Risk Factor provides a powerful way to understand flood risk in terms of the expected cost required to repair flood damage to your home’s structure.
First Street Foundation® has incorporated historical data from the U.S. Army Corps of Engineers (USACE) to estimate the current and future annual cost of flood damage, and the potential loss to a building structure over the next 30 years. These estimates are based on the likelihood and depth of flood damage to a building, as well as building characteristics, structure value, and type of risk.
What are flood damage estimates?
A property’s estimated cost to repair flood damage provides a powerful way to understand flood risk in terms of the financial cost to property owners. The Flood Model considers the location of a building when determining the type and the subsequent cost of its flood risk. For example, storm surge from a hurricane cause a different type of damage than structural damage from heavy rain.
These factors are then compared with historical data on flood damage costs from the United States Army Corps of Engineers (USACE). The approximate property value includes the value of the physical building structure as well as the value of the land the property sits on is estimated through a peer-reviewed methodology developed by First Street Foundation based on a home’s specific building characteristics. Building characteristics refer to factors such as the number of stories of a structure, the presence of a basement, and the first-floor elevation. This data comes from Lightbox, a leading provider of commercial real estate data. For properties where data does not exist, it is estimated using algorithms based on known property characteristics and those of nearby properties. You can learn more by reading about our flood methodology.
Annual flood damage estimates
Annual flood damage estimates capture a homeowner’s expected cost per year to repair flood damage to their home.
The USACE data analyzes the relationship between the depth of flooding and the amount of damage caused, based on historical records from actual insurance claims. This then provides an estimate for the expected loss per year that a property owner can expect to pay as a result of damage to their home from flooding.
Potential loss to building structure
The potential loss to the building structure is the estimated cost a property owner can expect to pay as a result of structural damage to their building from flooding over a selected period of time. Estimated projected depth, likelihood, and type of flooding come from the First Street Foundation’s Flood Model.
The potential loss to a building structure over time is the sum total of all potential flood damage, based on a property’s likelihood, depth, and source of flood risk. The potential loss to a building’s structure is calculated by adding each year's annual flood damage estimate over the selected period of time. For example, if a property’s annual flood damage is estimated to be $100 every year, the potential loss to that building would be $1,500 in 15 years.
The cost of flood damage is increasing
Because the risk of loss changes as environmental conditions change, damage estimates generally increase over time as the risk of flooding to a property increases. Changes in the environment have already increased flooding across the United States, particularly in coastal and low-lying areas. As these trends continue into the future, 1.7 million more American properties will be at risk, and the damage and cost of flooding will continue to add up.
If a property’s flood risk is projected to increase in the future, the estimated annual flood damage in 30 years will be higher than the estimated damage this year. However, future annual flood damage estimates do not consider inflation or home improvements that might increase building value, both of which would increase flood damage costs. It's important to review available flood solutions sooner rather than later.
Flood damage estimates v.s Flood Factor scores
A home’s Flood Factor® is not based on its flood damage estimates. However, because both Flood Factors and flood damage estimates are based on flood risk projections, there may be some correlation. Flood Factors reflect the likelihood of water reaching a building, while annual flood damage estimates capture the real-world damage that flooding is likely to cause based on the building’s unique characteristics. A home’s Flood Factor is based on its comprehensive flood risk over the next 30 years; it looks explicitly at the likelihood and depth of floodwater reaching a property’s largest building footprint. Flood damage estimates use these projections and specific details about the building to assess the likely cost of flood damage.
A property with a low ground floor elevation (likely 1-2 feet). Source: This Old House
While homes with high flood risks are likely to have higher annual flood damage estimates, it is still possible for a home to have a low Flood Factor and high damage estimate or a home to have a high Flood Factor and low damage estimate. How quickly the water reaches the footprint, how long it stays, and the home’s foundation type has a lot to do with the actual damage the home may experience.
A property with a low ground floor elevation (likely 1-2 feet). Source: This Old House
For example, a property with a high Flood Factor projected to receive 3 feet of flooding in the event of a 1 and 100-year flood may have low annual flood damage estimates if the home is raised higher than 3 feet. While there is still a possibility the home could be damaged, the model would project that floodwater would not reach the home or cause damage to the building. Because flooding can impact individuals beyond just the cost to repair structural damage, a property can still be considered at risk of flooding even with low flood damage estimates.
Press Coverage
USA Today: Flood-prone homeowners could see major rate hikes in FEMA flood insurance changes, a new study finds
New York Times: Climate Threats Could Mean Big Jumps in Insurance Costs This Year
Bloomberg: Most Americans Don’t Have Enough Flood Insurance for Climate Change