Most people are aware that flood insurance can be required on an existing home, but what about when it is being built? We want to talk about flood insurance for new construction homes in Birmingham Alabama.
First of all when a home is being built the builder carries an insurance policy called a builders risk. This covers the structure until they are done building it. Most people are aware of a home insurance builders risk policy but most are not aware of a flood insurance builders risk policy.
A flood insurance builders risk policy is going to provide some different coverages compared to what the traditional builders risk will cover. Generally coverages will be pretty limited on the flood insurance builders risk policy. The reason for this is many times the walls are not up yet or the structure is not secure because of this it can create additional flood exposure. As a result flood insurance for contents is not usually offered until the structure is complete. Another type of coverage that is not offered many times is additional living expenses or business loss of use. One reason is since no one is living in the home additional living expenses is not needed. This coverage is provided for temporary housing.
In the Birmingham Alabama area these types of policies are very popular in flood prone areas like Alabaster, Pelham, Hoover, Trussville and Vestavia. So as a builder or potential buyer its important to check with the local flood plain manager before building. One reason is if you know the type of flood zone you are in then you might be able to elevate the home to help get the flood zone changed. While this process would not be approved until the home is built its important to know this process to help property values and potential resale opportunities.
If you have questions about flood insurance in Birmingham Alabama or flood insurance on new construction homes make sure to subscribe to our YouTube Channel The Flood Insurance Guru or like our Facebook page where we do daily flood education videos. You can also visit our website Flood Insurance Guru or give us a call 205-451-4294.
Most people are aware that flood insurance can be required on an existing home, but what about when it is being built? We want to talk about flood insurance for new construction homes in Birmingham Alabama.
Today we're talking about what the different flood insurance options are in areas like Richmond, Arlington, Norfolk, and Virginia Beach Virginia. These are areas that have seen a lot of flooding through the years but may not be as much lately. So many people think that the only option in these areas is through the National Flood Insurance Program, also known as NFIP, which we will talk about that program a little bit first.
The National Flood Insurance Program was created in 1968 because people along the Mississippi River were having continuous flooding, and the program was set up to give them some kind of resource and relief so that they could have floods covered since private companies did not want to cover them at the time. The National Flood Insurance Program is administered by FEMA or the Federal Emergency Management Agency. It's also known as the Government Flood Insurance Program.
Some of the quick things to know about the National Flood Insurance Program is it offers coverages on residential properties up to $250,000.00 and on contents up to $100,000.00. As we've mentioned before, most people think this is the only option when it comes to flood insurance. Today we want to talk about what some different options are out there and if these options are better than the National Flood Insurance Program.
When it comes to flood insurance, depending on what type of loan you have on the property, you may have access to what's called private flood insurance. What is private flood insurance? Well, private flood insurance is, just like it sounds, its flood insurance that's offered by private insurance companies. Now, some of the benefits and downsides to this is with the National Flood Insurance Program is they set their rates. All rates are mot the same across the board. it does matter where you go to get a policy. Well, when it comes to private flood insurance, this different insurance companies can pick and choose the risk that they want and they can pick and choose the rates. Generally, most private flood insurance is backed by larger companies or groups of companies like Lloyd's of London and Lexington. Now there are surplus companies is what they're called. They're not admitted companies. A lot of these companies don't have to abide by the same state laws. This is something to pay attention to when looking at private flood insurance.
Now that we know what some of the major backers are it's also important to know there are some smaller insurance companies that do offer private policies that are backed by those companies individually. Let's talk a little bit about the coverage differences when it comes to private flood insurance and the National Flood Insurance Program. We've mentioned the coverages with the National Flood Insurance Program before. Well, how it's a little bit different with private flood insurance is private flood insurance will offer coverage more than $250,000.00 on residential building. They might even go up to 10 million and on contents they offer replacement costs. They offer additional living expenses. If your property is flooded, you would have temporary housing possibly provided. They also even offer some things like repair and refill of a pool if a pool is damaged by a flood. Some private companies are even starting to go to payment plans while traditionally flood insurance has been required to be paid in full at new business and at renewal each year, even if it's paid by you or your mortgage companies. These are some differences.
Now let's really talk about the four ways to obtain flood insurance in Virginia. When we put the National Flood Insurance Program together and we put private flood, we want to talk about some different options. As we have mentioned before, you can do just a normal, traditional policy through the National Flood Insurance Program that any local insurance agent should be able to care of for you. You can also do what's called a flood insurance policy transfer or policy assumption. This is still through the National Flood Insurance Program, but if you're purchasing a house in one of these areas in Virginia then you might have the opportunity there where someone's already got a policy on the property and they can simply transfer from them themselves to you at closing. It's a very easy process.
