Nashville Flood Lessons: Do You Need Flood Insurance?

After reading about the recent flooding in the Nashville area, I again find myself reminding people to consider optional flood insurance. First, some background. Most homes that are in 100-year flood plains are required to buy flood insurance. This is because the banks know that this designation means that you have a 26% chance of a 100-year level flood within a 30 year span.

However, even if you are outside these areas, you may still be in danger of a serious flood. Often these areas are shown on flood maps as 500-year flood plains. Many people read this and think something like “…last flood was in 1909, we’re good for another 400 years!” Actually, having a 0.2% chance of a flood each and every year works out to a 6% chance of occurring at least once over a span of 30 years, or 1-in-17. According to an article from from CNM News:

The flooding in Nashville has been deemed a “500 year” flood, as the Cumberland River rose to over 51 feet (floods occur at 40 feet). The flood waters took over portions of Downtown Nashville, as well as the Opryland area.

What if it happens to you? Most homeowner’s insurance policies don’t cover flood damage. More from BusinessInsurance.com:

The National Flood Insurance Program, which is run by the Federal Emergency Management Agency, may cover some losses experienced by businesses and homeowners that purchased the coverage. However, Mr. Costner and other insurance experts said flooding reached areas that are not federally designated flood zones. According to FEMA, Nashville and Davidson County, Tenn., had 4,100 NFIP policies in force as of March.

All of Nashville only had 4,100 policies? This means that not very many people were even required to buy it. This USA Today piece tells the stories of several riverfront homes that weren’t covered.

Tiffany Wiggers says she doesn’t have flood insurance and, in fact, she paid $15,000 extra to be closer to the river. “Everybody on this side of the street, we paid lot premiums to be near the river: $15,000. You have to laugh to keep from crying,” [...] She says she and her husband questioned the real estate agent, builder, lender and an insurance agent about flood insurance, but all said it wasn’t necessary. “They all said, ‘You’re not in a flood plain, so you don’t need it,’ ” recalled Wiggers for USA Today, who was taken from her home via rescue boat. “I was like, ‘FEMA and the bank said we won’t need it, so we’re in the clear.’

If you haven’t already, take some time and check if you are in a flood plain here. But it could be that the any flood maps are outdated or inaccurate. Add in some common sense if you are near a body of water. In the end, you may consider buying flood insurance even if you are not required to by your mortgage lender. We carry a modest amount of optional building coverage from the NFIP.

Comments

  1. Margaret says:

    We didn’t have a single flood for the first twenty-five years at this residence. Then, in two years, we have had two heavy rains which brought the water almost up to the front door. The depth from the center of the street – we are elevated somewhat – must have been about five feet. New apartment projects and changes in road levels raised the chance of flooding and we finally bought the flood insurance. Worth it for the peace of mind.

  2. I live in Nashville, and until you see the devastation first hand….see someone’s entire life piled up in a trash heap on their front lawn….it all just seems unreal. I was not personally affected, but I have friends, family, and co-workers that have truly lost everything.

    I don’t know if this is a rumor or if there is any truth to it, but I was told by several different people that if you purchase flood insurance and you don’t live in a designated flood plain, that your rates are astronomical and you are at risk for being dropped. Also, flood insurance only covers structure, not contents. While it is helpful to be able to have a new floor and walls, the largest cost for most people is probably replacing all of the kitchen appliances, beds, clothing, furniture, electronics…..all that is gone for a majority of the flood victims.

  3. I live in Nashville. Not only did people in low lying areas get hit, almost everyone with a basement sustained damage. One friend said he watched his basement sump pump become completely overwhelmed because ground water poured in faster than the pump could pull it back out. His house is 40 feet higher than the highest flooding. Thirteen inches of rain in two days also turned many minor roof leaks into major sources of damage.

    There has been a tremendous surge of volunteer cleanup help. Many locals had experience with Katrina and knew what had to be done. This has mitigated some of the damage. The city as a whole will recover very quickly.

    That being said, this will bankrupt some households and businesses. We had a tornado in 1996 that actually revitalized parts of the city.

    My attitude toward insurance has changed over the years. I either go bare or buy every option possible because it seems the policies are set up to pay out as infrequently as possible. After taking every option I sternly inform the agent that I expect to be covered if I need it. I’ve been with the same company and agent for many years.

    I passed on flood insurance for my house. I was near a creek, but half way up a substantial hill and was OK. A neighbor higher than me had a basement and it flooded. She had a rider to cover it…but it had a $2500.00 limit and the damage was more than twice that. Ironically the week before my stainless steel washing machine hose broke and flooded my house. (The washing machine was also in a pan.) It was covered under home owners.

