Many people understandably stop getting flood insurance since they're in a low-risk flood zone however as we've learned in the past, this doesn't really mean a no-risk flood area. Due to this, many mortgage lenders will require you to have a flood insurance policy for your property. 

Let's talk about what are the impacts on your mortgage payment or escrow account when you don't have flood insurance? What responsibilities do mortgage companies or lenders have to force-place a policy or coverage for my house?

Penalties of No Flood Insurance

First, let's talk about the possible penalties you may take place if you're required to get a flood insurance policy for your building.

The Biggert-Waters Flood Insurance Reform Act enacted penalties for flood violations of $2000 with no aggregate limit. The civil money penalties (CMP) will be included upon violation of either not being able to purchase adequate flood insurance, properly force placing flood insurance, providing notification on the availability of flood insurance, and proper escrow for premiums.

Now, for high-risk flood zones or the Special Flood Hazard Area (SFHA), a flood insurance policy is a must as per the regulations of the Federal Emergency Management Agency (FEMA). If you're doing a federal loan, it's most likely that your mortgage lender is managed by the government, so you may be able to easily get a flood insurance policy in place from FEMA and the National Flood Insurance Program. It's also most likely that your mortgage lender is going to be the one to immediately require you to have flood insurance for the building.

Mortgage Company and Escrow Account

Now, it's important to note that if your mortgage lender, lending institution, or the bank increases, extends, or renews a loan secured by a residential property, you're going to expect them to be required to escrow all premiums and fees for the flood insurance. This is unless the bank or the type of loan qualifies for an exception to the escrow requirement.

Escrow accounts generally get impacted by flood insurance however this doesn't give you a heads up in real-time or immediately. Many times, residents don't think that they're going to be impacted until six months later when they start to receive this massive bill that's been backdated several months.

Escrows are reviewed annually and are based on when your loan is made. Simply put, the month of your review depends on the date of the purchase of your house. This is important because if you decide to change flood insurance companies before your annual review, it won't be reviewed until the set month. For example, if you bought a house in November and decide to change your flood insurance company in February, it won't be reviewed until November. This can be very surprising and can really hurt you in the long run.

Picture this, you moved into another flood insurance provider and this was an increase on your mortgage for $400 per month. This can mean that the time between the change and your annual review, you might be collecting a huge sum of money that you only get to find out that you need to pay to catch up to your escrow several months after.

How can you avoid this? Reach out to your mortgage company, provide some form of notice to your bank, review the term on your loan, and make sure that there's a second review done considering the adjustments, or more simply get the flood insurance on your own. 

Force-Placed Flood Insurance

There will be times that your mortgage company, lending institutions, and the bank will do everything to make sure that the property will be insured against flood damage. This may lead them to force place a flood insurance policy on your property. Now, this may sound like a good thing since you won't have to do the nitty-gritty of applying for a policy from the federal flood insurance or private flood insurance market. However, this is generally a bad thing since you lose a lot of flood insurance purchase benefits.

It's equally important because maybe you're in a low-risk flood zone where flood insurance is available but isn't required by the federal government on floodplain regulations, the mortgage lender can actually decide on your behalf.

This is why we really encourage that regardless of your flood zone — be it preferred zones or special flood hazard zones — you still should start to purchase flood insurance from either the National Flood Insurance Program or the private flood insurance. Not only to protect your building and contents but also to make sure that you won't get flood insurance flood-placed on your property by your lender. 

It's important to note that force-placed policies aren't automatically under FEMA and the federal flood insurance or your preferred private insurance company. The only time that FEMA will be providing you flood insurance coverage and handling your flood claims is if the mortgage lender and/or loan works with the federal government. Most of the time, the insurer is the mortgage lender themselves. What does this mean for you?

Well, if the policy is force-placed, you can expect that the flood insurance premium to be expensive and you really don't have a say on it. Most of the time, the flood insurance coverage on these force-placed policies will just be for the building. This means that you're going to lose a lot on your personal property since the contents aren't really covered.

Getting Your Flood Insurance

This is a good thing about doing your own purchase of flood policy. You get to receive adequate coverage for both your building, be it residential buildings or commercial buildings, and everything it in. The National Flood Insurance Program provides both building coverage and personal property or contents coverage of $250,000 and $100,000 respectively.

When it comes to private insurers, you may get coverage from their private flood insurance policies for additional living expenses, contents and building replacement costs, and loss of use. These are simply additional coverage from the standard coverage they provide for buildings and items or personal property coverage. 

Another bad thing about a force-placed flood insurance policy is that they aren't transferrable. Generally, the National Flood Insurance Program will allow a property owner to do a policy transfer and policy assumption when selling a house. When it comes to the force-placed policy since the flood policy was made with your loan, then once you sell the house the policy won't stay on the house, but you're going to have to carry it with your loan.

If you have questions on how a mortgage lender work, how to avoid getting force-placed policies, getting the choice to pick your flood insurer, special flood hazard areas, or anything about flood insurance, please reach out to us.

Remember, we have an educational background in flood mitigation and we want to share this knowledge with you. Click the links below to get started, so you too can be prepared when crap happens.

       

The federal government is consistently working on the Federal Emergency Management Agency (FEMA) in order to provide proper flood protection and mitigation for residents across the country. We've covered that one of the steps is to become a participating community in the National Flood Insurance Program (NFIP), but this isn't a simple sit-down and settle the thing. In order to be able to start participating with the NFIP, you have to follow the proper pacing set by Congress.

Let's talk about the initial phase of becoming a participating community in the NFIP, the Emergency Program, and figure out what it is, its benefits for you as a property owner, and your flood insurance options while you're in this program.

National Flood Insurance Program's Participating Community

Other than encouraging communities to adopt and enforcing floodplain management regulations in order to reduce the flood damage from future floods and developing flood maps of flood hazard zones, the NFIP's main goal is providing affordable flood insurance for homeowners across the country.

In order to obtain this, FEMA, the National Flood Insurance Program (NFIP), and the community must be in agreement to voluntarily participate in the NFIP's flood mitigation efforts. When this happens, the participating community will get access to the federal flood insurance policy, disaster aid, and disaster grants. In order to continue participating, however, the community must follow and abide by the guidelines and floodplain management ordinances set by FEMA. Doing this also means generates points through what's called Community Rating System (CRS), the more points a community has, the higher benefits they get in form of discounts on flood insurance premiums.