The next option for flood insurance is, of course, the private market that we've discussed before. Now, it's very important to understand that if you get a rate from one private insurance company, or you get denied, it does not mean that you will get the same rate or denied by another one. It's very important to reach out to someone who has multiple flood insurance companies that they can review and has an educational background in flood mitigation like the Flood Insurance Guru. This way you know what all the options are available. Every once in awhile flood zones might be inaccurate so the opportunity to do a letter of map amendment or LOMA might be available. This is when we go through, we review things on an elevation certificate to see maybe if a property qualifies for this LOMA or letter of map amendment. And what this states is hey FEMA states I'm in a high-risk flood zone, but some things on the elevation certificate and our surveys show others.
Then what we do is we take this information to FEMA and we dispute it, and if we win, they do this LOMA. They change you from a high-risk flood zone to a low-risk flood zone. This does a few things. First of all, it removes the mandatory requirement for flood insurance, which can also help you increase your property values because it's no longer required.
Just to summarize, ways to get flood insurance in Richmond, Virginia; Norfolk, Virginia; Arlington, Virginia; and even Virginia Beach and other areas of Virginia is to do the traditional policy through the National Flood Insurance Program, do a letter of map amendment if you get the flood zone changed, do a policy transfer from one buyer to the next, or even take out a private flood insurance policy with one of the other companies.
If you've got questions about flood insurance in Virginia, you can always reach out to us through our website floodinsuranceguru.com, you can also subscribe to our YouTube channel or like or Facebook page where we do daily flood educational videos, or you can also give us a call 205-451-4294.
Today we were discussing why flood insurance is required in Arizona. I mean, we're in a desert does flooding actually occur? Well, deserts actually have roughly 40 to 100 floods per year, especially in the Arizona area. So today we want to discuss some of the flood risks. When do they occur? What are your options for flood insurance in Arizona? Particularly areas like Tucson, Gilbert, Surprise, Scottsdale, and Phoenix, Arizona.
First of all, let's talk about why flood insurance is required in Arizona and why Arizona might be one the most dangerous areas. Arizona is in the southwestern part of the U.S., which is mostly a desert area. So most people think that deserts don't have to worry about flooding. However, a lot of Arizona is in what's called an AO flood zone.
Now this is considered a 100 year flood zone, which is one of the higher risk flood zones. One of the major risks for Arizona is that these zones have a one to three foot decline, and what happens with these areas is when very little rainfall comes in, it's like water hitting cement. It comes downhill really has nowhere to go, so it starts to settle at the bottom of these areas like valleys, and canals like throughout Arizona.
So what happens is during monsoon season, half an inch or even an inch of rain may be received in a short amount of time and this water has nowhere to go. It creates this ponding at the bottom of these areas and it floods a lot of these low lying areas in Arizona. One of the reasons for this is in a lot of areas across the country, you have what's called your base flood elevation, and this is what FEMA feels flood waters could come up to in certain areas.
Well, in many areas across the U.S., it's 300 or 400 or even 500 feet. Well, in Arizona, it's one foot, so the margin for error is very low. Because of that it creates a lot more flooding exposure in areas like Arizona. So this is one of the reasons why flood insurance is required on a lot of properties in Arizona.
Now, flood premiums are typically very affordable in areas of Arizona, especially in Phoenix who recently had a five percent decrease because of a discount that was added by FEMA back in late 2018. As well as Scottsdale Arizona where flood insurance rates went down in 2016. right. So now that we've discussed why flood insurance is required in Arizona, let's discuss what are the different flood insurance options?
Well we're going to talk a little bit about those today. In Arizona, you've got the two traditional programs. Most people think there's just one option, which is the National Flood Insurance Program, which offers coverages up to 250,000 on residential buildings and 500,000 on commercial buildings, and then they often 100,000 in contents coverage.
Well, you've also got a private flood insurance market that has become very popular across the U.S. and has provided a lot better coverage in many situations for a lot of people. They can pick and choose the kind of risk they want, unlike the National Flood Insurance Program who has to take on everything, but by picking and choosing the risk that they do pick, they can really provide some really good coverages for sometimes double and triple what the National Flood Insurance Program can offer and many times the pricing is half.
