Online real estate sites like Zillow and Realtor.com have had a major impact on the real estate market over the last 5 years. You can almost find out instantly what your house will be sold for, however there are some misleading things on these sites. Sometimes the square footage might be wrong, the year built, or even the foundation type.

As you can imagine these things could have a big impact on what you could sell your house for in Huntsville Alabama. Having the lowest home inventory in 20 years can also magnify this issue.

However these things could be having an even bigger impact on your flood insurance premiums.

Everybody uses these sites now from realtors to home buyers to insurance agents. It makes it very easy to get the information you need to do a home insurance quote or a flood insurance quote if you are an insurance agent.

You might even be a potential buyer using this information to get your flood insurance quote.

STOP right there that is the wrong way!

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As we mentioned before these sites are not always 100% accurate. For example we were just reviewing a listing in Huntsville Alabama for potential home buyer where the property was in a special flood hazard area. We were reviewing everything on the home and noticed when it comes to flood insurance some things were different.

  1. Foundation type
  2. Year built
  3. Update details
  4. Estimated value

You see the North Alabama MLS and the online sites had the home listed with a basement, but when we reviewed it there was not a single side of the property that was underground. FEMA's definition of a basement is a property that has all sides of the home below grade.

When it comes to flood insurance this home was actually considered to be on a slab. Had this home been quoted with a basement it could have had some major exclusions for coverages on the first level as well as significantly higher flood premiums.

Now lets use the other example that confuses alot of people and that is when its listed as a basement when its really a crawlspace.

This mistake could have a significant difference on flood premiums. Sometimes the mistake is not caught for a few years. If you have a flood insurance policy through the National Flood Insurance Program they normally request pictures which can prevent this from happening. However if its a private flood insurance policy they may not request these documents and there is no getting this flood insurance premium back from previous years.

So how can updated details impact the property?

So say the site says the home was built in 1950 which makes it a pre firm structure but it was updated in 2004. It list many of the things that were updated but what it doesn't tell you is the home was torn down to the foundation and redone.

As a result FEMA no longer considers this a pre firm structure but instead it is a substantially improved structure. As a result the year built is considered to be 2004. Since the home is in a special flood hazard area an elevation certificate would be required if you decided to do a policy with the National Flood Insurance Program. The rating system could also be completely different since it is no longer a Pre Firm structure.

Estimated value might be one of the most common things that is off with these sites. Now it's always recommended that you reach out to a realtor so you can get accurate values of the market value of the home. Using the estimated value on these sites as an insurance agent can be very dangerous. Whether it is flood insurance or something else this could easily underinsure a property owner. Then what happens is when a claim occurs they may not get the coverage need to replace or repair the home.

This is one major complaint that property owners had in east Alabama on Weiss lake and Lake Logan Martin after the 2019 flooding event.

Many of these property owners either had the loan amount listed on the flood insurance or what they thought the homes value should be. The problem with alot of these sites is they use market value on these amounts and for flood insurance replacement cost is used.

So whats the difference?

Market value is the value someone thinks they could sell their home for.

Replacement cost is what it would actually take to rebuild the home.

As you can imagine when its a bad real estate market there could be a huge difference in these amounts.

So let's say that you bought that house on Lake Logan Martin in 2010 not long after the market crash. You got a great deal on it and got a great rate on the flood insurance.

It might not be as a good of a deal as you think. You might want to pull out that flood insurance policy in see what amount of coverage is listed on there.

I imagine you only have $75,000- $100,000 in coverage when you should have $150,000-$175,000 in coverage. You might not have that much coverage we recently had a client come to us that only had $85,000 in coverage on a 3000 square foot house. As you can imagine this $85,000 in coverage would not have gone very far on a 3000 square foot house.

So we have addressed some issues when using these online real estate sites. Remember while these tools can be great for getting information, you always want to verify this information with a licensed realtor.

So if you have questions about making sure your flood insurance policy is accurate or learning more about what flood insurance options in Huntsville Alabama are available then visit our website. You can also check out our daily flood education videos on our YouTube channel or Facebook page. If you are on the run then check out our daily podcast here.

 

Contact Us

 

Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com

 

 

 

When people hear the words flood or flood insurance you would think you just got a letter from the IRS. It's one of those things that nobody wants to talk about. Its the same story for insurance agents across the country. It's the one product that many agents try to avoid because of the complexity of it, the time it takes, and the confusion of the National Flood Insurance Program.

So today we want to discuss 5 things you need to know about flood insurance as an insurance agent. Once we get through these things today we hope that you have learned something and can better serve your clients.

rule 5 (1)

So lets look at these 5 areas of flood insurance

  1. Write Your Own Carriers and NFIP Direct
  2. Understanding Flood Zones
  3. What is a Policy Transfer
  4. Flood Insurance Options
  5. NFIP Cancellation Process

 

WRITE YOUR OWN CARRIERS AND NFIP DIRECT

So lets briefly discuss write your own carriers and NFIP Direct. If you have listened to our flood podcast, read some of our flood blogs, or seen our flood education videos then you saw where we briefly discussed the differences of these. However lets give you a brief description. The difference in these two is going directly to FEMA for your flood insurance quotes and servicing compared to going to a 3rd party. In many situations most people would try to avoid a 3rd party but in these situation the 3rd parties called write your own carriers can actually make the servicing of flood insurance much easier especially during the claims process.

As an agent its also important to know that working with the 3rd party might also keep more money in your pocket when it comes to commissions.

So now that we pretty much know the difference in these two options let's get an understanding of flood zones.

 

FLOOD ZONES

This might be one of the hardest things people have when it comes to flood insurance, even for insurance agents.

When is flood insurance required?

What does the flood zone mean?

Well let's answer those questions for you. Now there are many different types of flood zones but we want to discuss the main zones which are flood zone X, A, AE, V, and VE.

