Written by Dani Milton
Dani Milton is a senior content strategist and insurance specialist for SmartFinancial. She received her B.A. in English.
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Updated January 26, 2022Expert Reviewed
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The Federal Emergency Management Agency developed flood zones to identify flooding risks different communities face. Flood Zone AE has a high flooding risk due to their low elevations and proximity to floodplains, lakes and rivers.
Although standard homeowners insurance pays for damages from windstorms, fires and other perils, home insurance doesn't cover flood damage. Flood Zone AE is a Special Flood Hazard Area that has a 1% chance of an annual flood, or 26% during a 30 year mortgage period. FEMA requires Zone AE residents with federal mortgages to buy a flood policy.
Below, you'll learn about Flood Zone AE and the risks you should consider when shopping for flood insurance coverage.
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The Federal Emergency Management Agency developed flood zones to determine each community's flood risks. Flood Zone AE are low-lying areas that have a high risk, because of their proximity to floodplains, rivers and lakes. Zone AE replaces Zones A1-A30 on FEMA's new Flood Insurance Rate Map (FIRM) format.
Flood Zone AE locations have a high flooding risk.
Zone AE is a Special Flood Hazard Area (SFHA), which has a 1% annual flood risk, or a 26% chance of flooding during a 30-year mortgage. This 1% probability is FEMA's base flood or 100-year flood value.
FEMA also assigns a base flood elevation (BFE) to Zone AE areas. BFEs are the heights floodwaters may reach during base flood periods. Locations with high BFEs have greater flood risks and pay higher flood insurance premiums.
Additionally, Flood Zone AE structures must adhere to the following codes by U.S. law:
FEMA issues Elevation Certificates that indicate structures meet its standards. ECs can be used for flood insurance discounts.
By federal law, Zone AE homeowners must buy flood insurance because of the high flood risk. Zone AE businesses and homeowners who have federally backed mortgages are also required to get flood coverage.
FEMA's Flood Insurance Rate Map (FIRM) can identify your home's specific flood risk and includes your community's premium zones and SFHAs. You can get data about your property's risk in the following ways:
Home insurers consider factors, such as a home's age, construction and square footage when calculating homeowners premiums. Your flood zone doesn't affect your home insurance rates. However, it does affect your flood premiums.
The average price for flood insurance in Flood Zone AE is $1,025.
Under FEMA's new Rating Risk 2.0 System, flood carriers use zones as one of several factors to determine flood insurance premiums. Other variables include your home's foundation and elevation, as well as your area's BFE, flood frequency and risks.
The average price for flood insurance in Flood Zone AE is $1,025. Here are NFIP base premiums for combinations of Contents Coverage and Building Coverage in Special Flood Hazard Areas, like Flood Zone AE.
NFIP policies only pay for damages when situations meet FEMA's flood definition. FEMA defines a flood as a partial or complete inundation of two (or more) acres or two (or more) properties (one which a policyholder owns). Their policies don't cover property losses if only one home or property is affected by floodwaters.
FEMA also imposes a strict 30-day waiting period for all NFIP policies. When flooding occurs before coverage starts, the flood policy won't cover property damages. Additionally, NFIP flood policies only cover building and contents up to the coverage limits.
Private flood insurance plans have higher coverage limits than NFIP plans. This coverage is also more affordable. One study found that people save 20 - 40% on their flood insurance plans when they purchase them from a private flood carrier.