Recently, we were able to insure a million dollar home in Surprise, Arizona for less than $600 a year through the private market. This policy provided building coverage up to $1,000,000 and personal content replacement coverage up to 400,000, which is we mentioned before that's a lot more coverage than the National Flood Insurance Program.
So these are some of the benefits, but these are the two main options for flood insurance when it comes to looking for flood insurance in Arizona, particularly areas like Gilbert, Surprise, Scottsdale, Tucson and Phoenix, Arizona. Now let's say that you're buying a house in Arizona and someone's already got a flood policy on there, it's through the National Flood Insurance Program. The you might have the opportunity to do what's called a flood insurance policy transfer or policy assumption where they transfer that property from themselves to you when you purchase a property.
Many times, this can grandfather in better rates because they've had the policy in place a while and if the flood zone's recently changed and they had that policy before then, then they have access to preferred rates. So now that we've discussed why flood insurance is required in Arizona and what the flood insurance options in Arizona are? Where can you find a flood insurance expert? While any insurance agent can sell flood insurance you want to make sure you work with someone who deals with it everyday and has an educational back ground in flood mitigation like The Flood Insurance Guru.
we want to make sure that you're aware of our YouTube channel. Make sure to subscribe to it where we do daily flood education videos.
Also, our Facebook page. Make sure to like it, The Flood Insurance Guru. So if you've got questions about flood insurance in Arizona or why is flood insurance being required on your property, even maybe getting the requirement removed, please reach out to us. Make sure to subscribe to our Youtube channel or like our Facebook page where we do daily flood insurance educational videos. You can also visit our website floodInsuranceguru.com or give us a call, 205-451-4294.
Today we are talking about what is excess flood insurance? Before we discuss that lets discuss something that will give us a better understanding of excess flood insurance the National Flood Insurance Program also known as NFIP.
NFIP is the government flood insurance program. A few quick things to know about the NFIP is that it only offers residential building coverage up to $250,000 and $100,000 on contents. So what happens if you need more coverage? This is where excess flood comes in to help.
Excess flood insurance is a private flood insurance program that is offered on top of what NFIP offers. So let's think of it as building blocks or bricks stacking on top of each other to help provide more protection.
So when does excess coverage kick In?
Well excess flood insurance does not kick in until the NFIP policy has been exhausted. So once the $250,000 for the building and $100,000 for contents has been used then the excess policy could come into play. So let's say you want $750,000 in building coverage the NFIP policy would cover the first $250,000 in coverage and excess would cover the additional $500,000.
It's important to also understand how the claims process would work. This would basically be different claims for one occurrence. So you would have your normal NFIP deductible that you would have to pay and then the excess deductible on top of that.
Excess flood is a great product that provides the additional protection many people need. If you want to learn more about excess flood and if it is right for you please visit our website Flood Insurance Guru. You can also visit our YouTube channel and facebook page The Flood Insurance Guru where we do educational videos. You can also click the link below to learn more or give us a call 205-451-4294.
Today we are talking about flood insurance policy transfers or flood insurance policy assumptions. What are they? How can they be beneficial? What are the negatives about them? We're going to discuss those a little bit today.
First of all, generally a policy transfer or a policy assumption is when a national flood insurance policy is moved from one property owner to the next, FEMA also calls it a policy assumption. Many other people refer to them as policy transfers. Let's talk about some of the benefits of them. How can they help property owners?
Some of the benefits of doing a policy transfer is, for example, let's say that a flood zone on a certain property has recently changed to a much higher risk zone. Then what happens is a policy transfer locks in the current rate for what the property owner has. So if that property owner took out a flood policy before the flood insurance map changed or they've had that policy a while then those rates are locked in. This is one way to get that preferred flood insurance policy through continuous coverage, because by doing a policy transfer, as I said, it locks that rate to what it's currently at.
One of the other benefits is, if you're the individual that's buying the property, since those premiums are already paid up until the renewal, you're not going to have pay anything until renewal. So if you're closing on a home then this could significantly save you on closing costs.
Some of the negatives that we want to talk to about really is on the seller side. Let's just say you're the individual that's wanting to transfer your policy because you're selling your house. What are some of the positives? What are some of the negatives?
Well, the positives is, it gives that new property owner that rate that you currently have, which could be very beneficial. Let's just say if your neighbor's paying $1,500 a year for flood insurance in Birmingham Alabama where flood maps recently changed, but your flood policy is only $550 a year, then this might help you to sell your property a little bit quicker. Some of the negatives is, though, since flood insurance is paid in full every year, when you do a policy transfer and you're the current owner, you will lose these premiums. So that is one negative you have to look at.