These discounts start at around 5% and can go up to 45% on your flood insurance rates depending on your participating communities' efforts in reducing the general flood risk for the area. Rates for flood insurance can really be expensive especially for those in high-risk flood zones or special flood hazard areas (SFHA). 

But before you get to becoming a fully-fledged participating community, you'll be put in the Emergency Program first. 

NFIP Emergency Program Flood Insurance Coverage

Now, when you're starting with the NFIP participation program, your community will have to start with the Emergency Program. It's important to recall that when you're doing a flood policy with federal flood insurance, your overall flood coverage from flood loss and flood damages will be capped. This means that you're going to have coverage limits since the National Flood Insurance Program (NFIP) has a max of $250,000 for building coverage for a residential property. This can only go up to $500,000 if the building listed is commercial property. Regardless of the property type, a standard flood insurance policy from the NFIP will provide $100,000 max for contents coverage or personal property.

This is generally what you can expect once you go past the Emergency Program however if you're still in the initial phase of participating with the National Flood Insurance Program (NFIP), your coverage against flood damage is capped at $35,000 only. Considering property value nowadays, this isn't even half of what you might lose due to flooding. So, what if this isn't the right thing for you?

Flood Insurance Options

You can still go through with your community's participation with the NFIP despite having the downside of the Emergency Program's capped coverages. It's important to note that once your property starts participating, you can go through FEMA for your flood insurance.

On the other hand, there's a more viable flood insurance company compared to this that can really help you recover and prepare for the possible losses from flood events: private flood insurance.

Private insurance companies also provide flood policy for a much lower flood insurance premium compared to the National Flood Insurance Program. Now that your loan type won't really get in the way of getting flood insurance from private insurers, you can go with this flood insurance market. What's in it for you?

First, let's talk about the process purchase of flood insurance in the private market. When you start your flood insurance purchase with the NFIP, you may have to follow a 30-day waiting period whereas the private flood generally takes up to 15 days max for your policy to take effect after the initial date of purchase. This goes the same for flood insurance claims wherein it takes a much shorter amount of time to be completed.

More importantly, there's basically no maximum amount when it comes to limits of coverage. This is because private flood doesn't really do a capped amount for coverages. You can get more than $250,000 and even up to $10,000,000 for the listed building affected by flooding — or should we say buildings since you can list multiple structures in a single policy which is something that you'd need a separate policy for if you're doing a National Flood Insurance Program policy. Contents coverage can go up to $1,000,000 or even more. Apart from these, you also get additional coverage with your policy such as additional living expenses, replacement costs, and loss of use.

Overall, the choice of which flood insurance road you'll take is solely in your hands. You can wait out the participation process and do your best to help rate your CRS or you can move into the private market with its own risks like the chance of the private company deciding to pull away from your area and non-renew flood policies. At the end of the day, any form of insurance is better than having no insurance considering how flooding and disasters can happen in an instant. 

Remember, we have an educational background in flood mitigation, so if you have any questions on flood insurance options, flood zones, flood map changes, or anything about flood, please reach out to us. You can also check out our daily flood education videos over at our YouTube channel, so you too can be prepared when you face flood water.

        

Despite some bumps along the road in the past year or two, we still get to dedicate a day to celebrate this big blue globe we call home. As we celebrate Earth Day, let's keep our heads up and eyes open since this day can be a great moment to understand how the current state of Earth and the impact of climate change will affect flooding across the country and flood insurance in general. 

Earth Day

We know the usual drill on celebrating Earth Day: turning the lights off for a certain amount of time, joining clean-up drives, donating to reforestation efforts or planting trees yourself, trying to reduce waste and carbon emissions, and many more. More than this, we should also understand the current condition of our planet and how climate change is impacting it. Like it or not, we're currently stuck here and we have to face whatever comes our way.

It's important to keep in mind that climate change has been directly contributing to higher sea levels, more frequent drought, storms, heat waves, melting glaciers, and as we go through the Spring season, it's important to see how the season and weather impacts your flood insurance.

Understanding Flood Risks

Seasonal Changes

We mentioned how seasons can affect flooding in a certain area and how ocean levels are rising. This is important because we have what we call spring thaw which a covert threat in this season other than spring storms and heavy rainfall here and there. Spring thaw is when the heat of the season starts to melt the collected snow and ice from the previous Winter. Now, it may seem that some of the snowmelt runs off to a nearby body of water or drainage system, but in truth it also seeps into the soil, saturating it, and eventually gets released to water formations.

This means that the land won't be able to naturally take in much water than usual. This can be very big when it comes to flooding since it's possible that rivers, lakes, and creeks can rise to unexpected levels given enough inches of rain. As greenhouse gases keep on heating the planet up, it's likely that spring thaw may become more devastating.

Sea Level

When it comes to sea levels, on the other hand, we have to take into account how ocean temperatures impact them. There are two major contributors to the rising sea level: melting glaciers and ice sheets adding water to the ocean and the volume of the ocean expanding due as the water warms. It's important to note that the average sea level rose to about 8 to 9 inches since 1880 and two years ago, the global sea level was 3.4 inches higher than the average of 1993. This means that coastal areas are facing more threat of possible storm surge or even high tides causing an overflow of the water to the general area.

Storms and Rainfall

Another flood risk is the constant and more frequent heavy rainfall due to storms. The National Oceanic and Atmospheric Administration (NOAA) recently announced the twenty-one names of the storms for this year. Now, we should preface that this number isn't a surefire count on the hurricanes coming in the country since we've seen how 2020 had more hurricanes than expected.

This means that if you're living near a body of water: lake, river, creek, or the coasts which are generally considered as Special Flood Hazard Area (SFHA), it's more likely to experience flooding during the storm season.

You can understand the risk of flood in your area through flood maps or Flood Insurance Rate Maps (FIRM) wherein the Federal Emergency Management Agency (FEMA) announces the movement of flood zones for properties and their respective expected flood insurance costs changes.

Flood Insurance

We want to cover the impacts of these expected flood risks on the cost of flood insurance policies and flood insurance options as preparation as well, but first, it's important to note that flood policy generally gets impacted by the overall data from flood risk, flood claims, and flood loss in order to determine the flood insurance premium for your property.