Flood zone X is going to be the minimal risk flood zone where flood insurance is not required. While it is not required roughly 30% of flooding still occurs in this zone. This particular flood zone also usually offers the best rates because it is considered low risk. Don't let the low risk designation fool you though this is what happened to so many flood victims of Houston Texas, Nebraska City Nebraska, Tulsa Oklahoma, and Florence Alabama.

This victims were told that since flood insurance was not required that it was not needed. As you can imagine they were pretty upset after losing everything in the 2019 floods.

Let's look at the next flood zone which is flood zone A. Flood zone A which is considered to be the special flood hazard area but normally doesn't have a base flood elevation. Because this is a special flood hazard area or part of the 100 year flood plain flood insurance is required if there is a mortgage on the property or an additional interest.

 

Flood zone AE which is considered to be the special flood hazard area as well but has a base flood elevation. This means you can get a better accuracy of the true flood risk.

Flood zone V or VE are considered costal flood zones. These are areas that are usually near a coastline whether it be a lake or ocean. These properties are also considered part of the special flood hazard area which means like the other zones that flood insurance is required.

So now that we some what have an understanding of the flood zones. What if someone has a flood policy on one of these zones that no longer exists. For example the flood zone has been changed from flood zone X to A or AE. This is what is called a grandfathered policy.

 

POLICY TRANSFERS

This a great scenario where policy transfers come into play this is where the policy is transferred from the seller to the buyer to protect the flood insurance rate and keep the policy grandfathered. This tops the flood zone from changing on the policy as long as there has not been a gap in coverage.

Policy transfers are normally only available through the National Flood Insurance Program.

So are other flood insurance options available for your clients?

Yes generally across the United States there are two flood insurance options available.

We have briefly discussed the first option which is the National Flood Insurance Program but what about the 2nd option which is private flood insurance.

There are some big differences in these two options and both options are not available to everyone.

The National Flood Insurance Program is available to anyone as long as that community is a participating community.

So what is a participating community?

 

These are communities that have agreed to meet a higher standard of flood plain management and follow strict guidelines. By doing so it makes them a participating community this also sets the community up for possible disaster assistance help after a flood.

So if a community does not participate can you still get flood insurance?

Yes there are still options available in some of these communities which brings us to the other option for flood insurance which is private flood insurance.

So what is private flood insurance?

 

PRIVATE FLOOD INSURANCE

Private flood insurance is just like it sounds it's backed by private flood insurance companies while the NFIP is backed by FEMA.

Generally private flood insurance can offer a lot more coverage than the NFIP and many times do it with a 40% savings. One reason is different technologies are used to determine rates. NFIP uses their own flood maps which is based on a parcel but private flood insurance can take a deeper look at historical flooding in an area and the elevation of a property.

Most private flood insurance is considered to be non admitted carriers. As an insurance agent it's important that you understand the difference between non admitted and admitted carriers.

So do your clients qualify for private flood insurance?

It could depend on two things claim history on a property and the type of loan on the property.

Many private insurance companies will not do a flood policy if a property has ever flooded. Some companies only look back 5 years and others limit it to one claim on the property.

So what does the loan type have to do with qualifying?

Well all loan types except for FHA loans currently accept private flood insurance as long as it reads this statement. This policy meets the definition of private flood insurance contained in 42 U.S.C. 4012a(b)(7) and the corresponding regulation.

 

ADMITTED and NON ADMITTED CARRIERS

So what is the difference?

An admitted insurance company is backed by the state, which means:

  • The insurance company must comply with all state regulations regarding insurance, which are established and overseen by the National Association of Insurance Commissioners.
  • If the insurance company fails financially, the state will step in to make payments on claims as necessary.

A non-admitted insurance company isn’t approved by the state, which means:

  • The insurance company does not necessarily comply with state insurance regulations.
  • If the insurance company becomes insolvent, there is no guarantee that claims will be paid, even if the case is active at the time of the bankruptcy or financial failure.
  • If policyholders think their case was handled improperly, they can’t appeal to the state insurance department.

When comparing these two options you want to pay attention to the ratings of these companies typically the better rating the better opportunity for these companies to stay in business. We normally do not recommend working with anyone that does not have an A rating.

Now there are very few admitted private flood insurance companies out there. However if you are in areas like Florida or New Jersey you have to quote first through these admitted carriers before going to the non admitted or surplus market.

It's important to understand your state guidelines on using surplus or non admitted carriers. Check out your states insurance website for guidance on this.

 

CANCELLATION PROCESS

Let's look at the 5th thing that an insurance agent should know about flood insurance and that is the cancellation process. Let's look at the private flood insurance process first.

Private flood insurance follows similar guidelines as the National Flood Insurance Program. Now if you don't have a mortgage you can cancel at anytime but you want to pay very close attention to the minimum premium earned policy.

For example say the minimum earned premium is 50% this means you won't be getting any more than that back. So if you decide to cancel the policy 2 months in you could be out alot of money. You also want to see which fees are excluded when a policy is refunded. Normally any kind of surplus or policy fees are fully earned and not refundable.

So what if you have a mortgage? Can you cancel at anytime?

No you can only cancel this policy if your mortgage company will allow you to. Generally the private flood insurance company requires a signed cancellation letter and a letter from the bank stating it is ok to cancel the policy.

Now let's look at the National Flood Insurance Program cancellation process. This can be confusing and its why we recently do a video series on the 26 cancellation reasons. You can find the podcast that discusses those reasons here.

 

Let's look at cancellation reason 26 which is on the one that normally causes all the confusion. We probably get at least one question about this cancellation process everyday. This cancellation reason discusses midterm cancellation when a duplicate policy is in place outside the National Flood Insurance Program.