  4. Yes, insurance should be bought when you have a danger that you can’t otherwise recover from, at least easily. I don’t bother with cell phone or laptop insurance, but I buy flood insurance since I am near a body of water but not technically in a flood plain.

    Check out FloodSmart.gov or your homeowner’s agent. It is the same price no matter who you buy it from. If you aren’t in a flood plain, it is actually cheaper in my experience (which should make sense, no?). The average premium is $500 a year.

  5. In reply to Rachel – flood insurance is quite cheap if you do not live in a “flood zone.” You can also get content coverage. The max coverage in a low risk area costs around $350/year (no basements where I live, though. Premiums a little higher with basements).

    We’ve actually been bumped from “low risk” (200 years?) to “highest risk” (10 year flood zone) within the last few years. All politics. We’ve always had insurance due to living in a basin by a couple of huge rivers. We rely on the levies, and I am AMAZED how many people do not have flood insurance. It is now mandatory, but most homeowners haven’t bought it? IT’s a mess. $350/year has seemed like a steal to me, considering the potential for significant damage.

  6. These floods can be devastating. I lived in Cedar Rapids, IA two years ago when we got hit by the floods that had the downtown and surrounding areas under 6+ ft of water. While there was a lot of volunteer efforts and the city is slowly coming back, the neighborhoods around are still almost like ghost towns. At that time I flew numerous missions with the Civil Air Patrol to survey the damages, look for lost livestock, and take aerial photos of the damage. The extend of the damages was just surreal.

    Tiffany Wiggers quote just ticks me off. I really do not sympathize with people that live next to the river and then cry for help. They just want all the “benefits” but not the issues (floods, mosquitoes, alligators, etc). I guess that’s just the logical extension of the American dream. Does someone really need to tell them to buy the insurance? DUH!

  7. Living by water has its dangers. It costs a premium, but there are major risks that are possible, even if the likelihood is remote in the time you live there.

    I had gone to the Oregon coastline a few years back, and came away very impressed. Relatively moderate weather (albeit rainy), and beautiful, scenic Pacific coastal drives and views. Fantastic. I’m not near retirement age at all, but my mind drifted to the future. Then, I read about Tsunami risks to that part of the US coast, in light of the recent Chile earthquate.

    The point is, when you’re by a body of water, you have to at least be prepared for potential calamaties – or at the very least, some major annoyances – to go along with the scenery.

    It reminds me of buying a home with a swimming pool. Depending on the climate, it sounds like fun! But to me, the benefits don’t match up to the potential risks (harm to kids/accidents). I would pay less for a house with a pool, compared to one that is identical in all other ways but has no pool.

    We are all different of course, which makes for interesting discussion.

  8. When someone tell you you are not in a flood zone.. thats incorrect. FEMA designate probable high risk and zones whhich are not high risk. But as the recent flood shows, anywhere can have flood damage.

    Homeowners policies do not cover flood/runoff/ground water penetration. If you are not in a FEMA designated high risk zone the you can get 250k of coverage on your dwelling and 100k in contents coverage for only $355/year.

    Now the flood coverage is limited in scope. It wont cover driveways,landscaping fences or carports or tool sheds. It will cover your dwelling and contents(if you select content coverage). If you need to check what zoe you are in it’s very easy and most insurance agents will do that for free.( I know that I do)

  9. Jennifer says:

    While researching floodplain areas after the flood we found that FEMA updated several different areas/counties in TN back in 2007. Unfortunately Davdison county local floodplain maps remained unchanged. Most realtors & ins companies use local maps ………If the county had seen fit to notify us that our floodplain status has changed we would’ve got flood insurance immediately.

  10. Jennifer,

    The information you received may not be completely accurate. Mortgage companies and insurance companies get flood zone determinations from federal maps. Mortgage companies will automatically do a determination whenever the acquire a new mortgage.( when you take a new loan out or if the mortgage is sold to another company)

    I agree that FEMA needs to do a better job in identifying flood prone areas. The Nashville basin and the local karst topography make flooding possible in areas not located anywhere near a “blue-line” creek or waterway. Developers resist these types of updating to maps because it drives up the cost of ownership and slows down home sales.

  11. Jennifer says:

    Rob,
    Thanks for the info. It’s been my understanding that once FEMA changes a floodplain zone its the obligation of the county to notify citizens. Citizens then have the opportunity to accept or reject the changes. I’ve found where other counties ( outside of Davidson) notified residents of changes. Our property is located in an area that had been low risk but was changed to the 100 yr floodplain without our knowledge. Very disappointed that our county didn’t see fit to notify residents of added potential flood hazards.

  12. Yes, insurance should be bought when you have a danger that you can’t otherwise recover from, at least easily.

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