Some people would not think that's that big of a deal, because they're trying to sell their house, but if you've just paid $8,000, $9,000, maybe even $10,000 on a flood policy, then that can be a big difference. These were some of the negatives. Generally, though, when it comes to these policy transfers and it comes to policy assumptions, these typically are only done through the National Flood Insurance Program, and there are certain forms that have to be filled out.
It's generally three pages that you have to fill out to get this transferred. One of the things that you have to verify is that it's your primary residence. Let's just say that you're selling that house and you're trying to transfer that policy. It's a rental house for you, but the person buying it is going to be using it as their primary residence then you may not necessarily be able to do a policy transfer because it's going to be a different type of policy. FEMA rates rental properties differently compared to primary residence policies.
To get a better understanding of that, you can watch one of our earlier videos or read some of our blogs about the differences in flood insurance between rental properties and primary residences. So these are some things to think about, but on these forms, once thy are filled out and are turned into the flood carrier then the flood carrier can send over proof of coverage to the mortgage company showing that the policy's been transferred, and this should be able to be done fairly quickly.
So if you've got questions about how to do a policy transfer, is a policy transfer right for you, or you just got more questions about flood insurance, please reach out to us, floodinsuranceguru.com. You can go to our YouTube or our Facebook channel, The Flood Insurance Guru, where we do our daily educational videos, or you can give us a call 205-451-4294. Also, don't forget to click the link below to learn more about how we might be able to help you.
Hello Chris Greene here with Flood Insurance Guru. Today, we're talking about, what is private flood insurance? If you've watched some of our other videos, then you've seen where we've discussed some of the differences between the National Flood Insurance Program, also known as NFIP, which is falling under FEMA but today, we want to talk about exactly what is private flood insurance? Maybe, how can you benefit? and what are some of the unique coverages? Those are some things we want to discuss today. This way you know about all the flood insurance options.
First of all, let's talk about, what is private flood insurance? Private flood insurance is basically like it sounds. Private flood insurance is insurance through the flood market benefits offered by private insurance carriers. Now, there's two main backers of this, that probably insure 95% of the private market, and that's Lexington and Lloyd's of London.
Lloyd's of London is basically a group of investors out of London. They insure a lot of the high-risk stuff in the insurance market today that other companies aren't willing to take the chance on. They're also referred to as a surplus market, because they have some different guidelines they go by. Because many times they're not registered by the local states, so many of those times they don't have to carry certain reserves. They don't have to follow certain rules, because they are not registered with each individual state. Now when claims are paid out, they could move out of that state without paying for those claims, so that is something to consider. However, generally, that's never really happened but they do have to disclaim this with being a surplus company.
Let's talk about the private market a little bit, as well. Outside of Lexington and Lloyd's, you've got very few insurance companies out there that will go into the private market on their own without other backers. Now, some of the benefits of private flood is, they offer some pretty unique coverages. Like, more than $250,000 on residential buildings, more than $100,000 on content coverage, replacement costs for personal property, and additional living expenses,. So if your house floods you might have those additional living expenses covered for, let's say six months.
Now, one of the things that we hear a lot here at the Flood Insurance Guru is, "Hey. I've got a private flood insurance quote, but I was declined because I've had a claim. So, I can't get private flood insurance." This just simply isn't the case. A lot of what this is, is just misinformation out there.
Yes, there are a lot of private flood insurance companies that will not insure properties that have had a flood loss but there are also some companies that will. Now, most of the guidelines with some of these companies is that there hasn't been more than one flood loss within the last five years that's exceeded $250,000. That is the max that's offered through the National Flood Insurance Program on residential. Basically, what they're looking for there is to make sure there's no total loss.
Now, in the private market, while they will insure properties that have had a loss. Generally, they're going to surcharge for it. They're going to charge you a little bit more money on top. To give you an example might be 10-20% more because the property had a flood loss. The reason for that is, properties that have incurred a flood loss generally are more likely to incur another one in the future. These are some unique coverages when it comes to private flood insurance.
What exactly is private flood are some of the things that we've discussed a little bit? If you've got questions about, maybe, is private flood insurance right for you? or you want to get a better understanding of what exactly it is, maybe, compared to the National Flood Insurance Program then click the link below or visit our website Flood Insurance Guru Go to our YouTube and our Facebook channels where we do daily videos on flood education and different flood topics. You can also give us a call, 205-451-4294.