The NFIP

When it comes to federal flood insurance through the National Flood Insurance Program (NFIP) and FEMA, you can expect that being moved into the high-risk flood zone or the SFHA in flood map updates generally mean that your flood insurance premium's going to increase. Commonly, this is shown as flood zone and flood zone AE on flood maps.

This can go around five to fifteen percent depending on what state you're in. Generally, your property may be moved into a high-risk area if you're close to a body of water like creeks, lakes, and rivers.

This may also mean that you're going to have to carry mandatory flood insurance for your property by the mortgage industry. This is to make sure that the property and its value will be protected despite experiencing a flood which is why the mortgage industry generally has a rule that high-risk areas are to have a flood insurance policy in place.

On the other hand, if you're property is near the coasts which are considered also in the SFHA, you're going to get higher flood insurance premiums compared to those who are in flood zone A or AE. This zone is known as flood zone V.

This increase can range from ten to twenty percent compared to the average or low-risk area rates. You may also be required to carry an elevation certificate and other additional documents for your flood insurance purchase.

Flood insurance coverage with the NFIP maxes out at $250,000 for property or building coverage if you're doing a residential policy and up to $500,000 for commercial policies. This is with a $100,000 personal property coverage. It's important to note that additional living expenses, loss of use, and replacement costs aren't included. If your property experienced substantial damage or severe repetitive loss, you may be eligible to get an extra $30,000 for flood mitigation purposes through the Increased Cost of Compliance (ICC) coverage.

If you're planning to get federal flood insurance, you might want to really prepare for it ahead of time since there may be a 30-day waiting period before the policy takes effect on the property.

The Private Flood

On the other hand, when it comes to flood insurance rates, the private flood insurance which is provided by private insurance companies follows almost the same system on the cost of insurance rates however it's significantly cheaper compared to the federal flood insurance rates. This means that if you're in a high-risk flood zone, you're still going to pay for more expensive premium rates compared to low-risk areas.

Keep in mind that the private market won't ask for additional documents to properly measure the risk of flooding on your property since each carrier has developed its own set of approaches in doing so.

When it comes to private flood insurance coverage, there's no max amount which means you can get up to $10,000,000 for property coverage and $1,000,000 on contents. More importantly, private companies provide additional living expenses, replacement costs, and loss of use.

Flood insurance purchase with the private market is also significantly better since you only have to wait 15 days or less for your flood insurance policy to take effect. It's important to note that the waiting period on the private market generally depends on the carrier or the insurance provider. Yes, this means that you aren't really locked into one carrier when you move into the private market since there are multiple flood insurance providers out there. 

Earth is a very unique planet and we should be very happy that we get to celebrate it. Regardless of how climate change is negatively impacting everything around us, we have to keep our head up high and move forward with a smile. Climate change isn't really helping flood events across the world, but it's better to be prepared for things like this and secure the things important to you.

If you have any questions on flood insurance, feel free to click the links below to reach out to us or check out our YouTube channel where we post daily flood education videos. 

         

In this blog, we'll answer one of the age-old questions: do flood vents lower flood insurance policy rates in Alabama?

As Alabama seems to experience a slew of severe weather leading to floodings in areas, like what we've seen more recently in Birmingham and Smith Lake, flood mitigation may become the key feature in making sure that property owners like you and your property will be protected from unwanted flood water damage and a bunch of headache in the aftermath.

Flood Vents

First, it's important to understand what is a flood vent and how does it work. Also known as flood gates or flood ports, flood vents are flood openings generally built-in with the structure of your home. This allows flood water to flow through the building instead of hitting the actual property. You can recognize this as the grills on the lower part of certain buildings and if you're living in Alabama, you might want to take notes.

Think of this as a new pathway for when flooding happens and you're directly in front of the water flow. These vents in turn take the water that should be hitting the foundation walls of your home or straining its exterior walls and allow it to simply pass through your property thus reducing and minimizing the damage of flood. Most of the time, the standard is that a property has at least two flood vents on two different sides of the exterior walls of your building in order for it to become viable as a flood mitigation step. 

The Federal Emergency Management Agency (FEMA) actually considers this as one of the most acceptable flood mitigation activities in reducing the risk of flooding on your building, removing the building from the severe repetitive loss list, and doing an elevation certificate. Now, does this really lower your flood insurance rate?

Flood Insurance Rate

To answer the question that might've been bugging you all this time, yes. More than a utility in your home's structure, flood vents are key to helping FEMA, the National Flood Insurance Program (NFIP), or even private flood in lowering your flood insurance premium rates. Any flood mitigation steps to reduce flood risks and possible flood damages are generally accepted as a condition for lowering your rates and the overall flood insurance cost for your building. This can mean that if you're paying about $1000 for your premiums, this can be lowered down to maybe $800 to $600. 

Flood mitigation activities include raising your lowest adjacent grade at least a foot above the base flood elevation. Now, the required distance between the lowest adjacent grade or your lowest floor compared to the base flood elevation depends on your floodplain management ordinances. Some states perform a "freeboard" level where a fixed distance should be followed on the construction in order for the elevation to be accepted.

This can really be helpful for those in high-risk areas, flood-prone areas, and the Special Flood Hazard Area (SFHA) since they're going to be the ones with the higher or more expensive flood insurance premiums 

Keep in mind that installing flood vents is just a single step in lowering your flood insurance rates. It's important to note that FEMA has other requirements on flood openings in order to lower your flood insurance premiums. For example, if you have an elevated building that's in any flood zone that starts with an A or high-risk flood zones, the NFIP minimum floodplain management ordinance will require the enclosures of the structure on the lowest elevated floor to be designed with proper openings.

Another question that comes up with this how much lower will the rates are going to be once you have met the standards of FEMA and the NFIP via installing these vents? Well, this generally depends on how your rating score comes out. If we were to look at how this can be looked into when it comes to your Community Rating System (CRS) as a participating community, this move can bring your rates 40% less than they should have been.

Keep in mind as well that the purpose of these openings is to reduce or minimize not only the flood risk for the building but also its flood loss. Since the NFIP can only cover a max of $250,000 for residential buildings and $100,000 for its contents, the cost of flood loss may not be fully covered if, for example, your property was severely impacted by flooding.

At the end of the day, these flood openings and making flood insurance cheaper can only do much in flood mitigation. We encourage that you reach out with your local floodplain administrator to check on the best steps that you and your community can do when it comes to flood mitigation.

