Do Retirees Need Flood Insurance If They Live In Charleston, SC?

Charleston, South Carolina, is (in our humble opinion) one of the best places in the country for individuals and couples to retire to. There’s no end to the entertainment, food, culture, and outdoor adventures that await those who come to Charleston.

If you want to move here, you’ll likely purchase a house or condo to call home. As you consider your options, remember that your new home could come with some new challenges you haven’t had to manage in the past. Primarily, some areas in Charleston are close to the water, which means they may be at risk of flood damage.

Let’s look at flood risk, flood insurance, and how retirees can decide if it’s worth adding a policy to their new home.

Flood Risk in Charleston, South Carolina

While individual risk will vary depending on where you’re located and how much water rises, remember that Charleston was recently included in a list of the “Most Vulnerable” cities in America to flooding.¹  

Being a coastal city makes Charleston inherently more prone to flooding than other areas in the state. As sea levels rise, the possibility of flooding increases. Anytime a storm or hurricane comes through, there are increased odds that some city regions will be impacted by flooding. Even outside hurricane season, the high tide cycle allows coastal flooding to occur year-round.

Why Flood Risk Is Important for Retirees

Even if the chance of a flood is minimal, here’s something to consider: Just one inch of water in your home could cause around $25,000 in damage.² For retirees living on a fixed income, major, unexpected expenses like this can seriously impact the longevity of their retirement savings. Rather than risk the chance of a nearby stream, river, or harbor surging and causing costly damages, there are protective measures you can take when purchasing your retirement home.  

Standard homeowner’s insurance does not cover flood-related damages. Because of this, anyone who lives in an area prone to flooding is encouraged to obtain a separate flood insurance policy. If you live in an area deemed high risk and your home was purchased with a government-backed mortgage lender, you are required by the lender to obtain flood insurance.

What Is Flood Insurance?

Flood insurance covers damage to your home, property, or business caused by water from coastal flooding or other overflow flooding from rivers, creeks, streams, etc. A flood insurance policy will cover physical losses to your home or belongings due to flooding.

There are two types of coverage: building coverage and content coverage. 

Building coverage protects things like:

• Foundation walls and staircases
• Electrical systems
• Plumbing systems
• Built-in appliances (such as refrigerators)
• Carpeting
• Permanently installed fixtures (such as cabinets)
• Detached garages
• Solar energy equipment

And contents coverage protects:

• Any personal belongings (computers, clothing, furniture)
• Your washer and dryer 
• Valuable items or collectibles (up to $2,500)
• Curtains

There are a few things flood insurance doesn’t cover, including:

• Loss of income due to business interruption
• Cars
• Any personal property kept in a basement
• Property that lies outside of the insured structure (pools, hot tubs, fences, decks, and patios)
• Temporary housing while the damage is being repaired
• Currency or precious metals (like gold)

Remember that flood insurance will only cover damage determined to be the direct result of flooding. If a pipe bursts and floods your home with water, that does not count as flooding, and your flood policy would not cover the damages (though your homeowner’s policy might). But if water flooded your property and caused a pipe to burst, your policy would likely cover the damages.

The National Flood Insurance Program (NFIP)

The only way to obtain a flood insurance policy is through the National Flood Insurance Program (NFIP)—the NFIP partners with over 50 private insurance providers, which you can use to purchase your policy. Or, you can purchase a policy straight from the NFIP through their NFIP Direct program.

Not all counties participate in the National Flood Insurance Program, but the city of Charleston and its surrounding communities do.³   

Flood Insurance Options for Retirees in Charleston

Aside from the NFIP, retirees may obtain a flood insurance policy through a private provider. This is a relatively recent change, as new technology has allowed private companies to more accurately predict (and therefore price) flood risk for individuals. 

Analyzing the Cost of Flood Insurance

Private flood insurance accounts for about 5% of the current residential flood insurance market, compared to the NFIP’s 95% market share. The rules and regulations are less restrictive because the federal government doesn’t back private flood insurance.

While NFIP is limited to $250,000 for building coverage and $100,000 for content coverage, it may not be enough protection to meet your property’s needs. Private flood insurers can set their limits and typically offer policies that exceed $500,000 in coverage.⁴   

It is possible, however, that insurance companies won’t offer flood insurance for those living in high-risk areas, like some communities in Charleston. Or, the insurer can remove your policy at any time if their calculations later determine your home is too at-risk. With NFIP, you generally won’t lose your policy for being in a high-risk area. 

In terms of cost, a recent study found that in some states, including Florida, Louisiana, and Texas, private policies had less expensive premiums than NFIP policies.⁵ If you are looking to obtain a policy through NFIP, the average annual premium for single-family homes in South Carolina is $700.⁶  

Benefits and Considerations of Flood Insurance for Retirees

An estimated 188,329 homes in Charleston are at risk of flood damage due to storm surges.⁶ The threat of hurricanes, storm surges, and rising sea levels should all play a role in deciding whether to obtain a flood insurance policy.

Considering the average claim on a flood insurance policy is $52,000 in damages, having a policy in place can provide retirees with immense peace of mind.⁶     

How to Lower Your Flood Insurance Premiums

The NFIP offers homeowners several suggestions for mitigating flood risk and lowering flood policy premiums. According to the NFIP website, these risk management strategies include:

• Elevating utilities above the base flood elevation.
• Incorporating flood openings into the basement of existing homes.
• Filling in your existing basement.
• Elevating your home above the base flood elevation.

As with any other type of insurance, you can always lower your monthly premiums by opting for a higher deductible. This can be a financially risky move, especially if you live in a high-risk area. But, if you set aside some emergency savings to cover the deductible in the event you need it, this could be an excellent option to minimize your monthly expenses.

Is Flood Insurance Necessary? Your Financial Advisor Can Help

Moving to a city like Charleston is exciting, and we want to help you make the most of your new home. Before purchasing a home, we encourage you to seek professional advice on necessary protection measures. You can consult an insurance agent to learn more about homeowners and flood insurance. They should be able to review potential policies and costs.

So many people dream of living by the water in retirement—for a good reason. We love Charleston’s incredible scenery, fresh seafood, and relaxing atmosphere. As you’re finding your retirement dream home, don’t forget to check into what areas may be at risk for flooding and what (if any) damage the house for sale has previously incurred. Your home should serve as your sanctuary in retirement, and it deserves to be protected from potential risks (like flooding).

If you want to learn more about retiring to Charleston or need help contacting an insurance agent, don’t hesitate to contact our team. We’d be happy to walk you through your options and connect you with our trusted network of professionals.

^Sources:

^{1Charleston listed as one of most vulnerable cities in 2023 for flooding risk}

^{2Flood Insurance}

^{3Community Status Book Report}

^{4Private flood insurance vs. NFIP: What’s the difference?}

^{5Could private flood insurance be cheaper than NFIP?}

^{6South Carolina flood insurance}