Colorado River. Dams located on Lake Travis and Lake Buchanan, built in the 1940’s, has helped control the very destructive flooding of the Colorado River. Today, the biggest risk is along the many creeks in our urban areas and the Colorado River south of Lady Bird Lake dam. Shoal, Bull and Walnut creeks in North Austin plus Onion and Williamson creeks in South Austin have considerable history of inundating adjacent areas.

Our neighboring Hill Country also has many creeks and rivers subject to flooding that can rage with great torrents after a heavy rain. The Blanco, San Marcos, Llano and Pedernales Rivers have all had major flood events in recent years. The hilly topography and thin soils make the Texas Hill Country particular prone to flooding.

Flood Insurance Terminology

The hardest part of understand both your flood risk and flood insurance policies is the terminology. Most folks are confounded by its mix of insurance and engineering terms. Once you have a key to decipher the flood insurance nomenclature, things will make more sense.

  • Flood EventBase Flood Elevation – This is the level at which there is a 1% chance of flooding in any given year. A building that is located on land below the “Base Flood Elevation” is inside the 100-year floodplain.
  • Elevation Certificate – Clarifies the relative elevation of your house in relation to the know flood risk. This allows for more accurate rating of the flood insurance policy and may reduce your flood insurance rates.
  • Flood Maps (“FIRM” – Flood Insurance Ratings Maps) – Created by FEMA’s (Federal Emergency Management Agency), these maps were created to determine which land areas are likely to be flooded. These maps are based on surveys of the elevation of land areas relative to known flood risks (creeks, rivers, lakes, etc.).
  • Floodplain – Any normally dry land area that is susceptible to being inundated by water often because it is adjacent to a watercourse. The 100-year Floodplain is the land that would be inundated by a 100-year flood event.
  • Flooding – Rising water from outside enters a structure. An example would be a house inundation from a flash flood. The flood peril also includes mudslide.
  • Hundred Year Flood – An engineering term used to describe the relative flooding risk. A house that is located inside the Hundred Year Floodplain is considered to have a 1% chance of being flooded in any given year. Most mortgages require that a house that is located in a Hundred Year Flood risk area must be insured for flood.
  • LOMA (Letter of Map Amendment) – Document used to establish that a building is not located in a Special Flood Hazard Area. A typical situation in which a LOMA would be important is when a part of a house lot is subject to flooding in a 100-year storm but the house itself has been built at a higher elevation.
  • National Flood Insurance Program – This is the government agency that provides insurance for the flood peril in the United States. Insurance companies are licensed to sell flood insurance policies for this government agency. All financial backing, rules and contract terms are set by the National Flood Insurance Program which is part of FEMA.
  • Special Flood Hazard Area – A geographic area that is prone to flooding. An example would be an area adjacent to a river that has an elevation low enough to be subject to flooding.

Flood Zone Designations

  • A – River / stream flood risk
  • AE – River / stream flood risk with mapped base flood elevations
  • AO – River / stream flood risk with shallow water depths (1-3 feet)
  • AH – River / stream flood risk with shallow water paths (flows of 1-3 feet)
  • V – Coastal or Storm Surge flood risk
  • VE – Coastal or Storm Surge flood risk with mapped base flood elevations
  • X – Not a Special Flood Risk Area (elevation above the 100-year floodplain)

Flood Insurance Overview

Building – Provides protection up to your limit for damage or destruction of your house or other dwelling from peril of flood including rising water and mudslide.

Contents – Provides protection for your clothes, appliances, furniture and other possessions at your residence from peril of flood including rising water and mudslide. Flood Insurance offers “Actual Cash Value” as the basis of settlement. Contents coverage is optional and has a separate deductible.

Secondary Structures (fences, sheds, etc.) – None. Coverage is only available for the main structure.

Loss of Use / Added Living Costs – None. This is often a surprise since having to relocate into temporary housing is a normal situation after you house has been damaged by a flood.

Onion Creek Flooding

Onion Creek Flooding May 2015 downstream from the I-35 bridge.

Recent Austin Flooding Events (since 1/1/2015)

It helps to understand the flooding risk of our Central Texas region by knowing what floods have happened in recent years.

2016 May 26-27 – A large super-cell thunderstorm stalled over southeast Travis County produced over 9 inches of rain in only a few hours and continuous lightning. Further southeast in Bastrop and Fayette Counties, rain has been recorded up to a full foot. Bastrop County was declared a disaster area due to flooding with more than 100 homes damaged.

2015 October 30 “The Halloween Flood” – Major flooding in Wimberley, Del Valle and San Marcos. Storms, included a tornado south of San Marcos, dropped up to 14 inches of rain in areas south and east of Austin.

2015 May – A series of storms during the month of May caused major flooding damage in Central Texas. The flooding along the Blanco and San Marcos rivers on May 24 was extraordinary with the Blanco River cresting at over 41 feet. Overflowing water from the Blanco River caused I-35 to be closed just north of San Marcos. Over 350 houses were heavily damaged with 72 house completely washed away around the cities of Blanco, Wimberley and San Marcos.