Remember, we have an educational background on flood mitigation, so if you have questions on private flood insurance, mitigation activities, flood coverage, or anything about flood policies, feel free to reach out by clicking our links below or checking our YouTube channel where we post daily flood education videos.

     

In the latter part of March 2021, for three consecutive weeks, the community of Birmingham, Alabama experienced severe weather however unlike the past two weeks, flooding and strong winds presented a threat to the city. We observed the saturation of land causing trees to fall and the Smith Lake becoming the culprit to the flood damage to the area. This can really be alerting for this region since it does look like the state is experiencing flooding that's becoming worse each time.

Now, when it comes to flood insurance, this can directly impact you whether you're doing a policy with the National Flood Insurance Program (NFIP) under FEMA or the Private Flood Insurance market. Let's talk about how this can impact you and the things you need to know when it comes to your flood insurance policy when you experience flooding like this.

Now, it's important to note that there will be flood insurance rates increase in the future due to your Birmingham community becoming more flood-prone in a short period of time. If the flood map also shows that the area should be considered under Special Flood Hazard Area (SFHA), then the flood insurance rates can be expected to become more expensive with FEMA and the NFIP. However, this can also mean a good impact if you're doing a policy with FEMA and the NFIP then you might be able to go through the Increased Cost of Compliance (ICC) coverage. 

What is the ICC?

The Increased Cost of Compliance (ICC) coverage is an additional property coverage provided by FEMA through the National Flood Insurance Program. This generally provides additional money for the property's flood mitigation compliance purposes of up to $30,000 in order to reduce the flood risk in the future. It's important to note that the increased coverage will be separate from your standard flood insurance property coverage of $250,000 if it's a residential property and up to $500,000 if it's a commercial building.

It's most likely that you're eligible for the ICC if you're one of the impacted properties by the Smith Lake flooding in Alabama. The eligibility for this requires that the property should either be substantially damaged or is considered a repetitive loss.

ICC Eligibility

When we say substantially damaged, this means that the property owner experienced a flood loss on his home that's worth 40 to 50 percent of the house's market value. This means that if you were flooded and the total damage is less than 40% of the house's market value, then you won't be able to get ICC coverage. Now this can be crucial since the market value of properties over at Birmingham and Smith Lake is very high, so you're really going to have to be very careful on reporting the total damage on your residence if you're looking to be eligible through this condition. 

Repetitive Loss, on the other hand, means that a property has had two or more flood claims over the last 10 years. Loss history includes all of the ownership on the building since 1978 or since the building's construction after 1978.

What's Flood Mitigation Compliance

When we say flood mitigation compliance, this means that the structure of the building itself should meet the floodplain management ordinances set either by the federal government or the local community. Now,  there are four accepted floodplain management activities when it comes to complying with FEMA's flood mitigation standards: elevation, floodproofing, relocation, and demolition.

Elevation

When we say elevation, this means that the goal of the activity is to raise your property's lowest adjacent grade above the base flood elevation (BFE) of your community. This means that you have to elevate your property's lowest flood at least a foot above the base flood elevation.

Floodproofing

For this activity, it's important to note that this is only for non-residential properties. This requires that the commercial properties should be watertight below the BFE by reinforcing your walls, installing a watertight shield for doors and windows, building a drainage collection system, sump pumps, and check valves.

Relocation

When a property's being relocated, it simply means that you're going to move to another location on the same lot or another lot, but in order to meet compliance standards, you want to make sure that you're at least moving in a lower-risk area. There's no problem with relocating to a new location within the Special Flood Hazard Area (SFHA) or the 100-year flood zone however you're still going to have to make sure that it's going to be compliant with FEMA still. This can be the greatest flood prevention activity that really helped a lot of homeowners avoid the impact of major flooding and significantly reducing the risk of flooding on their property.

Demolition

Lastly, this activity is only done when the first three are no longer a viable option due to the flood damage being too severe for your property. Now, it can still be possible that you can redevelop the building after demolition however it's important to make sure that the laws and requirements of the Federal, State, and community are followed. 

Beyond Flood Insurance 

Now, it's also important to shed light on the possible negative impacts of lake flooding and the future risk of flooding in the area on your overall flood insurance purchase. If you're doing private flood insurance, then this could mean that they may choose to pull out from providing Birmingham, Alabama flood insurance due to the high risks that it's presenting to the table. Since FEMA doesn't choose their risks, severe repetitive loss as we mentioned before is a condition to be eligible for the ICC coverage, but private flood may see this as a red flag to continue providing flood policies and decide to non-renew.

It's still important to note that private flood is still a fair market with its own standards and guidelines. In fact, the ICC coverage usually is included in the property's coverage if you're doing a private flood insurance policy.

If you have questions on FEMA ICC coverage, if you're eligible for it, your flood insurance options, or any question about flood, feel free to reach out to us. We'll keep our doors open for you! You can click the links below to get started or watch and subscribe to our YouTube channel where we post flood education videos daily.

Remember, we have an educational background in flood mitigation and we want to share this knowledge with you, so you can be prepared when crap happens.

     

The Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP) provides resources for homeowners and policyholders who need assistance in rebuilding after a flood. This program and coverage are known as Increased Cost of Compliance (ICC).

What’s ICC?

The Increased Cost of Compliance, or Increased Compliance Cost, pertains to the additional coverage and assistance provided by federal flood insurance for those impacted by a flood. This comes in the form of providing extra payment coverage of up to $30,000 to cover the needs of a property for flood mitigation and reduce flood risk.

You should be aware that the ICC is only available for policyholders under FEMA and NFIP. This additional flood insurance coverage is intended to make sure that your property is both prepared and has reduced the risk of flood damage to the building in the future. The additional coverage for flood mitigation is dedicated to making sure that your property or building will be in compliance with the State or community floodplain management ordinances or laws. 

Flood Mitigation Compliance

When it comes to reducing the risk of flooding and flood damage to your property, there will be a set standard on floodplain management ordinances. There are four types of accepted floodplain management activities to bring your insured building or property into compliance with the community's floodplain management regulations. Let's talk about them.

Elevation

This simply means that the insured building or property is raised to or above the base flood elevation (BFE). This is a very common way of reducing flood risks and flood damage and when it comes to Nashville, you can expect your property to follow the freeboard requirement. This means that your property will be mandated to be four (4) feet above the BFE.

