And why you should consider getting flood insurance sooner rather than later.
FEMA's new payment program for National Flood Insurance is a game-changer.
After 55 years of requiring an annual payment for flood insurance when applying for or renewing coverage, the Federal Emergency Management Agency (FEMA) is now allowing homeowners to pay in monthly installments. This is part of the department's efforts to "reduce barriers to purchasing flood insurance."
The option to pay in installments with no added costs is designed to help homeowners be more flexible with their budgets and alleviate "cash flow pressure." With the average cost of flood insurance at $819 per year and an average annual increase of 18%, reducing payments to a more manageable $81 a month in 2025 will help those in vulnerable locations better protect their homes.
Two small catches with the new payment program are (1) that homeowners with premiums in escrow will not be eligible for the monthly installments, and (2) there are standard fees that will still need to be paid at the time of the first monthly premium payment, so homeowners will need to budget for those each year.
Forty-five percent of eligible policyholders and mortgage holders already pay NIFP premiums monthly into an escrow account. Condo associations typically do not use the installment plan, as they already have cash reserves set aside for an annual premium payment. Currently, there are over 4.7 million National Flood Insurance Program (NFIP) policies in place, including 3.2 million homes and 1.1 million condominium policies.
This leaves over 1.8 million residential policyholders who do not have a mortgage or belong to a condo association who can benefit from the installment program.
The Risk is Much Greater Than Thought
Many homeowners believe flooding isn't an issue for their homes after consulting FEMA's flood maps.
However, First Street Foundation, a non-profit working to define America's growing flood risk, has revealed that Virginia's flood risk is actually three times greater than FEMA maps indicate, particularly in southwestern parts of the state.
With the recent flooding caused by Hurricane Helene in North Carolina, many homeowners would be wise to consider taking out flood insurance if they can afford to. The potential for flash flooding and rising rivers is increasing yearly in previously unlikely places.
Flooding Types
Floods are defined as weather events where water temporarily covers land it normally doesn't cover. They can happen anywhere, and geographical features can increase the risk.
Here are the main types of floods, named for the weather conditions or geography that cause them.
Inland Floods
Inland flooding is the technical name for typical flooding that occurs inland far from the coast. This includes flash flooding and river flooding.
Inland flooding is caused by persistent rainfall, runoff, slow-moving tropical storms, rapid snowmelt and ice jams.
Flash Floods
You'll often hear of flash flood warnings when fast-moving storms dump copious amounts of rain over a short period of time. They can also be caused by the sudden release of water from a levee or dam. Flash floods are deemed more dangerous than ordinary floods because of the their intensity and suddenness.
River Floods
Rivers, lakes, and streams can rise for the same reasons that flash floods and inland flooding occur, but are often caused by storm surge on coastal areas as well. When storm surge pushes water back up rivers, this slows the flow further inland and can cause rivers to overflow their banks. River floods are defined at 4 flood-stage levels:
Action stage (yellow) is when water levels are near the top of river banks.
Minor flood stage (orange) is when nearby roads experience minor flooding.
Moderate flood stage (red) means nearby buildings are flooded and roadways are closed.
Major flood stage indicates extensive and often life-threatening flooding is occurring. This usually includes the complete inundation of low-lying areas.
Coastal Flooding
Coastal flooding is expected to only worsen as global warming continues. The number of days U.S. cities have experienced coastal flooding over the last 30 years has doubled.
Urban Flooding
In many cities, sewer and storm drain systems have deteriorated to the point that they become overwhelmed by storms and sudden downpours. Paved surfaces redirect water into these insufficient systems, resulting in flooding.
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If you live in an area with hills, streams, creeks, lots of pavement, or near a river, it is worth it to discuss flood insurance with your home insurance provider. Your provider cannot handle the flood insurance for you, but they can help you look at your needs and direct you to the right resources for applying for coverage. It is also a very good idea to talk to your provider about what water damage coverages you currently have so you are well-informed should a catastrophe happen.
Sources: Nerd Wallet, Insurance Journal, ThoughtCo, First Street Foundation, FEMA
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