In 2018 FEMA released a bulletin stating that they would allow midterm cancellations for property owners to move to the private market if their bank allowed it.

However a few months later they reversed this decision. So as of 2020 the only way this policy can be cancelled for duplicate coverage is at renewal.

There are a few things you will need to make sure this policy gets cancelled properly. You will need a letter from your bank stating that they will accept private flood insurance and you will need a signed cancellation letter from the agent and client.

Here is where alot of people get in trouble when doing this they don't account for the waiting period with private flood insurance.

If its a 5 day or 15 day wait period you want to make sure that the new private policy is issued that many days before the renewal date. If you make the policy effective on the date of renewal or even one day later it could cause FEMA not to cancel the flood insurance policy for another year.

 

So we have discussed 5 things you should know about flood insurance as an insurance agent. Maybe you want to get a better understanding about other things on flood insurance or see how we can help your clients get their flood zone changed? Then make sure to visit our website you can also check out our daily flood education videos on our YouTube channel or Facebook page Flood Insurance Guru.

 

Contact Us

 

Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com

 

Flood zones can sometimes be difficult to understand. When are you in one and when are you not? What sources can be trusted to give you the right information to verify the flood zone. Does your mortgage company have the right zone and if not what can be done?

Sometimes trying to read a flood map can be like trying to read a foreign language for the first time. You have to understand a few things to get a good understanding of what these maps mean.

The first thing you have to understand is what each zone means and are they mandatory. Below are some of the main flood zones

  1. Flood zone X
  2. Flood Zone A
  3. Flood zone AE
  4. Flood zone V
  5. Flood zone VE

Let's get a brief understanding of what each one of these zones mean.

Flood zone X is what is considered a minimal risk zone. Insurance is not mandatory in this zone it is important o understand that 30% of flooding occurs in this zone normally as a result of flash flooding. These zones also carry preferred rated policies that carry some of the most favorable rates.

Next is flood zone A this is considered to be part of the 100 year flood plain but many times this area does not have a base flood elevation. This means that many of the flood risks really are undetermined because flood studies have not been done in the area.

Flood zone AE is also part of the 100 year flood plain but has a determined base flood elevation making measuring the risk a much easier task.

Flood zone V are coastal areas like flood zone A they have no base flood elevation

The last zone we want to look at is flood zone ve these are coastal areas where a base flood elevation has been determined.

Now that we understand flood zones a little bit we have a better understanding of what is required and what isn't.

So let's get back to that letter you got from your mortgage company that states you are in what is called a special flood hazard area and that flood insurance is required. You think to yourself there is no way this property is in a flood zone it sits on a hill.

Tuscany landscape with typical farm house-1

It's very possible that you are absolutely correct. There are really two problems that could be giving you the wrong information.

  1. FEMA bases maps on parcels
  2. 3rd party vendors

Your house sitting on a hill doesn't mean according to FEMA that its not in a flood zone. Remember everything is in a flood zone. It might be a low risk like a flood zone X or a high risk like a flood zone AE. FEMA currently bases their maps on parcels. This means that the area below your home might be listed in the same flood zone as your home.

How is that possible the elevation difference is 25-50 feet.This is one of the downsides of the parcel system.

The other problem that comes into play is 3rd party vendors being used for zone determinations. Some times these companies don't all have the right information and as a result the wrong flood zone could be provided.

So what can you do to fight this information?

Whether you are a purchasing a new home or fighting the letter you just got in the mail you have the right to appeal this information. There are a couple of options here

  1. Letter of determination review
  2. Letter of map amendment

    Blue Mailbox with Mails Isolated on White

So what is a letter of determination review?

According to FEMA a letter of determination review is is an option available to a property owner to appeal a lender's flood zone determination. To have this process completed it generally cost $80 for the process.

Whether this is a property you currently own or one you are looking at buying you have 45 days of the notice being sent by the lender to the borrower stating the building is located within the Special Flood Hazard Area (SFHA).

So what happens if you win or lose this process?

Well if you win then the mandatory requirement to carry flood insurance will be removed.

If you lose the appeal then you will continue to be required to carry flood insurance on the property.

So what about a letter of map amendment?

What is it?

According to FEMA a letter of map amendment also known as LOMA is an official amendment, by letter, to an effective National Flood Insurance Program (NFIP) map.

This process works a little bit different than a letter of determination review. A LOMA is a request to actually change the flood map. You have to prove that the lowest adjacent grade of the property is above the base flood elevation and the risk is minimal. This process generally takes about 30-60 days for FEMA to review. Below is some additional information that FEMA may require for a LOMA.

  1. Elevation Certificate
  2. Property deed
  3. Tax plot
  4. Copy of flood insurance rate map

The appeal outcome is the same as the letter of determination review process. If you win the mandatory requirement for flood insurance will be required. Generally a letter from FEMA needs to be submitted to the bank. Then a letter from the bank needs to be sent to the flood insurance company in order to win the process.

If you lose you will continue to keep your flood insurance going.

Sometimes these processes can be confusing. We have an educational background in flood mitigation so we are here to help in anyway possible.

If you have further questions about how to complete this process or if you will win then make sure to contact us. You can visit our website to get more information or even order an elevation certificate if you need on. You can also check out our daily flood education videos on our YouTube channel or Facebook page The Flood Insurance Guru. You can also tune into our podcast to get more information.

 

Contact Us

 

 

Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com

 

 

Sometimes a FEMA policy simply needs to be cancelled to make sure certain dates line up. That is exactly what we are talking about today, when a FEMA policy needs to be cancelled or rewritten to match another insurance policy on the same building. It's very important that these dates line up exactly. It's not unusual for FEMA to not cancel a policy because of incorrect dates.