Floodproofing

This flood mitigation activity is only for non-residential properties. Simply put, if you have a commercial property then it should be watertight below the BFE. To do this, you can either reinforce your walls, install a watertight shield for doors and windows, build a drainage collection system, sump pumps, and check valves. 

Relocation

Many of you know how this works. Usually what you'd want to happen is to move your property to another location on the same lot or another lot outside the floodplain. This can be the greatest activity when it comes to flood damage prevention however if you're relocating to a new location within the Special Flood Hazard Area (SFHA), then the National Flood Insurance Policies has to be compliant too. This means that the relocated building should be elevated or floodproofed.

Who is Eligible?

It's important to preface that the ICC is only applicable to policyholders of federal flood insurance companies (FEMA and NFIP). For an NFIP flood insurance policy, the qualified applicant must have a federal government loan to start carrying flood policies on properties. For private flood insurance policyholders, you can expect that this will be included in your policy with your private insurer. Once you're insured by the National Flood Insurance Program, your property must also meet one of the two conditions to be eligible for Increased Cost of Compliance (ICC) coverage.

First, your property either was determined to be substantially damaged. According to FEMA and the NFIP, this means that your property was damaged by a flood that resulted in the cost of restoring the structure to its pre-damaged condition is either equal to or exceed 50 percent of the property's original market value. If the total damage and flood loss has an average cost of less than 50 percent of the property's market value, then you won't be able to get the ICC coverage.

The other condition is if your property meets the criteria of a repetitive loss structure. This is also known as repetitive loss of use which means that the insured property experienced flood-related damage twice over a 10-year period. It's important to note that the average cost of repairs is at least 25 percent of the market value of the building. This only applies if the community has adopted a repetitive loss provision in the local floodplain management laws. 

Since we're talking about Nashville residents and considering the severe impact of flood water on the city the past few years and with a high risk for flooding which may cause possible future flood losses, it's most likely that your property falls under one of these two conditions. You can reach out to your community officials or insurance agent to check if you're included in substantially damaged properties or in the repetitive loss list. However, this can be a big problem for owners since both conditions are based on the market value of the property and in Nashville, the ICC coverage maximum of $30,000 is just less than ten percent of the average property values in the city.

As we've mentioned before, Nashville residents who are carrying federal flood insurance from the NFIP and FEMA will benefit significantly from the ICC coverage. It's important to note that this won't be taken out of your standard coverage for buildings and contents.

In order to get an ICC coverage, you should reach out to your community floodplain management and officials to file a single claim in behalf of those who were substantially damaged or under the repetitive loss of use. Once the community validates your property, they will then assign a representative who'll process the ICC claim for you.

Flood mitigation is both an individual and community effort and other than being able to reduce flood risks, these floodplain management activities can benefit your community through participating with the NFIP and getting a high community rating that eventually will reward Nashville with discounts on flood insurance premiums of up to 40 percent.

We're way past the time of not being able to fight natural disasters like Superstorm Sandy. If you have questions on the ICC, what best to do when living in high-risk flood areas, flood map updates, flood insurance costs, flood coverage, or anything at all about flood, please reach out to us.

Remember, we have an educational background in flood mitigation and we'd love to help you protect the value of your property by understanding flood risks so that you too can be prepared when crap happens.

       

Flowers are all in bloom and dangerous floods may also loom around.

It's a new season as we watch the snow melt and winter wait it out till the end of this year, but this is also the same season with a high risk for flooding due to multiple reasons. Let's talk about the impacts of spring flood for Iowa, how this can impact your flood insurance, and what you should do to prepare for an event that no one wants to happen.

History

The Hawkeye State has been a victim of multiple catastrophic flood events throughout history. This is important for us to know what we can expect in springtime where flood risks are generally starting to increase.

It's notable that most of the major flooding that the state experienced happened around April to July which is generally within the Spring season. To name a couple of these historic floodings, the Great Flood of 1993 devastated the state as a result of months of rainfall accumulating to 48 inches of rain between April and August. More than the storms and consistent precipitation, Iowa also experienced a wet 1992 due to the long and snowy winter season. When Spring came in March 1993, the collected snow and frozen bodies of water significantly impacted the flooding across the state along some streams. This was a pattern that continued until May.

In 2008, the state experienced one of the worst floodings in modern history. This was a time when extensive flooding resulted in a more focused and intense impact on 85 of Iowa's 99 counties. A total of $10 billion in statewide damage was estimated. Just like the 1993 Flood, the main contributor to this flood event was Spring thaw wherein the snowmelt and ice from the winter seep into the ground and runs off the surface into lakes, rivers, and streams. Add to this, the state also had extremely heavy rainfall which results in up to 14 inches of rain.

As you can see, Spring flooding really had a hand in the major floods and river flooding in Iowa, and this might be the same situation at any time come Spring 2021.

Threats

As the Spring season continues to bloom this year, it's important that you're aware of the threats it may bring with it other than hay fever. For one, we've already mentioned that the previous floodings were due to the collection of snow and ice can cause wetness to the soils which cause a lot of trouble for bodies of water which receives this excess water. The Mississippi River and Missouri River are the likely candidates to also contribute to spring thaw. We've seen this happen two years ago and it's not impossible to experience the Midwestern U.S. floods this year.

Since recent data shows that the previous winter season and precipitation brought around 2 inches up to 12 inches of rain in the Midwest region of the country, this is a sign that flooding may occur even in the smallest amount of continuous rainfall. This may also mean that areas closer to a body of water in Iowa State may experience moderate to major flooding, but it's important to understand that even homes far from these bodies of water may experience minor flooding to moderate flooding.

We highly encourage you to be prepared until August has passed. Well, generally we'd like you to make sure that you're always prepared every day of the year since natural disasters don't really give a heads up.

Flood Insurance

It's important that you already have a flood insurance policy in place regardless of the zone designation your property's in according to flood maps. Keep in mind that in most states, Spring is also flood season. You'd best insure your home and make sure that mitigation efforts are made for your community to reduce the risk for flooding significantly. In this season, flood conditions depend not only on the rainfall coming in but whatever was left by the previous season.

You might be wondering what your options are. Well, you have two: the National Flood Insurance Program (NFIP) under the Federal Emergency Management Agency (FEMA) and the federal government itself, and the private flood market.