Elevation certificates can be confusing and if not entered correctly it could cost you thousands of dollars each year. So its important to understand exactly what the different elevations on the elevation certificate mean and how it can impact your flood insurance rates?
First let's talk about the base flood elevation, what is a base flood elevation?
According to FEMA Base flood elevation or BFE is the computed elevation to which floodwater is anticipated to rise during the base flood. So let's imagine the BFE is the water level in the ocean, if your house is above it then you might be in a boat but if your house is below it you might be under water.
Each one of the elevations we are going to discuss is going to be compared to the BFE in determining the flood insurance rate through FEMA. When reviewing the elevation certificate the numbers you will generally be looking for will be in Section C2.
The first elevation is going to be top of the bottom floor. This is generally going to be the lowest level of the foundation like a crawlspace, basement or slab. Depending on the foundation type if this level is below the BFE it could have a significant impact on the rate. For example subgrade foundations with a negative elevation level will have a bigger impact on rates than above grade foundations will.
The next elevation to review will be C2 section B which is the top of the next highest floor. In many situations this will be the first rated floor. For example if you have an above grade crawlspace and you have flood vents then you maybe able to count this as the lowest rated floor. This could cause a drastic decrease in flood insurance premiums.
The next section is C2 section d which is an attached garage depending if the garage contains equipment like a water heater or furnace it could have little impact on the flood insurance rate.
The next section of the elevation certificate is section C2 part E this part can be crucial to flood insurance rates. This is the lowest level of machinery equipment. This is talking about things like air conditioners and furnaces. Lets say the rest of the house is above the BFE which gives you possibly preferred rates but the servicing equipment is not then you get stuck with high risk rates. This is one reason why people elevate this equipment to make sure it is level with the lowest floor. This way the equipment does not have a negative impact on your flood insurance rates. This has become a common practice in low lying areas like Houston Texas, Findlay Ohio, Des Moines Iowa, and Montgomery Alabama.
The next section is part F this is the lowest adjacent grade of the building. This means the elevation of the ground, sidewalk or patio slab immediately next to the building, or deck support, after completion of the building. The lowest point of the ground level immediately next to a building. The importance of this level is can determine if your property qualifies for a letter of map amendment which could remove it from a high risk flood zone. One of FEMA's conditions is that the lowest adjacent grade or LAG be above the base flood elevation. One reason is if it is below you can imagine what flash flooding could do to the property.
One the last sections is part G the highest adjacent grade also known as HAG. HAG is the highest natural elevation of the ground surface prior to construction next to the proposed walls of a structure.
The last part of section C2 is h this has to do with the lowest adjacent grade of things like a deck or structural support of a property. When it comes to flood insurance rates things that have the biggest impact on rates are living areas. So areas used for parking or access like a garage or deck may not impact things as much.
As you can see all these different numbers can be confusing like what number is the most important? Just remember the lower the home is below the base flood elevation the higher the rate is. If you need help with understanding an elevation certificate reach out to a local flood insurance expert like The Flood Insurance Guru or a surveyor.
Flood zone AE also referred to as the 100 year flood zone has the highest premiums other than coastal areas. These are generally because most of the structures have a negative base flood elevation. So what determines the premiums of these zones?
Well there are a few things that have a major impact on flood premiums in these zones. The age of the structure, the foundation type, flood loss history, and the elevation of the home.
Let's start with the age of the structure depending on when the house was built it will have a different rating model through FEMA. Its based on the first flood map for structure which generally occurred after 1978. If it was before the first flood map its called a PreFirm structure and if its after the first flood map its called a PostFirm structure. One of the big differences between these two types of structures is called grandfathering where you can keep the property in a preferred flood zone that no longer exists. This is allowed on PostFirm structures but not PreFirm structures.
The next thing that has a major impact on flood insurances rates in flood zone AE is the foundation type. Let's start with crawlspaces above grade compared to subgrade. Above grade is a crawlspace that sits above ground and subgrade is going to be crawlspace that sits partially below ground. The big difference here is subgrade generally will sit a certain level below the base flood elevation which increase the premium. While above grade sits above ground it could still be below the base flood elevation. The difference is things like flood vents can significantly lower the premiums with above grade crawlspaces.