We want to discuss a few things

  1. Conditions
  2. Cancellation effective date
  3. Type of refund
  4. Required documentation

Save The Date card isolated on white background-1

Let's first look at two conditions that must exist when cancelling a FEMA or National Flood Insurance Program policy for reason 3.

  1. The insurer must remain the same for the new flood policy with the same or higher amounts of coverage. The agent must submit a new application and premium.
  2. The other insurance coverage for which the common expiration date is established must be for building coverage on the same building insured by the current in-force flood policy

If these conditions do not exist then it would not be a valid reason for cancelling a policy under cancellation 3.

So let's say you are able to get the policy cancelled when would the effective date of cancellation be?

 

The cancellation date under reason 3 is going to be subject to a 30 day wait period just like any other policy. These means that if changes to building coverage are needed they would be subject to a 30 day wait period as well. Its important to understand this because of you don't at least have your loan amount covered then the bank could force place coverage.

It's important to remember that in order to get the proper refund you want to make sure to have all the proper paperwork in within one year of the new effective date.

Now let's talk about what kind of refund you might be getting?

If the cancellation is done properly then a prorated refund will be received which includes increase cost of compliance, reserve fund assessment, and homeowner flood insurance affordability act surcharges.

So in order to get these done there has got to be some required documentation correct?

Yes lets discuss what required documentation is needed. There are three things that are needed.

  1. A new application and premium
  2. The agent must request cancellation of the prior policy upon receipt of the new policy declarations page
  3. The insurer must retain a copy of the new policy declarations page and the other perils policy declarations that show the building address and policy effective dates

So we have talked about FEMA cancellation reason 3 when cancelling a policy to match a common expiration date. We have discussed what the conditions are, what type of refund you should get, and what the needed documentation is?

Maybe you have further questions about this cancellation rule? If so make sure to visit our website floodinsuranceguru where we have free flood educational resources. You can also check out our YouTube channel Flood Insurance Guru where we do daily flood education videos.

Remember we have an educational background in flood mitigation which means we are here to help you understand your flood insurance, flood risks, and mitigating your property to help you lower flood premiums and flood damage.

Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com

 

 

As mentioned in our previous blog we are discussing 26 cancellation reasons in 26 blogs. In the first part we talked about reason or code 1 when a building is sold, destroyed, removed, or altered.

We briefly discussed valid cancellation reasons, type of refund, and documentation needed.

In this blog we want to discuss reason or code 2 which is when contents are sold, removed, or destroyed.

Contents Removed, Sold, or Destroyed

It may seem to you that there are not a lot of resources out there for flood insurance when you don't own the building. It's not that FEMA is trying to look over what is called the tenant, there just normally more focus on the property owner. One reason normally is because of the mandatory mortgage requirement. There are normally not a lot of mandatory requirements when it comes to flood insurance for contents or business property. However we still want you to understand exactly what to do when you have a contents only policy through the National Flood Insurance Program.

3D open book with fonts flying the pages - isolated over white

So you you took a big risk and started a business last year. You weren't sure if it was going to survive or if you were going to survive. However you made it and your business is growing. Well the time has come for you to renew your lease but as you have added staff you need more space.

So you make the decision to move into a bigger building in a different location. This is where the cancellation reason for contents being moved comes into play.

So what exactly do you need to do?

Well lets talk about the first step and that submitting the cancellation request. You need to have the following two things completed.

  1. Signed cancellation letter on date you moved
  2. Signed cancellation letter with insurance agents signature

So once these things have been completed what else is needed. Well if you moved you want to provide an inventory record that shows the contents were moved. You could also submit a signed statement stating the contents are no longer at the location.

So how does the refund work?

Well your refund would be be prorated and based on the cancellation date.

3D Money growing on a tree - financial concepts

So what about if contents are destroyed?

Let's imagine that you are renting an apartment and you pull up in the complex parking lot to see the entire complex on fire. It takes hours for the fire department to put out the fire and the entire complex is a total loss.

You have lost everything you owned. However having renters insurance should help you get back on feet a little bit quicker.

It takes a few weeks but you finally get a check from the insurance company for your contents.

So what about the flood insurance?

Your don't have any contents left and you aren't living at the location anymore, so how can you cancel your flood insurance policy or can you cancel your flood insurance policy?

Thankfully for you, when contents are destroyed it is a valid reason for cancelling a FEMA policy.

So what do you need to do?

Like when contents are moved you need to submit a cancellation letter that is signed by you and the insurance agent.

You then need to show proof that these contents were destroyed.

In the situation we have talked about you should be able to get a letter from the insurance company that states the contents were destroyed.

So how does the refund work?

The refund will be prorated and based on the date the contents were destroyed. Its important to get this information in within a year to make sure that you get the proper refund.

So what if contents are sold?

Let's say you have decided to finally jump at the dream of living over seas. In order to leave out this dream you have decided to sell everything before embarking on this journey.

You basically sell anything you own that doesn't fit in your suitcase. So can you cancel your flood insurance.

While contents being sold is a valid reason to cancel your flood insurance there are some things you want to make sure to do before leaving the country.

 

The following things need to be submitted to FEMA

  1. Signed cancellation letter
  2. Bill of sale that contents have been sold.

So will the refund be a full refund or prorated refund?

The refund will be prorated and based on the date the contents were sold.

So we have reviewed what qualifies as a valid cancellation reason under reason or code 2. It's important that you follow the steps of submitting the proper cancellation documentation and any other required documentation to make sure you get a prorated refund back as quick as possible.

It's also important to understand that if renewal bills have been paid then there would be a full refund due if the inception date has not passed.

So maybe you lease an office or rent an apartment and have additional questions about flood insurance. Make sure to visit our website. You can also check out our YouTube channel or Facebook page where we do daily flood education videos. You can also tune into our podcast or click the link below to get more information.