If you're planning to apply for a flood policy with the NFIP and FEMA, you should start moving now since federal insurance generally takes 30 days before the policy takes effect. When flood levels start rising and your policy isn't active yet, you might have difficulties in restoring what you lost due to flood damage. It's also a good thing to remember that if you're in a high-risk flood area or the special flood hazard area (SFHA), NFIP and FEMA might ask for additional documents which may increase your waiting period to 60 days depending on how quickly you can get these additional documents to them.

The NFIP and FEMA are going to provide a max total of $250,000 for building coverage for residential properties. This amount can go up to $500,000 if you're carrying a policy for a commercial building. Regardless, federal flood insurance also provides coverage for contents which maxes out at $100,000. Unless a presidential declaration is given for your community, you also won't receive additional living expenses coverage. This goes the same for business loss of income or use if you have a commercial building impacted by a flood.

On the other hand, the private flood insurance market can also provide an insurance policy for you. You'd be able to choose from multiple private insurers for your policy. When it comes to a private flood, coverage for property damage can go up to $10,000,000 depending on your property regardless of whether it's residential or commercial property.

This option may also be the fastest one you can get since applications do vary, but remain significantly faster compared to the strict 30-day rule of FEMA and NFIP. The waiting period for policy application, insurance purchase, and its effectivity may only take up to 15 days maximum. 

Additionally, private flood generally automatically provides additional living expenses and/or business loss of use with their flood insurance policy coverage. Replacement costs are also going to be a part of policy coverage which means that private flood is most likely to provide you extra coverage in order to replace the contents you lost due to flood damage. Say, your TV was damaged and wrecked by flood water, then private flood is going to provide you the amount of that item if you were to buy it today. This goes for contents in with your insured property, so you can imagine how much coverage that would be.

This season, we'd love to enjoy going out to enjoy the freshness of blooming flowers and whatnots, but this can be ruined by spring flooding. River levels are expected to crest due to the effects of spring coming in and the excess water surfacing to bodies of water, so flood threat and risk for flooding are something you should look out for and protect your property. It's important to keep up with the news and flood forecasts since anything can happen in this season. 

If you have questions on flood insurance, flood briefing, risk of the spring season in your community, flood safety, or anything at all about flood, please feel free to reach out to us.

Remember, we have an educational background in flood mitigation, so we'd love to help you prepare for the worst and protect your property's value long term. Click the links below to get in touch and we'll be happy to provide you assistance on everything that's flood education and awareness.

       

As we start a new decade and enter Spring 2021, let's look into the differences between FEMA's National Flood Insurance Program and Private Insurance Company's Flood Insurance. It's important to note that both flood insurance companies have significantly improved in reducing the risk of flooding and flood damage through different means as they continuously look to providing the best for homeowners. We'll go over their respective flood insurance rates, their coverages, pros, cons, and unique benefits.

National Flood Insurance Program

What is the NFIP?

As you'd know, the National Flood Insurance Program (NFIP) is under the Federal Emergency Management Agency (FEMA) which is backed by the federal government. Come October this year, we're expecting the NFIP and Federal Emergency Management Agency (FEMA) to drop the Risk Rating 2.0. The new risk rating apparently aims to lower the flood insurance premiums for their policyholders. This can show an immediate decrease of an average of $86 per month for 23% of their current policyholders. For the remaining percentage of policyholders, you can expect an increase to the flood insurance premium of up to $20 or more per month.

Coverages

Coverage in the National Flood Insurance Program (NFIP) didn't change much. You'll get a max of $250,000 in property or building coverage if you're doing a residential policy and up to $500,000 for commercial buildings. There's also a $100,000 flood coverage for contents. This won't cover replacement costs, additional living expenses, and loss of use. You may also be able to apply for Increased Cost of Compliance coverage which will grant you an extra of up to $30,000 for flood mitigation on your property and reducing flood risks, but this coverage follows strict conditions to be eligible so it's not really a part of your standard flood insurance coverage.

Another thing to expect with the National Flood Insurance Program purchase is their waiting period. It's important to note that this hasn't changed as the purchase of flood policy will still follow the waiting period of 30 days. This can be good or bad depending on the situation.

This waiting period can be the time you're preparing to commit to the flood insurance policy from the federal government, talk to your mortgage lender, and make sure you have the correct coverage for you, regardless if it's residential flood insurance or for commercial properties. Within this time as well, there might be flooding or your community experienced a devastating flood, and you're still on the waiting period. This can really hurt you. 

The best thing about the National Flood Insurance Program is that they won't pick the risks. Generally, FEMA and NFIP cover all types of risks regardless of the flood zone, frequency of flood, and flood damage.

Private Flood Insurance Market

What is Private Flood?

When it comes to the other side of the coin, you have private insurance companies to help you with your insurance policy against flood damage. Now, it's important to note that private flood insurance is generally provided by different private companies like Lloyds of London, TypTap Flood Insurance, and Zurich Residential Private Flood Insurance to name a few. This means that you're not really locked into one provider and you have more options within the private flood itself.

Coverages

Flood insurance coverage in private flood doesn't really have a maxed amount, unlike the NFIP. This generally means that you can get full coverage for your property or building if it's worth more than $250,000. We generally recommend homeowners with expensive houses or commercial properties to go with a private flood market since you're most likely to have a property that's worth more than $250,000. This is generally the downside with the NFIP flood insurance since they maxed out at a certain amount, so if your property is worth more than what they cover, you're going to get a downgrade altogether.

Property coverage can go up to $10,000,000 if you want to and personal property coverage or contents can go up to $1,000,000. This generally depends on your property's values. Another important thing to discuss on private flood coverage is that these private insurers will provide replacement costs and additional living expenses or loss of use.

Private flood insurance also has an average premium that's significantly lower compared to federal flood insurance. This is why when it comes to options, private flood insurance might be the cheapest flood insurance anyone can get. Despite being the more affordable flood insurance, these private companies get to choose their risks which means that high-risk areas and special flood hazard areas might have a shortage of private flood options, if not nothing at all. If you'd observe, low-risk areas or preferred areas have more policies in force and more available options when it comes to flood insurance.

Looking at 2021 so far, there might be some parts across the United States where private flood insurance providers are starting to stray away from. If this is the case, you can still go through the National Flood Insurance Program however you're only going to get what flood insurance coverage they will offer.

Flood maps show how much flood has changed for the worse the past few years. In this Spring season, it's best to secure a policy since this is one of the seasons where flash flooding can happen anytime. It isn't a big deal where you're getting your flood insurance from, but it is important to make sure that you have the right coverages, be it from NFIP flood insurance or private flood policy.

