The average American can expect to move 11.4 times during his or her lifetime according to the US Census. You probably moved while living with your parents. Once you finish school, you get to pick where you live. This decision is getting more complicated. Global warming is increasing the flood risk and fire risk for homeowners across the US.
When looking for a new place to live, we look at things like the cost of housing, the quality of local schools, health-care and opportunities for fun and recreation. Now you also need to research how likely your preferred location will flood, face wildfires, earthquakes and more. That's because the cost of homeowners insurance plus additional coverage for flooding and/or earthquakes can significantly affect how much house you can afford.
In this article, we provide an overview of how to research the potential flood risk of any house you're considering buying. We'll do the same for fire risk in a future article.
Why You Want to Minimize Flood Risk
According to NPR, more than 10 million apartments and houses have a substantial risk of flooding in the next 30 years. This covers flooding from rising sea levels, storm surges along the coasts and inland heavy rain that causes rivers and lakes to overflow their banks.
Flooding remains the most deadly and expensive type of weather related disaster in the US. Here are the ways in which flooding impacts Americans:
- Flooding can make it difficult to get critical healthcare due to flooded roads.
- Homeowners can get sick due to contaminated water and/or mold that will grow on building materials and home contents within a few days.
- When insurance doesn't cover renovation costs, homeowners can tap into savings for college and/or retirement.
You might be wondering why this information isn't disclosed during the home buying process. Unfortunately 21 states don't require information about flood risks to be disclosed to home buyers or tenants. Your lender will require floor insurance if the house is in a flood zone but one-third of federal disaster money for flooding goes to people who live outside official flood zones.
So here's what you need to research when buying a house. If you're already in your house and don't know the answers to these questions, you'll sleep easier if you follow this checklist too.
Checklist to Assess Flood Risk
- Question: Has your home (or neighbor's home) ever flooded? This information should be provided by the seller but it's often omitted from standard seller disclosures. Homeowner insurance companies have the information but aren't required to release it. Your insurance agent may be able to see prior claims (similar to your driving record), so it doesn't hurt to ask them for the information.
- Answer: Prior flooding is a good predictor of a future flood so ask the seller for this information. Real estate agents may share information but in most places they aren't required to do so. Other options are neighbors who've lived nearby for a long time, local media reports and your local building department.
- Helpful Resources to learn what information must be disclosed in your state.
- Questions: How long do you expect to live in this house? This is important as you want to know how much the sea level is expected to rise and more extreme rain could increase your flood risk.
- Answer: If you only plan to live here for a few years, the risk might be acceptable. The longer you stay, the greater the risk.
- Helpful Resources:
- Questions: Is the house in a FEMA designated flood zone? This is what determines if you need to buy flood insurance. Trust the FEMA maps and challenge a demand (here's an example of a successful challenge) from your mortgage servicer if they tell you flood insurance is needed. They might be wrong and you'll save thousands of dollars over the years if you don't need it.
- Questions: How much does flood insurance cover? And what does it cover?
- Answer: Flood insurance rates vary based on the flood zone designated by FEMA. In flood prone areas, flood insurance will be expensive while lower rates apply to low risk areas. While you buy flood insurance from an insurance company, the insurance is actually offered by the National Flood Insurance Program (NFIP), which is managed by FEMA.
- Helpful Resources: Investopedia's article, Understanding Lender Required Flood Insurance, goes into a lot of detail that should answer all your questions.
- Questions: Have any neighbors taken a buyout? This is where local governments buy houses that have flooded repeatedly, to move people out of the riskiest areas.
- Answer: Buyouts only happens in a small number of neighborhoods but it's definitely something worth checking out.
- Helpful Resources: You can search NPR's database by zip code, to learn about homes that were bought and demolished between 1989 and 2017.
Wishing you much success in staying safe and dry at home!