 

Contact Us

Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com

Getting a FEMA flood policy can be confusing. Trying to figure out what is covered and what isn't covered can be frustrating. The cancellation process can be even more confusing. 26 cancellation rules for 26 different cancellation reasons that just sounds like a headache. It can feel like trying to figure out the tax code and who wants to do that.

 

frustrated young business man working on laptop computer at office

 

So we want to talk about what rules are active, which rules are inactive, what rule applies to what scenario, what documentation is needed, are you getting a refund?

You see its already getting confusing and you just want to throw your hands in the air and say.... forget it.

 

Well over the next 26 blogs we want to break down each rule for you and make it as easy as possible.

How do you make FEMA rules easy to understand? Well hopefully we can find a way to get us both through these rough waters.

So let's get into FEMA cancellation reason 1 or code 1. This rule particular rule is talking about 4 scenarios for a building when its

  1. Sold
  2. Removed
  3. Destroyed
  4. Altered

On each one of these scenarios we want to discuss the following

  1. Valid reasons
  2. Documentation needed
  3. Cancellation date and request
  4. Type of refund

So let's look at a building being sold. You have had your house listed for almost a year. You have finally made it past the obstacle of flood insurance being required and things being needed to be fixed on the house. You just left the closing table and it's time for the next chapter of your life.

Happy family holding poster of a house for sale

 

Wait!!!!!

Can you finally cancel the flood insurance? Maybe

Let's talk about it. As mentioned before you just walked a way from the closing table and the house is no longer yours. This means you no longer of an insurable interest in the property.

Keys and Golden Keyring with the Word Home over Black Wooden Table with Blur Effect. Toned Image.

What exactly does that mean?

It means that if something happens to the property it no longer impacts you.

According to FEMA this qualifies as a valid reason to cancel your flood insurance.

HOORAY!!!!!

The next two important questions

  1. What documentation is needed?
  2. Are you getting a refund?

Since the property was sold you have two options for documentation. Either a bill of sale or a loss settlement. This documentation will actually show that a transaction took place. This shows FEMA that your insurable interest is gone.

The next thing that is needed is a signed cancellation letter needs to be sent in to FEMA with the effective date the property is sold. Its best yo have your signature as well as the insurance agents signature this will stop any further delays.

So once these things are sent in then a refund should be issued generally within 30 days.

So what kind of refund will it be?

Drum roll......

Successful businessman holding dollars - isolated over a white background

It will be a prorated refund based on the effective date of the cancellation. So if you have had the policy for 6 months then you should get 6 months of refund back.

 

Now that we have talked about if a building is sold lets look at some other reasons that fall under reason or code 1 of the FEMA cancellation reasons.

So what if a building is removed, what exactly does this mean?

Generally when a building is removed its being relocated to another location.

When it comes to documentation on a building being removed you can generally get a letter from the courthouse stating it was moved and where it was removed.

So do the same cancellation rules and refund rules apply here?

Yes the cancellation date is the date the building was relocated and you will be getting a prorated refund based on this date.

What if a building is destroyed?

A building being destroyed is valid reason for cancelling a FEMA policy but what kind of documentation can be provided?

Well if it is a result of an insurance claim you can get a copy of a total loss letter.

This is a letter from the insurance company that states that the building is a total loss.

If it was destroyed for other reasons you can also submit photographs showing the building is no longer there.

So we have talked about if a building is sold, removed and destroyed, but what about altered.

A building being physically altered is very important when it comes to cancelling a FEMA policy. FEMA has strict eligibility guidelines on what is considered a building.

So what exactly would a physical alteration be?

Well a good example is a mobile home that is on a permanent foundation. If the foundation type changes or it is removed from the foundation then the building is no longer eligible for National Flood Insurance Program.

 

Do the cancellation and refund processes work the same way on altered buildings.

Yes like buildings that are sold, removed, or destroyed altered buildings use an effective cancellation date on the date these changes took place. It also qualifies these property owners for a prorated refund.

As you can see under reason or code 1 of the FEMA cancellation reasons there are some unique situations on buildings that have been sold, removed, destroyed, or altered.

In these situations it's crucial that you understand the valid reasons, effective cancellation date, type of refund, and documentation needed. FEMA is very strict on this process and you want to make sure your cancellation does not get delayed.

Make sure to tune into our next blog when we discuss reason or code 2 contents that are sold, removed, or destroyed.

If you have further questions about FEMA cancellation reason or code 1 make sure to visit our website. You can also check out each one of these reasons on our YouTube channel The Flood Insurance Guru. You can also tune into our daily flood education videos on our Facebook page The Flood Insurance Guru or catch our daily podcast.

 

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Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com

 

So the time has come to make some additions to that beautiful home that you bought last spring. One of those additions is tearing down the old deck and building a new one.

Wooden fence panel wall with detail

 

 

The plan is to make this one bigger and better, maybe even build stairs going down to the lake. This way you have easy access to the boat house.

 

Coastal landscape Beach view of boardwalk and deck by dune near peaked roofs of houses in Cape Cod, Massachusetts-1

 

You start meeting with contractors to get the plans and budget together. You have finally agreed on everything and you want to start building as soon as possible.

You want to have that deck ready for the spring.

 

    STOP RIGHT THERE!!!!

You could be getting ready to build a disaster or even be in the middle of a disaster without even realizing it. Before you build a single thing or tear down a single thing you want to verify a few things.

  1. Special flood hazard area
  2. Base flood elevation level

The first thing that you want to verify is if you are going to build this beautiful deck in a special flood hazard area or if you current deck is in one. If your current deck is in one more than likely the bank would have notified you.

What is a special flood hazard area and how would it impact the deck you are going to build?

According to FEMA a special flood hazard area is is the area where the National Flood Insurance Program also known as NFIP floodplain management regulations must be enforced and the area where the mandatory purchase of flood insurance applies.