Remember, we have an educational background in flood mitigation and we want to help property owners like you in becoming more educated and aware when it comes to flood. If you have any questions about the private flood insurers, flood premiums, flood insurance options, moving into private market flood insurance policy, or anything about flood, please feel free to reach out to us. You can also check our YouTube channel for our daily flood education videos, so you to can be prepared when crap happens.

       

Rainfall isn't the only threat for flooding in Tampa Bay this week. Some are from leaks.

Piney Point Catastrophe

On April 4, 2021 (Sunday), Florida was threatened with another flooding event, but this time not through man made means. The Tampa Bay of Florida received millions of gallons of polluted water from a wastewater reservoir in efforts to prevent the "imminent" collapse of a storage reservoir at an old phosphate mine in Piney Point, and avoid a catastrophic flood situation.

This event called for Manatee County, Florida to pursue evacuation plans for its residents as 340 million gallons of contaminated wastewater were expected to impact not just Tampa Bay in Central Florida, but its surrounding counties and communities with 20 feet wall of water. The walls of the retention pond had water pouring from leaks and Gov. DeSantis declared a state of emergency due to the threat of having the pond collapse entirely. Although there are statements saying that the water quality standards are overall safe, it's really hard to say when you're talking about a leaking phosphate plant. Some residents showed concern that the wastewater might be at toxic levels which the government denied.

Mitigation efforts were done by plugging the breach in the reservoir wall with rocks or other materials and pumping 35 million gallons per day daily at Port Manatee. This is to ensure the integrity of the stack system as quickly as possible. This doesn't come without a threat of both Tampa Bay and all of the bodies of water affected to increase flood risk in their respective areas.

Flood Insurance Coverage

Now, the biggest question that people will ask: "What if my property was flooded when they pumped out water, will my flood insurance cover it?"

Well, this can be a yes or no answer since generally it depends on how your policy was written. There might be some flood insurance policy exclusions that may not consider this kind of event as outside of their coverage. Remember, flooding that is caused by natural disasters is automatically covered by your flood insurance policy however this event can be considered as a man-made disaster. 

Remember, a flood is only covered if there are two or more parcels impacted or 2 acres. Considering that different companies have different conditions and declarations for the coverage you have on your flood insurance. This goes both ways for federal and private market flood insurance policies.

When it comes to man-made floods, it's best that you check on the policy jacket of your current flood insurance and its exclusions. You can look at it when it comes to the flood exclusion of FEMA on earth movement. Say, there was a catastrophic flood situation that caused things like landslides, this may fall into the policy jacket of your standard homeowners' insurance, but flood insurance generally eliminates this from their coverage.

It's important however to make sure that you are aware of the flood insurance policy exclusions. This is the part of your policy that contains what is going to be covered by your insurer because there will be cases where certain environmental disasters that caused floods could be excluded from your coverage. You can always reach out to your insurance agent to understand what's in your policy jacket and what the policy exclusions are. This way you can be mentally prepared and financially secured if you were to experience an event like this.

Remember, we have an educational background in flood mitigation, so if you have any questions on your flood insurance, your options for flood insurance, its coverage, policy exclusions, or anything at all about flood, please feel free to reach out to us by clicking the links below:

       

It seems like we have been waiting since 2012 for FEMA to update the National Flood Insurance Program also known as federal flood insurance. When the Biggert-Waters Flood Insurance Reform Act was released back then the plan was to reform the program. However government shutdowns along the way have slowed things down. Let's be honest anything with the federal government takes a while. There were many elements of the program that needed to change. However at the last second congress changed their minds. So many subsidized flood insurance rates continued.

 

NFIP Risk Rating 2.0

Then came along NFIP Risk Rating 2.0 which had the goal of implementing technology into determining flood risks and flood insurance rates.

The new program will bring a whole new set of requirements with it. Maybe more flood insurance coverage will be available. If you have ever read the flood insurance manual then you know the National Flood Insurance program limits flood insurance coverage on standard flood insurance policies to $250,000 on residential buildings and $500,000 buildings.

Now with these changes could come major changes to flood insurance premiums, flood insurance rate maps, opportunities for communities,  provisions, and standard flood insurance policies. 

Governments have been waiting for these changes for a long time. Some in coastal areas have really been fighting this change.

So when is all this going to impact property owners or maybe even your property?

Important Dates

FEMA recently released a bulletin stating the dates to follow for these changes. We are going to talk about a few of these dates.

• October 1, 2021
• April 1, 2022
•  

Let's look at October 1, 2021 we will call this 2.0 day. This will be the day that new policies start being issued under the new program. So any new flood insurance policy issued through the NFIP or the Federal Emergency Management Agency after October 1, 2021 will fall under this program.

So what about insurance policies that are renewing?

Renewing policies are going to follow a little bit different path. If a policy renews between October 1, 2021 and March 31, 2022 then it will have two options. It can stay in the legacy program or it can be written in the NFIP Risk Rating 2.0 program. It could be that the new program is a better option for some people. According to FEMA they expect the average policyholder to have their flood insurance rate go down $84 a month.

If a policy renews after April 1, 2022 then it must renew in the new NFIP Risk Rating 2.0 program.

So those are the dates we have as of right now. These dates could change but as of April 2021 they are expected to go live in 2021.

Maybe you have questions about what your flood risk is or what flood insurance options are available?

Are you in a flood prone area?

What is the borrowing limit in flood zones?

Then make sure to subscribe to our Youtube channel where we do our daily flood education videos. You can also check out our podcast.

Remember we have an educational background in flood mitigation. So we are here to help you understand your flood insurance options, flood risks, and mitigating your property long term.

 

Most people might be waiting for April 1st to come in order to do some jokes and what nots, but for us here in the Flood Insurance Guru, we want you to be up-to-date with the NFIP April 2021 updates.

Flood insurance is constantly being improved, optimized, and worked to be more efficient for homeowners however it looks like the April 2021 update won't be kind on its rate changes and updates. Let's look into this changes made by the government, Federal Emergency Management Agency (FEMA), and the National Flood Insurance Program (NFIP) in their latest Flood Insurance Manual. What are the new rates? How will this affect you and how your flood zones will impact your flood insurance rates?

A disclaimer first and foremost, FEMA may update and modify these changes made by the program to implement and better transition to Risk Rating 2.0.