The next type of foundation that will have a major impact on premiums are basements. As you can imagine basements can sit a good distance below the lowest adjacent grade creating a significant negative elevation. This can have a big difference on the rate so its very important to understand this when owning a house and purchasing a house. Also just because a basement is below grade does not mean that it is below the base flood elevation. Now that we have talked about foundations lets talk about how the elevation of the home in a flood zone Ae can impact the rate.The only real way to know this is to have a survey or elevation certificate completed. Now that we have discussed how the elevations of a home can have a major impact on flood insurance rates as you can see from the different foundation types.
Lets talk about positive elevations first and how they can have a big impact. The further your home is above the base flood elevation the better the rate is going to be. If all the elevations of your home are above the base flood elevation your home might even qualify for a letter of map amendment. This means that your property might be removed from the high risk flood zone and placed in a low risk flood zones causing a big improvement to property values. Now lets talk about the impact of negative elevations. As mentioned above basements can cause a home to have an extreme negative elevation. The higher the negative elevation a home has the higher probability of a flood occurring. This can create a double edged sword because the NFIP rates can be through the roof sometimes exceeding $10,000 a year for non coastal properties. However the other problem is the higher the negative elevation the less likely that a private insurance carrier will offer coverage on a property. So these are some things to think about when buying a home with a basement or building a home. we have discussed the impact foundation types can have on a structure lets talk about flood loss history.
Flood losses can have a major impact on a property. It could even stop a property from selling if severe enough. Generally when one flood loss occurs you would lose the preferred rating with the NFIP if you had one. Having a flood loss can also eliminate most of the private flood insurance options as most will not insure a property that has had a loss. However when the second loss and paid claim occur is when disaster can strike. This can turn a property into a severity loss property which has to follow certain mitigation guidelines in order to get insurance through the National Flood Insurance Program and private flood insurance is not available on these type of properties. This is why you should really review things closely before filing a flood insurance claim.
Have questions about flood insurance? Click the link below or visit The Flood Insurance Guru
Flood insurance can be expensive especially when it comes to the 100 year flood zones or flood zone A. One of the major reasons for this is because flood insurance rates are based off how far a structure is below or above the base flood elevation. Well much of flood zone A has what is called an undetermined base flood elevation. Many times this means one does not exist. As a result it is difficult to compare the elevations of a structure to something that does not exist. As a result FEMA and private flood insurance carriers have to be conservative in determining rates in these areas.
Just because you may not see a base flood elevation does not mean there is not one. Many times a local flood plain manager can help track down the base flood elevation or provide a community letter to FEMA that shows one. These letters have helped to significantly lower flood insurance rates in areas like Birmingham Alabama, Knoxville Tennessee, Nashville Tennessee, Des Moines Iowa, Findlay Ohio, and many other areas across the country.
Maybe you have been told that there is not a base flood elevation for your structure, if so please reach out to a flood insurance expert like The Flood Insurance Guru who has an educational background in flood mitigation.
Hello. Chris Greene here with The Flood Insurance Guru, and today we're talking about building diagrams when it comes to your flood insurance. In particular, we're talking about elevation certificates. What do these building diagrams mean? Well, what a building diagram is, is it's the foundation type of what your house is or what the surveyor or engineer who did that elevation certificate thinks it is. The reason we say, thinks it is, because sometimes it could be incorrect. We have seen that where surveyors or engineers have put foundations, because many houses could have two different types of foundations. You could have a crawlspace part of a house, and you could have a slab, but if you look in the corner here, then you're going to see a building diagram on an elevation certificate. In this particular situation, you might see a 1 here, or you might see a 1A, a 1B. What this is, these are slabs is what this 1A and 1B means.
Now, you might see 2 up here. If you see a 2 up here, then it means that you've got a subgrade basement. It's not split level. Now, maybe you see a 3 up here. What that means is that you have gotten a split level slab that's not subgrade. What subgrade means is, it means it's below the grade of the house, and so you might see a number 4 up here. Four is going to be a split level with a subgrade basement. Now, you might see a number 5 up ... Five is going to be an elevated building with no enclosure, and what this means is that the building is elevated below. It might be parking, but it's completely opened. It's not enclosed at all. You might see a number 6 up here. Six is going to be a building, an elevated building with an enclosure. You might see a 7 up here. A 7's going to be an elevated building with solid foundation walls. Number 8 is going to be an elevated building with a crawlspace. Number 9 is going to be non-elevated on subgrade crawlspace.