 

So how exactly would this impact your deck?

Well this is how flood maps work. If a structure is within that special flood hazard area flood insurance is required if there is a mortgage on the property. So if you decide to build that deck in that area and the stairs fall within the special flood hazard area then you could place your entire home in the special flood hazard area.

 

Every property owner is always thinking about how can I increase my property value?

Well building this deck could possibly decrease your property value 10-20%.

Properties that are located in the special flood hazard area generally take longer to sell.

One reason is its an extra cost to the new property owner compared to properties that are not located in these special flood hazard areas.

So what do you need to do then?

Well before building you want to verify if there is a base flood elevation on your property.

What is a base flood elevation?

 

Then you want to make sure that all the steps and and any support for the structure is above the base flood elevation. We usually recommend by at least a foot because it is not uncommon for the FEMA to change the base flood elevation in areas after flood insurance studies have been completed.

Who can you contact to make sure these things are correct for you?

We usually recommend contacting a surveyor or engineer that can do an elevation survey of the whole property, this way you know where the rest of your home is located.

Also here's 5 questions to ask a surveyor?

  1. Are they licensed?
  2. How long have they been doing this work?
  3. How long will the process take?
  4. What if some information on the certificate is wrong?
  5. Am I going to get photos?

 

We quickly listed above 5 questions to ask a surveyor but pay very close attention to question number 4. It's important to understand what a surveyor can and can't be held responsible for on an elevation certificate. Lets talk about three areas and if they are responsible

 

  1. Building Diagram
  2. Elevation numbers
  3. Address
  4. Vent size

Out of the four things listed above a surveyor is only responsible for the elevation numbers. Now if it is a professional engineer its a little bit different story.

So what do you do if some of the information is wrong?

Well normally most surveyors will correct these like the building diagram or address for you. Even though they are not responsible for it. The building diagram tells FEMA or the flood insurance company the foundation type of the property.

So you may ask what is the importance of elevation numbers?

Remember two things drive flood insurance rates.

  1. Elevation
  2. Location

So the higher you are above the base flood elevation the lower the flood insurance rate. The lower the elevation is below the base flood elevation the higher the flood insurance rate.

So we have talked about that new deck you want to build but what if you already have a deck that is in this special flood hazard area.

What can you do?

Well there are a few options here, but let's discuss what FEMA is looking for first?

Section C2h) of the elevation form states that is the lowest adjacent grade of the deck, stairs, or structural support.

 

So these are three things you want to be concerned with if you fall within in this area and there are two options.

  1. Move the deck
  2. Tear the deck down

We mentioned how stairs can put you in a special flood hazard, we recently had a property owner that ran into this exact issue. The entire house was outside the special flood hazard area, and so was the deck except for the last two steps.

So these two steps placed the entire home into the special flood hazard area possible causing a significant on the property value and possibly an additional $50-100 a month on the mortgage.

So what could this property owner do?

Well one thing that is recommended is possibly relocating the stair case to the other side of the deck that doesn't go as far down the grade.

The other option could be tearing down the deck but no one wants to take on this cost and most times is not needed. Many times even if its structural support they can be relocated to other positions without sacrificing the integrity of the structure.

As you have seen today building a deck can cause a lot of problems. It's important to do your homework during this process, so it does not have a negative impact on your property value.

If you have further questions about how decks or maybe even swimming pools can place you in a special flood hazard area make sure to visit our website. You can also check out our YouTube channel or Facebook page The Flood Insurance Guru where we do daily flood education videos. You can also check out our Podcast.

 

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Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com

 

Birmingham, Alabama, USA downtown skyline.

Birmingham Alabama is a rapidly growing housing market. One of the benefits of the gorgeous homes through out Birmingham is the basements. Tuscaloosa to Birmingham to Gadsden Alabama is considered tornado alley of Alabama. The area continues to get hit by tornadoes like the 2011 Tuscaloosa tornado and the 1998 Oak Grove tornado. So people see this as a protection measure. Some of these basements are finished and some are unfinished.

 

So let's imagine that after looking at house after house in Birmingham Alabama you have finally found the perfect house in Hoover Alabama. It has the schools you want, the unfinished basement you have been looking for, and you can picture the perfect family entertainment area.

You make an offer only to find out a couple of days later that it's in a special flood hazard area. You are like what is a special flood hazard area?

The mortgage company notifies you this is an area that has a 1% chance of flooding in any given year. Then they throw you the curve ball that flood insurance is going to be required. You think great how much is that going to increase my house payment every month?

You think why didn't the seller tell us it was in was in a flood zone?

Well this could have happened for a couple reasons. It could be that the home was recently moved into the special flood hazard area within the last 12 months.

The other reason could be that the seller chose not to disclose it. Since Alabama is a buyer beware state the seller has the right not to disclose it.

 

The moment you find this out you want to pause and have a conversation with your realtor about the due diligent period.

It could take a few days to collect all the accurate flood information and if you need to walk away from the deal you want to make sure its an option.

So you make a couple of calls to different insurance companies but you get a different answer each place you call.

So frustrating right?

You think why in the world can I not get a straight answer from anyone. You are ready to say forget it lets move on, then you find this blog.

 

So let's give you the answers you are looking for so you can make the best decision for your family.

How Is A Basement Going To Impact Your Flood Insurance in Birmingham Alabama?

walk out photo

It's important to understand that two factors are the driving force of flood insurance premiums in Birmingham Alabama.

  1. Elevation
  2. Location

Elevation can be the main factor as to why you have low flood insurance premiums or high flood insurance premiums.

We recently spoke to a property owner in Texas that was paying $3000 a year for flood insurance but her neighbor was paying $700. She couldn't understand why such a large difference. Well come to find out she had a basement while her neighbors home was on an above grade crawlspace.