Premiums & Surcharges

As we walk right into the month of April and welcome spring, the NFIP also increases the premium from an estimated average of $880 to $969. This change will have an average increase of 10.2 percent. In this case, you're going to have to prepare your wallet for more expensive premiums from the NFIP.

It's important to emphasize that this goes for every flood insurance policyholders under the government (FEMA, NFIP). This won't look good on your wallet since the higher premium you are paying before this, the higher the increase will be. In comparison, this change is smaller than last year's 11.3 percent.

 

When it comes to flood insurance, the closer you are to high risk flood zones or the special flood hazard area, like the Flood Zone A, AE, or even VE, the higher your flood insurance rate is. This means that people in Flood Zone X will have lower premiums than people in Flood Zone A which are both going to receive the 10.2% increase regardless. You can understand more about these flood zones by listening to our podcast:

The update also noted that surcharge and policy fees aren't included in the average premium rate. If you'd include that, it will raise your premiums from $990 to $1,080 (9% average increase). This may hurt your secondary residence properties.

Pre-Flood Insurance Rate Map (Pre-FIRM) subsidized policies like non-primary residential, business, severe repetitive loss (SRL) properties, and properties that were damaged or improved will generally receive an increase of 25% per year till they've reached full-risk rates.

Remember that Pre-FIRM properties are buildings or properties that were built before a flood map was established and SRL properties are buildings or properties that received reports or claims of multiple flood damage. 

April 2021 Rate Changes for Flood Zones

Flood Zone X

If you have a property within this low risk flood zone, your flood insurance premium will increase to 1.4%. This totals a billed increase of 1.3%. For example, if your home is in Flood Zone X which you pay $1000 premium, this will be updated to $1014. With the NFIP 2.0 update, this also means that if you're getting close to the high risk flood zones, like Flood Zone A, your rate becomes higher.

Watch the video below to learn more on Flood Zone X.

Flood Zone A

If you have a high risk flood zone property, or sits in the 100-year flood zone, specifically the unnumbered A zone, you're going to receive an increase in your flood insurance premium of 1.7% (total billed increase of 1.5%). With the flood map update released last month, it's important to get your home checked with your insurance agent to make sure that you're in the correct flood zone.

This premium increase is the same with other A flood zones like Flood Zones A1-A30 and Flood Zone AE. Although in these flood zones, there will be a different total billed increase of 1.4%. 

Since high risk flood zones generally have a higher flood insurance rate than low risk flood zones, you can expect that if you're already paying $2000 for your premium, then this update will be $2034. It's also important to remind everyone that being in a high risk flood zone or special flood hazard area (SFHA) will require you to have an elevation certificate as per FEMA and NFIP's guidelines. Elevation certificates can cost you from roughly $600 to $2000.

For Flood Zones AO, AH, AOB, and AHB which are shallow flooding zones, a premium increase of 2.7% is expected. This is $54 increase if you're paying $2000 for your premium.

Watch the video below to know the difference of Flood Zone A and AE:

Flood Zone V

Any property mapped on Flood Zone V or the coastal zones will receive an increase again this year. This is because research finds that there's a steady decline and erosion of the coastlines. The increase for these zones will be 0.3%. There's also a big possibility that more properties will be mapped into flood zone V in the following months, if not year. You can also expect an increase in 2022 if you're living along the coasts.

It may not look as much, but if you're moving into a property that has a beachfront, well you're going to pay a much higher premium compared to Flood Zones A despite being considered as both 100-year flood zones.

We covered the difference between Flood Zone A and Flood Zone V in our video below:

What now?

It's important to know these updates since it will directly impact your finances. Yes, your property will be insured by the NFIP, but is it enough to really help you out? Let's go over the things you can do about this update.

Change your Flood Zone

We've mentioned that elevation certificates can be costly especially if you're in the higher flood risk area. If you're buying flood insurance from NFIP, they'll ask that you have this document ready. This isn't just another money vacuum however. We've discussed that through the elevation certificate you can show that you're in the incorrect flood zone and have your property moved to a lower flood risk area. For example, you can be in Flood Zone A in the latest FIRM update, but since your elevation certificate shows that your property sits above the base-flood elevation, you can be moved to a flood zone X.

Once your certificate shows that you're not in the right flood zone then you can have your property removed through a letter of map amendment (LOMA).

Know more on elevation certificate and letter of map amendment through our podcast and video:

Private Market

We've mentioned how the private market can help you get a better deal over your flood insurance policy. If you feel like the coverage that NFIP provides isn't worth paying the increased premium, you have the option to get your flood insurance through private flood or private flood insurance companies.

What are the benefits of getting private flood insurance?

For one, it's important to remember that the NFIP takes time to process flood insurance from application to claims. If your property was moved from Flood Zone X, which isn't required to have a flood insurance, to Flood Zone A or AE, which the government requires that you have flood insurance, there'll be a 30-day wait period for them to complete your request or claim.

This goes the same if you're planning to start a business in these zones. How is it different in private flood? Well, private flood can take only up to two weeks to get your flood insurance settled.

When it comes to coverage, the private flood insurance generally offers more for less. This means that you'll generally receive more coverage like increased building/property coverage, replacement costs, additional living expenses, and more for lower flood insurance rates and premiums. Private flood rarely requires you to have an elevation certificate, so instead of spending money on this, you can actually save it for your business or maybe cover your flood insurance.

It's important to note that you can't get private flood with an active NFIP flood insurance policy. If you're considering a move towards private flood, you may watch our video below to help you out:

We've also covered the difference of the NFIP and Private Flood as well as more details on its benefits. You can click the link or watch our video below to know more:

As we move forward in 2021, we can expect more updates and changes from flood maps, flood insurance premiums, and policies. At the start of 2022, the National Flood Insurance Program will release another update on the changes for flood insurance, and we'll be sure to keep you updated on that as well.

The U.S. has had devastating floods and flood disasters throughout the past month and year. It does look like these floods aren't going to get better since they're more difficult to predict and more destructive than before, so you might want to prepare better for your flood insurance. So, is the NFIP the best flood insurance option? Find out for yourself by click below:

Remember, we have an educational background on flood mitigation and we want to help you preserve the value of your property long term.  If you have any questions about your flood insurance, the private flood, flood insurance rates and premiums, or anything at all about flood, feel free to reach out to us by clicking the links below.