Jeffrey Jackson the Deputy Assistant Administrator for the Federal Insurance Directorate within the Federal Insurance and Mitigation Administration (FIMA) at FEMA the Federal Emergency Management Agency (FEMA). 

0:00

Victoria: Hi, I’m Victoria Ray Henderson,  the host of the NAEBA podcast, Listen  Up Home Buyers! So happy to have back for a  second round of conversations, Jeff Jackson,  the Deputy Assistant Administrator for the  Federal Insurance Directorate. He leads  flood insurance operations for the National  Flood Insurance Program at FEMA. And Jeff,  I want to thank you so much for being  a guest again on Listen Up Homebuyers.

0:27

Jeff: Thanks. It’s great to be back.

0:29

Victoria: So glad to have you.  I’d like to start with a very general question. What should every  homebuyer know about flood insurance?

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Jeff: The most important thing to know is  then that in all but the rarest of cases, flood risk is not insured through your homeowner’s  insurance policy. If you want to have coverage  for water that comes from the outside and comes  inside your house, so not sink backups, not toilet  backups. Those kinds of things, but water coming  in from the outside, it requires a separate flood  insurance policy. You can either buy that from the  National Flood Insurance Program, which is through  FEMA, or there often are a number of private  flood insurance policies that you can buy as well.

Victoria: So if somebody lives in  an area that isn’t by the coast, isn’t necessarily by a creek or a river, what  do they need to know about flood insurance?

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Jeff: Well, it floods everywhere. There have  been in the last little bit under 25 years,  99% of the counties in America have flooded. So,  it’s happening somewhere in your county. And  what I would say is it’s not always readily apparent just by looking around and seeing  the distance to the nearest water source,  although that’s an extremely important factor. Changes in our built environment, the more we  see paving, the more we see development of what  was traditionally green space can raise our flood risk as well. And so there can be an illusion  that you don’t have flood risk when in actuality,  you’re at least perhaps moderately risky. And  that certainly is an area when you get there,  you would at least want to strongly only  consider buying a flood insurance policy.

2:15

Victoria: Okay. So as you know, I only work  for people buying homes as an exclusive buyer  broker. So the first thing that we typically do when they’re going to be buying a home is see how well they’re qualified to obtain  a mortgage. At what point should a home  buyer be looking at the risk that could be  potentially there in a house of interest?

Jeff: I would say it’s when you get that listing  from your broker and you see a list of houses,  it’s good to go look them up on the FEMA maps  to see if it’s a place where you would have to  buy flood insurance. And we certainly went over  this the last time I was here. But for the folks  who are checking in for the first time, if you  are in a high-risk area, what’s called a special  flood hazard area, and you have a federally  backed mortgage, which is most mortgages,  then you’re required to buy. For everyone else,  it’s an option to buy, and for those where  it’s required, certainly as you go through the  lending process, that will be made clear to you.But really, getting back to the heart of  your question, it’s when you walk through  the door of the house for the first time. It’s  everything from knowing if it’s in a high-risk  area as you go and choose to look at the listing,  as well as when you walk through the property,  look around and look for what are there any  signs of water in this house? Are there sump  pumps? Has clearly work been done because  there’s a drainage issue in a basement?  

Many places have that. So you don’t have to  be scared away that it’s a matter of going  in and learning as much as you can about  the property so that you make a decision  about whether or not to purchase it, and then if  you do purchase it; First, do you have to buy, have flood insurance? And then second,  should you choose to buy flood insurance?

4:06

Victoria: Right, I always tell people that  I’m working with that when we go into a house,  the first thing I’m going to tell you is  everything that’s wrong with it. And I go  straight to the basement because we both  live in the greater Washington, D.C. area,  and we have a lot of wet basements, a lot of  issues, along the Potomac River. Just last week,  I’m working with clients in Old Town, Alexandria,  and they were interested in a condominium, and I checked the flood maps, and it’s in an A.E. flood  map. Walk me through what your advice would be  for a homebuyer in that situation if they really  wanted to put an offer in on a place like that.

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Jeff: The first thing I would do is reach  out to your insurance agent and get a quote, not just for homeowners insurance, but also for  flood insurance. If you’re in that A.E. zone, that’s one of the zones that is required  to purchase if you have a federally backed  mortgage. So I would go get a flood quote  and factor that in, the cost of that in,  

when you’re determining the affordability of  the house, and as you’re comparing it to other  properties, perhaps where you might not have  to buy a flood insurance policy and make that part of your buying decision, the more you can  learn about a property, including from the cost  perspective. But your number one trigger should  be, have your insurance agent on speed dial. So,  when you see that house, you know that Saturday  is coming, you’re getting excited about going  and looking at all these properties, you know  for that one, you would have to factor in cost.