You see according to FEMA a basement is below grade or below ground on all 4 sides. So the deeper the basement is the emptier your wallet could be or couldn't be. The more negative the elevation is then the higher the flood insurance premium could be.

However remember like we mentioned before all 4 sides must be below ground. So if you have a walkout at the ground level then this might create a significant savings for you on the flood insurance. The reason for this is there is no negative elevation on that one side of the building.

Also this property would more than likely not be considered a basement but an elevated building with a walk out.

It's important to understand that FEMA or the National Flood Insurance Program is not your only option for flood insurance in Birmingham Alabama.

There is a separate private flood insurance market that can provide multiple options many times 50% less than FEMA. Depending on your loan type you may qualify for these options. If you are doing an FHA loan you will be required to go through FEMA but if you are doing a different type of loan like a conventional, USDA, or VA loan you can take advantage of these private options.

Now that the smoke has cleared you have gotten the answers to your flood questions lets discuss that second burning question.

Is Your Flood Insurance In Birmingham Alabama Going to Skyrocket when you finish the basement?

It's important to understand exactly how finishing a basement will impact your wallet.

There is good news and bad news here

The good news is finishing the basement will not increase your flood insurance premiums, but that does not mean it won't have a major impact on your wallet.

One common negative thing about all flood insurance policies is the limited coverages they offer on basements.

 

 

Let's talk about the National Flood Insurance Program coverages first. The NFIP policy limits building coverage in a basement to things that make the building safe this includes but is not limited to circuit breakers, stair cases, and furnaces.

On the contents side it will cover things like freezers or refrigerators, but it's not going to cover that big screen tv or little johnny's new XBOX One.

Now lets talk about private flood insurance and coverages in the basement. Many private flood carriers will not store any thing that is stored below ground. There are a few companies that offer basement content coverage of around $10,000.

Its important whether you go with The Flood Insurance Guru or another company for your flood insurance needs that you understand your coverages.

If you decide to finish that basement its recommended that you reach out to your insurance agent to get a good understanding of what exact coverages you do have. This way you can decide what to store in the basement and what not to store.

If you have further questions about flood insurance on basements in Birmingham or any other part of Alabama make sure to visit our website. You can also check out our YouTube channel or Facebook page The Flood Insurance Guru.

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Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com

Minnesota has more lakes than any other part of the country and people love a view of those lakes from their homes, especially on Lake Minnetonka. Many homes in Minnesota also have basements or at least they think they have basements.

Many of these homes in Minnesota have whats called walk outs.

Are these really basements?

Thats one of things we want to talk about today. It depends who you ask if this is considered a basement.

So what is a walk out ?

According to FEMA a  walk out is a structure where most of the walls of the lowest level are partially or completely below ground level and one wall is at ground level.

FEMA's definition of a basement is a structure where all 4 sides of the building are below ground.

We mentioned that walkouts have an entry level that is at the ground level. However they can still be basements. If there is a stair case immediately behind the door going below ground then this is considered a basement by FEMA. However if not then its not considered a basement.

So if its not a basement then what is it?

Well let's talk about elevated buildings and how they are different from basements.

Elevated Buildings

Elevated buildings can be in a few different forms like open enclosure, closed enclosure, partial enclosure, and walkouts.

So what is an elevated building?

An elevated building is as a building that has no basement and that has its lowest elevated floor raised above ground level by foundation walls, shear walls, posts, piers, pilings, or columns.

Let's take a deeper look at what elevated buildings with walk outs are?

A structure where most of the walls of the lowest level are partially or completely below ground level and one wall is at ground level is called a Walkout.

Now that we have a good understanding of basements and elevated buildings with walkout, let's look at the impact on flood insurance.

When talking about flood insurance premiums for basements it should not come as a shock that this can be where some of the highest flood insurance premiums in Minnesota are charged, but why?

If you have seen some of our flood educational videos or read some of our other blogs that you know that two of the biggest driving factors for flood insurance premiums are location and elevation.

Homes with basements in Minnesota have some of the highest flood insurance premiums in the state. The reason is that these types of homes normally have the most negative elevation. However the real questions is how many of these homes should actually be considered an elevated building with walk outs?

Say you own a home on Lake Superior in Minnesota you have come to expect that your flood insurance premiums are going to be high but they keep climbing, why?

One reason could be if you live in a home that was built before the first flood map and you have not provided an elevation certificate then it could be possible that you are being over charged for flood insurance every year.

Just recently we helped a property owner discover that their home was an elevated building and not a basement. We were able to help the property owner get these corrections done effective on the first day of the new term for the flood insurance policy. As a result the customer has an additional $2000 in their pocket.

Golden dollar symbol isolated over a white background

Saving money on flood insurance is great and all, but what about when a claim has to be filed. This is where there is a big difference between basements and elevated buildings. We hear from property owners all the time that are shocked that they did not get anything for their basement after a flood or they got everything covered.

One reason for this the confusion about basements like we mentioned earlier alot of people are not aware of elevated buildings with walk outs. Those that have a basement generally are not going to be as happy with their claim as those that do not.

The reason is as the FEMA manual and private flood insurance companies guidelines state they limit coverages for anything that is below grade. While the National Flood Insurance Program will cover some things in a basement like things that make a property safe. Some examples includes things like a circuit breaker, furnaces, freezers, and stair cases. It will also cover things like foundation walls.

Where the coverage really gets limited though is on contents.

Let's say that you finally saved enough money to turn that basement into a man cave. You have put in new dry wall, sofas, and big screen TV's. Its been an usually cold and snowy winter. The snow pack is about 300% higher than it has been in years past. Spring arrives with its rainfall melting the snow at a much faster rate than normal. You come down stairs the next morning to realize that you have 4 feet of water in your basement or elevated building, who knows what it is.

