COVID-19 Update: Please note that we are all working remotely and our hours remain unchanged at 8.30a- 5p CT. As always, taking care of our clients remains our top priority. Our phone number is 312-645-1200 and email remains the fastest way to reach us although all calls will be returned by the end of day should you leave a message because no one is available to answer. For more information and resources, see our Latest Insights.

Call Us 312.645.1200

Is Your Home at Risk of Flooding?

June 18, 2019

This Wall Street Journal article highlights FEMA flood zone maps and most of the country has not been remapped in the last 5-10 years (light pink). Some parts have not been updated in over 10 years (magenta).  Did you know the FEMA website offers a search by address option to check your homes flood zone and the last date it was updated?

flood map

Is Your Home at Risk of Flooding? The Data Is Hard to Find

Flood maps are outdated and information about whether a property has flooded before isn’t always disclosed

When Heather Gaker found the perfect sage-green beach house in Boynton Beach, Fla., four years ago, she hired multiple inspectors and researched the property’s flood history. Finding no serious history of flooding, she used most of her retirement savings to buy it with cash.

Then during a rainstorm in 2017, a half-foot of water filled her home, damaging cabinets and electrical wiring and causing mold. After she filed an insurance claim, she discovered her home had flooded repeatedly before. It was no longer eligible for flood insurance, making it virtually worthless.

“My life savings is in this house,” she said. “That would have been a deal breaker right there, knowing now the flood history.”

Ms. Gaker isn’t alone in finding it difficult to uncover a property’s flood history. While rising sea levels are leading more home buyers to steer clear of especially vulnerable areas, determining which neighborhoods are most at risk of flooding is proving to be a big challenge.

In Florida, Missouri, North Carolina and other states where flooding is common, home buyers have little or no explicit legal right to know whether their property has ever been flooded. It is difficult for inspectors to assess if a home is a flood risk unless they happen to visit at high tide or during a heavy rainstorm.

Overall, about two dozen states don’t require sellers to disclose if a property has previously flooded, according to the Natural Resources Defense Council, a nonprofit group of lawyers and scientists that advocates on environmental issues.

Many of these states also don’t require sellers to indicate whether a property is situated in a flood zone. In New York, sellers can opt to pay the buyer a $500 credit at closing rather than provide a disclosure form that includes information about a property’s flooding history, according to the NRDC.

Some U.S. lawmakers want to change this, particularly after recent floods caused home and car damage in Oklahoma and Louisiana. The House Financial Services Committee passed legislation this week that would require the Federal Emergency Management Agency to share information about a property’s flood history with current homeowners and buyers under contract to purchase a home. It would appropriate $500 million in annual funding for flood-zone mapping and expand mapping to all areas of the U.S.

“Buyers today need better information than FEMA’s notorious maps provide, and we all need to better understand the risk of economic collapse as this problem spreads along our coasts,” said Sen. Sheldon Whitehouse (D., R.I.).

FEMA also released data this week on all 2.4 million flood-damage claims it has processed since the 1970s, which advocates say is a step in the right direction but still of little practical use to ordinary homeowners, since that data set is dauntingly large and doesn’t allow users to search by address.

Federal flood maps, which outline flood zones, are designed to help set insurance premiums, but have a number of drawbacks as a source of information for would-be home buyers. They don’t take into account future sea-level rise or increased risk of more intense hurricanes.

FEMA flood zone maps have become the de facto source of flood risk information for homeowners, even though many have not been updated in a decade.

“We know the maps are fundamentally wrong,” said Matthew Eby, founder and executive director of First Street, a nonprofit that advocates for providing homeowners with more information about flooding and climate change. “The maps are out of date.”

Budget constraints have meant that large areas, mainly in the middle of the country, that are at risk of flooding from rivers and heavy rainfall aren’t mapped at all, according to an analysis of FEMA data by First Street, which is working with academics to build a database to address the issue.

Meanwhile, homeowners today may not see any publicly available information until they are at the closing table and it can be too late to walk away.

David Maurstad, deputy associate administrator for insurance and mitigation at FEMA, said the federal flood maps weren’t designed as a tool for homeowners to assess their risk of flooding but to determine whether homeowners were required to purchase flood insurance.

“That binary approach has had some unintended consequences,” he said. “People who are out of the high-risk areas don’t realize they need to take action.”

First Street is among a handful of organizations trying to improve flood disclosure. In collaboration with Columbia University, the Massachusetts Institute of Technology, the University of California at Berkeley and other institutions, it is assembling a comprehensive database on whether homes in the U.S. have previously flooded or are at risk of future flooding.

First Street and its partners use satellite imagery, high-water-mark data and other information to model whether homes would have been flooded. It combines this with FEMA data on flood claims that already exist but are difficult for ordinary homeowners to access.

Such information has long been available to large institutional real-estate owners and insurance companies, but it is far too costly for most individual homeowners to obtain. First Street’s database, which it expects to launch within a year, will be available, free of charge, for individual homeowners.

Mr. Maurstad said FEMA is working on making data about flooding more easily available and giving owners a more nuanced picture of whether their home is at risk. He welcomes efforts by First Street and others.

Still, some economists think these private databases bring problems of their own. While mapping flooding risk isn’t an exact science, just the suggestion of elevated flood risk can scare off buyers and devastate an owner’s ability to sell his or her home.

That is a concern for Skylar Olsen, a senior economist at Zillow Group Inc. who said the company is looking at providing flood-risk information on its site but worries consumers may not understand the margin of error inherent to such information. Scientists don’t agree on how much sea levels will rise in the coming decades, how much rising temperatures will affect the severity of storms and other unknowns.

“How do you represent that kind of number that can have a big impact on my willingness to buy this place, my ability to sell this place?” she said.

First Street said it is working with the Wharton Risk Management and Decision Processes Center at the University of Pennsylvania on how to communicate the information in a way that conveys its limitations.

“Knowing that a property is at risk is going to lower its value, and that’s going to be upsetting. Hiding the risk isn’t going to be helping anyone, it’s just hiding the risk until later on,” said Carolyn Kousky, executive director of the Wharton center.

Write to Laura Kusisto at laura.kusisto@wsj.com

Some of the Information that appears on this site is produced by Chartwell Insurance Services an independent insurance broker specializing in the personal asset protection of successful individuals. Other content is provided as a resource. The contents of all posts are informational only and Chartwell Insurance Services is not providing legal advice nor policy interpretation. If you have questions please direct them to a representative of Chartwell Insurance Services.