Now, it's very important to understand these buildings, because this can have a big impact on your flood insurance. Particularly, what we're talking about here with these buildings, it's like above-grade crawlspaces, are flood vents going to help? You also want to make sure that the building diagram on your elevation certificate is correct. I said if you just look at the corner here, you're going to see kind of what the elevation certificate should look like with the building diagram and things like that. Now, if you've got questions about elevation certificates, maybe you think your elevation certificate is wrong or something like that, please reach out to us, www.floodinsuranceguru.com. Go to our YouTube and our Facebook channels, The Flood Insurance Guru, or give us a call. 205-451-4294.
Farms can be one of the most expensive businesses to run and when damaged it can cause nationwide damage. So much of the United States depends on farming as a source of food and a source of income. So when floods occur you can imagine what can be at risk.
The recent flooding of the Midwest in March 2019 has shown us the type of damage that can be done to farms from flooding. Many of these farm areas took on a lot more snow than they did in years past. As a result when spring storms approached in March of 2019 it decreased the snow melt time table dramatically. Generally when areas like Iowa, Nebraska, Idaho, Wisconsin, North Dakota, and Minnesota start to thaw out from the winter the snow will generally melt over a period of 45 to 60 days. However when the spring storms moved in to these areas in 2019 it dropped these snow melt period down to matter of days.
This increase in water flow caused areas like the Missouri and Mississippi rivers to swell very quickly filling local tributaries causing massive flooding to farms across the Midwest that depend on these local water supplies. In many floods this water would recede fairly quickly however these farms and structures were submerged in water not just for a few days but up to 3 weeks in many areas.
The amount of time that these areas were submerged destroyed current crops and the opportunity for planting season in 2019 causing a massive blow to the farming industry in the united states. Another area that took massive blow were all these structures on the farms, the loss of live stock, and possibly a livelihood.
So what could have been done to prevent this? While there is not much that could have been done to save the farming land and crops since they depend on the water supply to survive. However when it comes to the structures and livestock a lot of things could have been done. Unfortunately due to lack of flood education and awareness across the country these farm owners were not aware of certain coverages that were available. So lets talk a little bit about some of these coverages.
First of all lets talk about the National Flood Insurance Program also known as NFIP. The NFIP was originally set up in 1968 to help people along the Mississippi River who continued to be devastated by flooding. While this program was set up to help people it was not necessary set up to make people whole again, especially when it comes to farms. You see farms usually have multiple structures on the property and these structures can easily exceed the value of home on the property.
Something else that can add up quickly is farming equipment. Sometimes this can exceed tens of thousands of dollars. As you can see when a flood occurs a farm owner can be exposed very quickly, so what can they do to protect themselves. When it comes to a NFIP policy coverages can be pretty limited when it comes to buildings and equipment. Let’s say that a farm policy is written as commercial flood policy. This means that the building coverage cannot exceed $500,000 and when it comes to separate structures a NFIP policy will require separate policies for each structure. Something else that NFIP will do is charge an additional $250 surcharge to each one of these structures. As you can imagine these fees can add up very quickly making finding a cost effective policy very challenging. When reviewing this NFIP policy something else to consider is the lack of business interruption coverage. As you can imagine when a farm floods it can cause major interruption in day to day business for a very long time. So then if more than one structure are not covered, more than $500,000 in building coverage is not covered, and business interruption is not covered then why would one take out a policy.
Well like the average American most people are not aware of other options and if any part of a farm is financed their bank may not inform them of these other options. So what are the other options out there? Outside of the NFIP you have one other option for flood insurance and that is the private market.
What is private market flood insurance? This is flood insurance that is provided by private insurance carriers. So how is it different?
Private flood insurance can pick and choose the risks that they want. The NFIP has to provide coverage for almost every risk out there. As a result cost effectiveness and proper coverage can be challenging. When it comes to farms this can be crucial as private carriers can put all the structures of one farm on one policy. This can do a few things first of all if a claim occurs it would be one claim not necessarily five separate claims because separate policies are required. Something else it can do is make things more cost effective because the $250 surcharge is not charged on private flood insurance policies.
Two other things that come into play is that the policy is not limited to $500,000 in coverage and business interruption coverage maybe available. As the 2019 flooding in Des Moines Iowa and Nebraska City Nebraska showed us $500,000 in building coverage does not go very far business interruption coverage can be crucial for a farm to survive. So what exactly is business interruption coverage? This is the loss of income a business may incur as a result of a disaster. For example if a farm cannot operate then the income it would have generated could be covered for a certain amount of time.