Snow-covered rocks in partly frozen creek

You make a call to your insurance agent to get the flood claim process started. The adjuster comes out to look at things and gives you the shock of a lifetime when they tell you that none of your belongings in the basement are going to be covered.

You scream Whatttt!

The adjuster explains that the contents are below grade and there was a clause in the flood insurance policy stating that contents coverage would not be included for anything below grade.

Now is not the time to find out that you didn't have any coverage because you thought you had an elevated building with a walkout, but the stairs going to the door make it a basement.

Now its important to remember that private flood insurance companies do offer some coverage for contents in basements but it is still very limited.

As you can see understanding the difference elevated buildings with walk outs and basements is important for three reasons

  1. Flood insurance premiums
  2. Better coverage
  3. Understanding expectations when a claim occurs

 

If you have further questions about flood insurance for basements or elevated buildings make sure to visit our website. You can also check out our daily flood education videos on our YouTube Channel or Facebook page The Flood Insurance Guru.

 

Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com

 

Metropolitan Skyline of downtown Birmingham, Alabama, USA.

Retrofitting means making changes to an existing building to protect it from flooding or other hazards such as high winds and earthquakes. It's important to understand that if your property has flooded repeatedly FEMA may require you to do some of these retrofitting methods. Not all methods work the same way so lets discuss them.

According to FEMA there are 6 different ways to retrofit a property in Birmingham Alabama. We want to talk about how these 6 methods can have an impact on your flood insurance premiums in Birmingham Alabama.

  1. Elevation
  2. Wet flood proofing
  3. Relocation
  4. Dry flood proofing
  5. Barrier systems
  6. Demolition

 

Elevation

The first method of flood retrofitting in Birmingham Alabama is elevation. Elevating a property is raising a property up from its original position in the flood area. Elevation can have a huge impact on flood premiums. Remember elevation and location are the two driving factors for flood insurance premiums in areas like Birmingham Alabama and Homewood Alabama. So the higher you raise a property the bigger the impact it could be on your flood insurance premiums. Elevating a property in certain flood prone areas like Chandalar court in Pelham Alabama can be very beneficial. Because of this areas location to the special flood hazard it has flooded in the past and more than likely will in the future.

While elevating a property is a great method, one thing many people forget to do is elevate any servicing equipment like air conditioners as well. While elevating a property can be expensive there are some hazard mitigation grants out there that can help assist with this process. When a presidential disaster declaration is filed these grants are passed down to the local communities. Certain projects are identified as higher needs. The federal government normally pays for 75% and the rest is covered by the state. The state then works with the local communities to determine the urgency of these projects.

Let's discuss the second method of retrofitting which is wet flood proofing.

Wet Flood Proofing

Wet flood proofing is allowing water to pass through your home in order to avoid larger amounts of damage. You may ask why in the world would i let water in my home.

Well one reason is it can eliminate pressure on your foundation keeping your foundation from crumbling during a flood.

One example of flood proofing is using flood vents. These are vents that are placed on the outside of your home that allows water and some debris to pass through.

In order to get credit for these on your flood insurance premiums in Birmingham Alabama the home needs to be above grade foundation like a crawlspace. Then you need to have 1 square inch for every square foot. So if you have 700 square feet you need to have 700 square inches of flood vents. These vents range from $200-400 per vent and then an additional $200-400 for installation. However its not uncommon for it to lower flood premiums in areas like Centerpoint Alabama from $3000 to $700.

Before investing in these vents you want to make sure you have the right foundation type on a home which can be done by obtaining an appraisal or an elevation certificate. You can click here to look at ordering an elevation certificate.

FEMA also states you must have at least 2 flood vents on your home and they must be on different sides of the home. There are two different types of flood vents, engineered and non engineered.

While FEMA does not look at them differently regarding flood insurance rates, engineered flood vents can do a better job of minimizing damage.

Let's look at the 3rd method of retrofitting which is relocation.

 

 

Relocation

Relocation is just like it sounds it is actually picking up the building and moving it to another location. This might mean 50 feet up the hill or 500 miles across country. This completely removes the building from the existing flood risk. Like elevation there are grants and NFIP flood coverages that can cover these expenses.

When it comes to a National Flood Insurance Program policy in order to qualify for resources for relocation the building has to be considered substantially damaged.

Remember substantially damaged means more than 50% of the market value before the flood.

As a result in most situations this removes the mandatory requirement for flood insurance.

The 4th method of retrofitting is dry proofing. So what is dry proofing?

 

Dry Flood Proofing

Dry proofing is sealing your home to prevent flood waters from entering. Sometime this can mean putting a temporary barrier around your property when flood waters are expected. This type of retrofitting usually requires a lot of human intervention, as a result it is not considered a factor in lowering flood insurance premiums.

The 5th method of retrofitting is barrier systems. Barrier systems are things that keep water away from your home. A good example of these are flood walls and levees. These can be expensive to install and maintain. Also if they change the base flood elevation of the area, then a flood plain manager has to sign off before they can be approved. What makes this method even more expensive is they do not impact your National Flood Insurance Program rates at all.

 

Demolition

Heap of rubble from street under repair

The last method of retrofitting is demolition. This is completely tearing the structure down and rebuilding. This may mean rebuilding on the same property or elsewhere. It removes the property from the special flood hazard area.

As you can see some methods of retrofitting can have a big impact on your flood insurance premiums while others may not. Some methods can be expensive like elevating a property. It's important to understand how each one of these methods can impact your property and others in the community. It's also important to understand when you may qualify for certain grants that can help with these methods.

 

If you have further questions about how retrofitting your property can impact your flood insurance rates then make sure to visit our website. You can also check out our YouTube channel or Facebook page The Flood Insurance Guru where we do daily flood education videos.

 

Start My Flood Insurance Quote

Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com