5:40

Victoria: When people are looking  at properties and it’s zoned X,  

5:46

but they aren’t that far from a zone  A.E., you had mentioned that typical  

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flood insurance isn’t covered in most  homeowners insurance. Is that correct?

5:57

Jeff: That’s right.

5:58

Victoria: Yeah. So, if you  are anywhere near an A.E.,  

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would your advice be to go ahead  and look into flood insurance?

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Jeff: I would go ahead and do it for a couple  of reasons. The FEMA flood maps are really a  

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regulatory product designed to decide when we  as a country and particularly looking out for  

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the mortgage holders’ interest, when we’re going  to say, hey, we need you to go ahead and purchase  

6:29

this insurance because your high risk. If you’re  just outside of the high-risk area, you’re not no  

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risk, and that’s the biggest myth that we have  to bust here as we teach folks about flood risk  

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in America. You’re probably at medium risk. Medium  to medium high is a good way of characterizing it.

6:50

What we know over time is it only takes about  an inch of water that can quickly get you up  

6:55

to around a $25,000 cost repairing  your home. So, in that circumstance,  

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I certainly would buy a policy. It  really gives you peace of mind. It  

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is an expense and I know with housing being  so expensive and insurance costs are rising,  

7:15

it’s not exciting to add an additional  expense into the household budget to be  

7:20

sure. But we talk to people every year who  do have the coverage and who do experience  

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a loss. And they look at, let’s say, a $50,000  or $60,000 flood loss, which is pretty common.

7:32

Victoria: Okay.

7:33

Jeff: Not average, but common, and so if you don’t  have the coverage, you’re looking at covering  

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that, putting things on a credit card, taking  it out of your home equity. If you just bought  

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the property, depending upon the size of your  down payment, you may not have a lot of equity,  

7:51

and it really can set you back. People get set  back decades and don’t financially or don’t  

7:59

financially recover at all. So particularly for  the people in that situation that you described,  

8:05

it would be a great investment. Your home  is your biggest investment for most of us,  

8:10

and this certainly will help  you protect that investment.

8:14

Victoria: Is it possible to give kind of an  average, and we’re not going to hold you to this,  

8:19

but an average cost for flood insurance? So people  have some idea of what they’d be looking at.

8:26

Jeff: Our average cost is a  little bit over $800 right now.

8:29

Victoria: Okay.

8:30

Jeff: But it can range and particularly for  those who are just outside of a high-risk area,  

8:39

it’s going to be a little bit more than that  probably. But the average cost right now is  

8:44

just a little bit over $800. The National  Flood Insurance Program was created because  

8:50

we have an insurability problem in America, as  well as an affordability problem. We haven’t  

8:55

unfortunately solved the affordability problem  in all these years, but the NFIP is here and  

9:00

we’ll sell a policy to anyone in any of the  22,600 participating communities. So that  

9:07

availability problem that we see with, you  know, we see insurers pulling out of places  

9:12

like California. We see people dropping people  in Florida, insurers dropping people in Florida.

9:20

With the NFIP that we’re going to be there  and we’re going to continue to sell you  

9:24

the insurance. It is going to be at a risk-based  price. That’s the affordability piece of things,  

9:28

and it’s one of the reasons why certainly for  those who can afford to do so, we encourage  

9:34

you to buy, and for those that can’t afford it,  we continue to advocate to Congress to provide  

9:40

some type of assistance, and we’re hopeful  that one day that’ll be in place as well.

9:44

Victoria: On this podcast, we’re going to  include some links so that people can learn  

9:47

more, from the FEMA maps and regarding the  flood insurance that you’re talking about.  

9:52

Is there anything else that you would like  consumers to know and specifically, again,  

9:56

people who are buying homes, anything  that you could share with your expertise?

10:01

Jeff: One is that the FEMA flood map is a snapshot  in time. It may be some vintage and certainly has  

10:10

to be reevaluated to make sure it continues to  represent the flood picture every five years,  

10:16

but a lot can happen in five years. Maps  get updated on a priority order. And so,  

10:23

it’s not uncommon to see a 10-year-old map that  probably is pretty close to what the risk is. But  

10:29

if you’re expecting fine line gradations and risk,  that’s not really what it’s designed to do. It’s  

10:34

designed to say it’s tremendously helpful for the  folks in your community who manage the floodplain,  

10:40

particularly at the county level. It’s  an important technical product for them.  