Now that we have discussed the NFIP and private market you might be trying to figure out what options is best for your farm. Well we recommend reaching out to a commercial farm insurance agent or flood expert like the Flood Insurance Guru that can make sure you have the right coverages in place so your farm can survive after a flood. Also if you have questions about farm flood insurance in Nebraska, Iowa, Minnesota, Wisconsin, Idaho, or other states simply fill the form out below.
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The flood insurance claims process can be a long road. As you can imagine when dealing with a government agency it could be even longer. In the video above we talk about the claims process when it comes to FEMA and when it comes to private flood insurance.
Forest Fires have always been an issue in areas like California, Colorado, Nevada, Utah, and Arizona. In 2018 Camp Fire truly showed us how fast a fire can spread, what kind of damage it can cause, and other hazards it can create. One of these new hazards it can create is higher risk flood zones.
Forest fires can cause massive damage as we have seen in recent years with the Camp Fire in California and the fire in Gatlinburg Tennessee area. When these fires spread they burn everything in their path and take lives in many situations. As these fires burn they destroy trees and generally any vegetation there in its path. As this vegetation burns it removes community protection from floods. So what happens next?
Well as most people know FEMA also known as the Federal Emergency Management Agency does flood studies on areas to review maps and adjust maps accordingly. However as Houston Texas showed us many times these new maps can take years to get approved. The reason is FEMA recommends certain changes and local communities have time to dispute any changes. Many times extending the new maps for your years. As you can imagine when an area burns that has been traditionally in a low risk flood zone new studies can take time.
FEMA works as hard as it can to get new areas and existing areas mapped as quickly as possible. As they have shown us they are limited with their resources. So when they review these map studies they look at historical data in an area when it comes to flooding. However areas like Knoxville Tennessee, Salt Lake City Utah, Boulder Colorado, and Denver Colorado may have not had a lot of flooding issues historically. However changes in vegetation now take away any protection they have had in place.
So what happens is many of these areas should be in high risk flood zones also known as 100 year flood zones. However they are not because of no history of flooding but they have had a major risk in exposure. So then what are the options for property owners?
Well at The Flood Insurance Guru we always recommend flood insurance for every property owner but lets talk about when flood insurance would actually kick in. According to FEMA a flood happens when 2 acres are inundated by water or more than one property is inundated with water. It is also considered a flood if a mudflow is involved. Now that we know what flood covers lets talk about some additional risk that are created by forest fires.
As we have mentioned before when these fires spread they burn all vegetation taking away all protection. So when this happens it takes a lot less rainfall or water runoff to create a mudflow. Before the vegetation would be there to soak up a lot of the water but with trees gone, brush gone, and nothing between the water and structures it’s a ticking time bomb.
So when this does happen and it will happen as history has shown us. What are property owners options for flood insurance? Well there are basically two options flood insurance through FEMA or private flood. Before we talk about the differences lets discuss flood zones a little bit first. Before the forest fires most of these areas were in low risk flood zones, also known as flood zone x. These are areas of minimal risk where FEMA has not determined the probability of flooding. Its important to understand that about 30% of flooding occurs in these zones and is usually a result of flash flooding. As you can imagine without vegetation the probability for flash flooding is much higher. Now that we have an understanding of what flood zone x is lets talk about the different options.
The first option is the National Flood Insurance Program also known as NFIP which falls under FEMA. This is federal flood insurance program where rates are set based on numerous factors like the elevation of properties, age of the property, and foundation type. You can get a flood insurance quote through any local insurance agent where rates should be the same but many times they are not because agent knowledge on flood insurance varies so much. In many situations they will require an elevation certificate. What is an elevation certificate? This certificate shows the different elevations of a property compared to the base flood elevation which determines your flood insurance rates with NFIP. Its important to understand that in order to be able to get a flood policy through NFIP your community has to be a participating member in the program. You can check with your local community to see if they participate generally about 95% of communities do because of federal funding. Now that we understand what the government has to offer lets talk about the private market.
Private market flood insurance is flood insurance that is offered by private insurance companies. These companies are generally backed by two major players either Lexington or Lloyds of London which is a group of companies that provide funding. The private market sets its own rates but still pays claims based on what FEMA defines as a flood. Private market also provides some different coverages like replacement cost on contents and additional living expenses.
Understanding these two flood insurance options is very important. Many people are told if they are not in a high risk flood zone that flood insurance is not available and this simply is not true. Its also important to understand just because it may not be required does not mean you are not at risk of flooding. If you have questions about how you could be exposed to flooding, maybe you think you are in the wrong flood zone, or you feel your policy is overated please reach out to The Flood Insurance Guru.