Hurricanes have been in the news and, if you believe the news, they will continue to be for years to come. This is obviously a concern for residents of the Atlantic Coast and Gulf Coast. Even New Englanders saw the impact of Hurricane Sandy. More than 112 million Americans live along the Atlantic Coast, and obviously there is no way to move them all out of hurricane-risk areas. So what can you do?
The government is working continually to improve buffers and other flood-prevention systems. But it’s important that you—as both a prospective homeowner and a current homeowner—take steps to make sure that you are protected from the damaging power of hurricanes.
There are physical home improvements you can make, but we want to focus on your insurance coverage. It will be part of your closing costs anyway, so it’s very much worth your time to understand.
We mention frequently that home insurance is part of the closing costs on any new home. What some people don’t understand is that flood or windstorm insurance (“Hurricane Insurance” is understood to be a combination of these two policies) is not built into standard home insurance. Regardless of whether you live along the Mississippi River or on a hurricane-prone coast, if you live within a flood zone, extra insurance will be required as part of your closing costs.
Working with a Realtor can be helpful during this process, informing you what homes fall within what zones. All of this information is important to know when planning your budget for a home.
Everyone knows that housing insurance prices changes based on a number of factors, most regarding size and potential liabilities. Flood insurance prices change depending on location of the home, of course, but many are surprised by how dramatically it changes across small distances. For example, hurricane coverage for a home right on the harbor could cost a great deal more than a home several blocks inland. You can gauge how prone a property is to flooding by running its address at the FEMA Flood Map Service Center. Share this information with a Realtor so they can help understand the impact its insurance requirements will have on your budget.
You may have lived in your home for more than 20 years. When you bought it, during 1998, you took care of all the steps listed above, and made sure that your home was outside of regulated flood zones. Why start worrying about it now?
Because flood zones change.
Recognized flood zones change over the years. Sometimes it’s obvious why, like the construction of a new dam or levee. But sometimes it’s less so. For example, a boom in development around your home will increases flood risk; soil is better suited for soaking up excess rainwater than concrete and parking lots, so now flood waters go farther inland. Even if your home was great 20 years ago, you won’t be eligible for coverage now. That’s why it’s important to stay updated on your flood zone status, and insure accordingly.
Building codes also change over the years, which will impact how you qualify for flood coverage. When shopping for a new home, this can make a big difference in whether you buy the bigger, classic home for a bit less, or the newer, smaller home for a bit more. It might be worth your while to budget for a contractor to make improvements to a home…if these improvements save you money in the long run on lower insurance payments. If not, you may want to pay a bit more upfront on the price of a home, understanding that you’re actually saving money long term.