Flood Zone AE is a designation the Federal Emergency Management Agency (FEMA) uses for high-risk flood zones. These areas have a 1% chance of flooding each year due to their proximity to floodplains, rivers, lakes, and other large bodies of water. A 1% annual risk may not sound threatening, but it translates to a 26% chance of flooding over a traditional 30-year mortgage period.
Because standard homeowners insurance does not cover flood damage, flood insurance is mandatory in these high-risk regions. Property owners in Flood Zone AE must secure protection by purchasing a separate flood insurance policy or, where available, adding an endorsement to their existing home insurance coverage.
Defining Flood Zone AE
FEMA has a comprehensive, complex, and sometimes changing flood mapping system that tracks the inherent risk of flooding across the United States. Areas that are high-risk — like Flood Zone AE — are part of FEMA’s Special Flood Hazard Areas (SFHA).
While there’s a lot of nuance to flood zones, put simply, if you own a home in Flood Zone AE, that means there is a 1% risk of flooding every year.
This 1% annual flood risk is also used to define the “100-year floodplain.” However, this phrase does not mean a flood only happens once every century. Rather, it indicates a 1 in 100 chance of flooding in any given year. Over the course of a 30-year mortgage, that adds up to a 26% chance — or more than a 1 in 4 likelihood — that the property will flood.
What is the AE Flood Zone’s base flood elevation?
Beyond knowing what Flood Zone AE is and whether your home is in such an area, it’s also crucial to understand the flood zone’s base flood elevation (BFE). This measurement refers to the anticipated height of floodwaters during a 100-year flood event. The E in Zone AE indicates that detailed hydraulic analyses have been performed to determine the precise BFE of a specific area.
Your area’s BFE has a big impact on how new homes and other structures are built. The lowest floor of the home must be at or above the area’s base flood elevation. While homes may have a basement below the BFE, they cannot be used as a living space. In addition, all plumbing, electrical, and HVAC must be above the BFE.
Older homes that have any living spaces or crucial home systems, such as electrical, below the base flood elevation will face significantly higher insurance premiums. Homeowners may need to renovate such homes to move water-sensitive home systems and equipment above the BFE. Further, personal items stored below the base flood elevation may not be covered by flood insurance.
Flood Zone AE insurance requirements
Properties in Flood Zone AE are bound by FEMA’s mandatory purchase requirement. It’s crucial to understand what this means before building or buying a home in Flood Zone AE.
Because you face more than a 1 in 4 chance of serious flooding over 30 years of home ownership, FEMA requires owners of properties (residential and commercial) in Flood Zone AE to purchase flood insurance “as a prerequisite for receiving any type of direct or indirect financial assistance.” This means any government-secured mortgage for a property in Zone AE — such as an FHA loan, VA loan, or USDA loan — requires flood insurance.
Remember, a standard homeowners insurance policy will not cover flooding. Flood damage is among the most common home insurance exclusions. So, even if you don’t have a federally backed mortgage, you should seriously consider carrying flood insurance.
How much does flood insurance cost in Zone AE?
Flood insurance costs in Zone AE depend on several factors related to your property. In April 2023, FEMA updated the pricing approach of the National Flood Insurance Program (NFIP), implementing the Risk Rating 2.0. This was a big shift for flood insurance, as it established a more precise algorithm for determining a specific property’s flood risk, rather than the overall risk for a flood zone.
Here are some factors that may impact the cost of flood insurance in Zone AE:
- Your home’s elevation: If your home is below the BFE, you’ll pay significantly higher premiums for flood insurance.
- Where your home is located: Your proximity to bodies of water will also impact costs. As you’d expect, the closer to a shoreline or river, the higher the insurance cost.
- Your home’s foundation: If your home is elevated on piers or stilts to allow water to flow beneath, your costs might be lower than they would be if your home had a concrete foundation that would be exposed to flood waters.
As with any other type of home insurance, flood insurance prices will also vary depending on the deductible and coverage limits you choose.
Pro tip: Buying flood insurance from a private insurer is often cheaper than buying it from the NFIP, which is subsidized by FEMA. Private policies are generally more comprehensive, as well.
Building and renovation requirements in Zone AE
When building a new home or structure in Zone AE or any SFHA, you must account for specific FEMA regulations. Most notably, you must adhere to the elevation requirements, meaning the lowest finished floor of the living space — and all crucial home systems and utilities — must be at or above the base flood elevation.
You’ll want to obtain an elevation certificate from your local floodplain manager to confirm your structure meets these guidelines.
If you already own a home in a 100-year floodplain and want to renovate, you’ll need to approach it carefully. If the total cost of your renovations is 50% or more than the assessed value of the structure (not the property as a whole), then you have to meet all FEMA regulations. If you keep renovations under 50% of the structure’s assessed value, you do not have to bring the building up to FEMA’s guidelines.
Ways to lower flood insurance premiums in Zone AE
There are several ways to lower your flood insurance premiums in Zone AE — and reduce the risk of flood damage at the same time. Some mitigation approaches are much more expensive than others, but they are usually more effective, too.
You can:
- Elevate your home so the lowest living space is above the BFE. However, this is an expensive project.
- Elevate all mechanical systems like HVAC and plumbing.
- Install FEMA-compliant flood vents.
- Regrade your yard and add a drainage system to divert water away from your home.
You can also select a higher deductible for your flood insurance to lower the annual cost of coverage. Keep in mind, though, that when a covered incident damages your property, the deductible is the portion of the loss you agree to pay out of pocket. So, it’s essential to choose a deductible amount that you’re readily able to pay on short notice.
Frequently asked questions
Is Flood Zone AE bad?
Flood Zone AE is a high-risk flood zone that has a 1% chance of flooding each year and a 26% chance of flooding over the course of 30 years. If you build or buy a home in this flood zone and finance the purchase, you’ll be required to carry flood insurance and your policy premium will be more expensive than it would be in lower-risk flood zones.
Can flood zones change?
Yes, flood zones can and do change over time as a result of changes in land development, weather patterns, and natural shifts in the land. FEMA regularly works with local engineers, land surveyors, and other community members to understand and evaluate an area’s flood risk and how it changes over time; these changes are then reflected in updated flood maps.
How does Flood Zone AE impact property values?
Because of the high flood risk, homes in Flood Zone AE tend to have lower property values than they would if they were located elsewhere. The lower property values reflect the high cost of insurance and the higher likelihood of flood damage.
What’s the difference between Flood Zone AE vs. Flood Zone VE?
While both Zone AE and Zone VE refer to high-risk floodplains, Flood Zone VE is specifically limited to coastal areas and refers to locations where wave heights can surpass 3 feet, adding additional risk.
According to FEMA, that means structures in Zone VE must adhere to even stricter building regulations. For instance, homes cannot be built on fill, and homes must be elevated on pilings to allow waves to pass beneath.
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