In the United States, flood zones are areas categorised by the Federal Emergency Management Agency. The various flood zone designations are designed to provide information on the chance of a flood in that region. FEMA flood zones are based on historical flood data as well as geographic and climate information. Many jurisdictions minimise building in high-risk areas, and insurance agencies use these flood zone designations when issuing policies and determining premiums.
Flood zone designations
Four basic categories of flood zones are defined by FEMA. Zones B, C and X are moderate to low risk. High risk areas are those likely to flood at some point, and include zones A, AE, AH, AO and AR. High risk coastal areas are even more likely to experience flooding, and are designated as zones V and VE. Finally, Zone D represents an area with undetermined flood risks because of insufficient analysis or data. The flood designation of a particular piece of land might be updated by FEMA constantly, or might remain the same for many years.
Flood zone AE
Areas designated as flood zone AE have a 1 per cent chance of experiencing a flood each year, and a 26 per cent chance of flooding at some point over the length of a 30-year mortgage. Homeowners who live in zone AE are required to purchase flood insurance through the National Flood Insurance Program. Zone AE is considered a special flood hazard area (SFHA) because it represents an area that will be covered by floodwater during a base flood. Areas designated as zone AE can be found on the Flood Insurance Rate Map at the FEMA website.
The National Flood Insurance Program is a U.S. government program that provides flood insurance coverage to high risk areas, including zone AE. It was designed to minimise government spending on disaster recovery because flood insurance is not available in these areas from any other source. Without flood insurance, the government was repeatedly forced to step in and rescue homeowners and municipalities. Communities are required to enforce FEMA-designed floodplain management plans in order to participate in this program.
Building in high risk areas
After the National Flood Insurance Program was implemented in 1968, many homeowners relocated to these high risk areas. They believed that the availability of insurance helped reduce the risk of property losses from flooding. In response, Congress amended the program in 1973 to require all homeowners living in high risk (such as zone AE) and high risk coastal areas to purchase flood insurance. The higher the risk of a flood, the higher the insurance premiums would be.
Flood insurance today
The National Flood Insurance Program was designed to be self-sustaining. Unfortunately, the program found itself paying out more in claims than it was taking in from premiums. In 1982, Congress passed the Coastal Barrier Resources Act. Under this act, those building new structures, or significantly modifying existing structures, in FEMA-designated coastal and high-risk areas would be ineligible for insurance. To further protect the interests of the program, the Flood Insurance Reform Act of 2004 was passed. According to this act, any homeowner who suffered more than two flood-related losses of $1,000 of more would no longer be covered, no matter the flood zone or location.