I recently receive a Denver Metro Association of realtor’s newsletter touting: “People have been flocking…
Are we in Seattle? With May having substantially higher rainfall in Colorado than normal (6.5 inches in Denver with normal being around 2.5 inches). The Denver Channel did an interesting analysis explaining why so much rain (see article) All this rain is good for wildfire season but bound to cause flooding problems.
With our recent rains in Colorado (what happened to “over 300 days of sunshine in Colorado?- interesting article on the history of this slogan), what does this mean for you and your commercial and residential property?
All the water falling has to go somewhere and will inevitably cause property damage downstream. As a result is a big storm is coming in many cities in Colorado?
According to Fema, property owners in Colorado are much more likely to have damage from a flood as opposed to a wildfire. There is a very interesting problem arising in many areas in Colorado. Many communities have opted out of the National Flood program and therefore residents are unable to get government flood insurance and many do not even know their property is in a danger zone. For example Blue River (clearly has some flood areas… blue river running through the town) has refused to join the national flood program and therefore residents are unlikely to get federal aid if there is a flood (there are 17 cities/counties who have opted out of the flood program; see Denver Post Article)
Who cares? Anyone who owns property and is going to get a loan would be required to have flood insurance. Many of the communities who opted out of the program have not been mapped yet for their flood risk so a property could be in a flood zone and the owner not even know. Furthermore if you have a property in a high risk area that is damaged in a flood, with new regulations the owner might not be able to rebuild (this happened to a number of properties both commercial and residential in the Northern Colorado floods of ’13)
What is flood insurance? It covers water coming from outside the structure; this is considered a flood and normal insurance will not cover; many property owners in 2013 floods found out real quick that they did not have the proper insurance and as a result had no coverage and therefore no ability to rebuild.
Why is flood insurance important? If your property is in a flood zone (anything outside of zone x) and you obtain a mortgage, the lender will require flood insurance on the property.
What is the catch? Flood insurance only covers up to 250k so if a property is worth more than that, flood insurance will likely not cover the full amount to recover from the disaster. There are also some questions about the solvency of the national flood insurance program as a result of the large number of claims.
What should you do? If you own a property in a Colorado flood hazard area you definitely want to get flood insurance. Property owners that have properties not in a designated flood zone should also assess their risk. For example in the floods a few years ago in boulder, many of the properties damaged were not in a flood zone (there was a dry creek bed, very small creek, or other body of water that greatly changed with the flooding). According to Fema 17% of properties damaged were not in a designated flood area. If you are near any dry creek bed, small creek, or other area that is susceptible, mitigation is also recommended (whether walls, landscaping, etc… to mitigate the risk)
Are you in a Colorado flood zone? This is a constant moving target, fema has come up with a tool to check for map updates: See Fema Site for update tool