10:43

It’s important for realtors and it certainly  important to help you learn if you have to buy.

10:50

What it’s not great at is a nuanced view of  risk, and so I caution against over-reliance  

10:57

on the flood maps, and I think the way you  look at it is the right way to think about it,  

11:03

which is not just, am I in or am I out of  the high risk zone? But how close am I to  

11:09

water sources? And then give some thought and  have some conversation around what have been  

11:15

the changes to the built environment? Say,  every map will have a date on it. What’s  

11:19

the environment? What’s happened since that map  was put into place? That certainly is one thing.

11:27

The second thing I would say is for many  years, there’s been a school of thought,  

11:33

which is that if you don’t have to  buy the insurance, you don’t need it,  

11:37

you don’t need to talk about it. I caution  against anybody, gives you a very dismissive,  

11:43

oh, you don’t need that, and so we don’t need  to bother to talk about it. I think that’s a  

11:51

thinking that’s a little bit behind the times  and is certainly not where I would want to be  

11:55

as a consumer in terms of getting service from  whoever would be giving me that advice. So I  

12:00

would counsel against you don’t need it. I think  there are a number of great agents. There are a  

12:07

number of great insurance agents who will help  talk you through a nuanced conversation. I think  

12:13

somebody who’s willing to get in a conversation  with you is where I would want to be as a buyer.

12:17

Victoria: Yeah, I think exclusive buyer brokers  like myself, and we’re all over the country, one  

12:22

of the first things we want to do is educate and  inform, which is why I have you on this podcast,  

12:28

because people need to know what the risks are,  and then they can make a decision based on that.  

12:34

I live in the Washington area, and every summer, I  end up flocking to the beach, just like everybody  

12:39

does. Sometimes I drive along that strip, that  little narrow strip of Ocean City and Lewis,  

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Delaware, and then Dewey and Rehoboth and  just think, this is a pretty risky area.

12:51

Jeff: Yeah, it certainly is, there’s been so  much evolution in the science of catastrophe  

12:58

modeling and learning all the flooding events  that potentially could happen. The more I talk to  

13:04

those experts, the more that I learn is that the  amount of time we’re in a home is infinitesimally  

13:10

small. It’s just minute, and you’ll hear owners  of homes say, I’ve been here for 10 years, I’ve  

13:17

been here for 15 years, and it’s never flooded.  So, it’s probably not likely to flood. And while  

13:24

previous flooding experience is important,  it’s just such a small amount of time. I mean,  

13:29

the way the water patterns work, 100 years is  just beginning to get to the point where you  

13:34

really get a keen sense of how water is moving  around and what the risk is in a particular area.

13:42

And then that’s on top of the fact that we change  things so much. I mean, we’re fortunate to live  

13:47

in these areas where things are getting torn  down and things are getting rebuilt and we need  

13:53

additional parking. And so, there’s got to be  an extra lot. And so, there’s all these things  

13:57

that sort of hopefully will move us away from  maybe the people selling us the property had  

14:04

it for 15 years and it never flooded there.  I wouldn’t let that be the end of my inquiry.

14:09

Victoria: No, definitely not. I mean, it’s the  biggest financial commitment you’re going to make  

14:14

in your life until you, I guess, do it again.  But you don’t want to make a mistake like this.

14:18

Jeff: We have a great website called  FloodSmart.gov. It has all kinds of  

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information about flood insurance policies, and  that’s important, but also just about flood risk  

14:29

in America. So, it’s a great resource to go  out and learn a little bit. Encourage your  

14:33

listeners to go check that out and we’ve got some  videos on that as well. So, go check that out.

14:38

Victoria: Great. Jeff Jackson is the  Deputy Assistant Administrator for  

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the Federal Insurance Directorate. He leads flood  

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insurance operations for the National  Flood Insurance Program at FEMA. Jeff,  

14:48

it is such a pleasure to talk to you again about  flood insurance here on Listen Up Homebuyers.

14:52

Jeff: It was great to be with you. Thanks.

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Please see some helpful links below.

• Flood Insurance | FEMA.gov
• FEMA Flood Map Service Center | Welcome!
• FloodSmart | Welcome to the NFIP | FloodSmart
• FloodSmart | Why Buy Flood Insurance?
• FloodSmart | How Are Flood Insurance Rates Determined?
• FloodSmart | Flood Preparation and What To Do After A Flood

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How can we help?

The exclusive buyer agents at HomeBuyer Brokerage specialize in serving home buyers. Please reach out with questions at info@homebuyerbrokerage.com.