A lot of changes had happened with flood insurance across the country. Kickstarted by the update to federal flood insurance with Risk Rating 2.0, a lot of things also need to be addressed when it comes to people who are buying and selling properties.

Things Realtors Should Know About Flood Insurance in Golden Isles, GA

Today's blog focuses more on the things you should know as a realtor in Golden Isles and Saint Simon Islands, Georgia when it comes to flood insurance.

CBRA Zone

One of the most important things we need to address is the overall geolocation of Saint Simons Island, Georgia, and why it's important for realtors to know why being in the coastal zones is important when it comes to flood insurance.

The Coastal Barrier Resources Act (CBRA) is generally the federal government's move in order to ensure that our coastal barriers are developed and modified. Considering that the properties in Saint Simons Island are basically within reach of the coasts of the Atlantic Ocean, the CBRA is implemented in the area.

Being in a coastal area like this will no doubt see its structures flooded due to storm surge, coastal erosion, or worst tsunamis. With the risk of flooding this high, you might be doubting if flood insurance is available for property owners of Golden Isles.

Is Flood Insurance Available?

The good news for realtors is that you can still sell houses in Golden Isles and secure that flood policy for your customer to protect both buildings and personal property however, there's a catch. The thing is, properties that are already built or under construction are the only ones that can get flood insurance through the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP). It's important to mention that this is only applicable if the property itself is prior to the prohibition date of the Coastal Barrier Resources System (CBRS).

As a realtor, it's also important to note if there are substantial improvements that are "over 50 percent of the structure's market value" made for the coastal home, flood insurance will no longer be available from FEMA and the NFIP. 

Changing Flood Zones

We've mentioned in the introduction how Risk Rating 2.0 is changing the flood insurance scene. One of its biggest impacts is moving out of using flood zones as a basis for flood insurance rates.

You might have encountered a lot of potential buyers rejecting to buy a house in Saint Simons Island because it's basically flood-prone and it's located in a high-risk flood zone. Generally, these concerns lean more towards homeowners being scared off by potential flood insurance rates skyrocketing.

The good news you can tell as a realtor is that being in a coastal flood zone, like Flood Zone V, won't really impact flood insurance premiums with the Risk Rating 2.0 in federal flood insurance. This is one thorn you can snip off their sides since basically all the flood premiums' would be concerned of are things like how much flood happens in the area, what type of floods impact the property, are there flood mitigations made in the property, and how it's built like the property's foundation to name a few.

So it doesn't really matter anymore if you're selling a property that's in a high-risk flood zone since it won't these flood zones no longer have a bearing on overall flood insurance costs. It's important to note, however, that a flood insurance policy will be required by the buyer's mortgage for any/all properties that are located in a high-risk flood zone or the special flood hazard area (SFHA).

Benefits of Private Flood Insurance

Lastly, we've been covering most of these flood insurance tips for federal flood insurance, so it's due time we move to the other flood insurance option. It's not always that FEMA and NFIP are your only way to get flood insurance.

Private flood insurance has been known for providing a more convenient flood insurance policy for homeowners and business owners alike. This is mostly owed to the fact that private flood generally has cheaper flood insurance premiums.

It's also important to note that even before there was a Risk Rating 2.0 update, most private insurance companies base their rates or premiums for flood insurance on what's called a flood risk score. This flood risk score looks into multiple factors and determines the overall risk of flooding for the specific property.

READ: Risk Rating 2.0 Georgia

This is something that every realtor should know by heart because once your buyer starts shying away after seeing a quote for flood insurance from FEMA and NFIP, you can guide them to their other flood insurance option.

Things Realtors Should Know About Flood Insurance in Golden Isles, GA

Another benefit of going through private flood insurance is its coverages. When you go to federal flood insurance and the NFIP, you'll have to get coverage for at least 80% of your property. This insurance coverage from NFIP also maxes out on $250,000 for residential building coverage and can go up to $500,000 for commercial properties. Both residential and commercial properties only get $100,000 in contents or personal property coverages.

The same can't be said for private flood insurance since most of these carriers will allow you to find more flexibility for coverages. So if the property is less than $250,000, you can still have it fully covered and have your customer lower their premiums. On the other hand, this also means that there are no coverage limits, so properties that are valued at more than $250,000 (i.e. $350,000) will get full coverage.

All of these benefits can easily be provided to the property within 3 to 14 days which is a drastic difference between the strict 30-day wait period of NFIP.

As a realtor in Glynn County, Georgia, this flood insurance information is something that you should know since it may directly impact your sales. It's important to note that at least 72.8% of Glynn County's residents will see an increase in their flood insurance rates with FEMA and NFIP.

So if you have any questions on flood insurance, click below to access our Flood Learning Center.

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You can also click the picture below to call us for your flood insurance concerns.

The Flood Insurance Guru | 2054514294

Remember, we have an educational background in flood mitigation which lets us help you understand flood risks, flood insurance, and how these impact the real estate industry.

Rivian, an American electric vehicle automaker, and automotive technology company, already has plans underway for the development of an electric vehicles plant in Georgia. Considering that both Amazon and Ford already joined forces in order to help Rivian get a boost in the industry, these plans may be far from being canceled.

What Rivian's Electric Plant Development Mean for Flooding in Georgia?

Today, we want to talk about what impacts this type of development has on flooding for Georgia and some tips on what you need to do with your flood insurance.

Developments and Flood

First, let's look back into the overall negative impacts of urban development when it comes to flooding.

In research from 2016 from the United States Geological Survey (USGS), it's found that urbanization has a direct impact on flooding. In this research for Illinois alone, they were able to find that in a 2-year span, there's a possibility of seeing a hundred to 600 percent increase in flood peak discharge due to urbanization. This data was gathered from Mercer Creek and Salt Creek in Illinois and you should keep this in mind since it will be valuable info later.

When it comes to Georgia, a lot of development is also going on to cater to more housing and urbanization. The same could easily be said for our state. The thing about these floodings when it comes to developments and urbanization is that it simply doesn't increase flooding for high-risk flood zones only.

Generally, all those developments are causing an increase in water runoff because water has nowhere to go. Also, changing the soil that naturally sips floodwater into cement causes this issue with flooding. Most of these waters go to low-lying areas and even low-risk flood zones like Flood Zone X.

This has been proven in 2017 when research from Georgia State University (GSU) also found an increase of 26% in annual streamflow for areas that were developed or urbanized from 1986 to 2010, as well as a doubling of high-flow days for Suwanee and Big Creek.

So, how will this new electric vehicle plant impact flooding in Georgia?

Rivian's Developments

This new development for the electric vehicle plant is considered to be the largest economic development project that Georgia will see in its entire history. The development will cover about 2000 acres of land. 55% of these lands are intended for agricultural and residential zones.

Considering the scale of this planned site, it's no question that this will cause a lot of burdens when waters start to rise and rain starts to pour. We've already mentioned before how changing the natural soil to cement can cause a lot of water to have no place to go but the neighborhood. The city of Social Circle itself is creating a movement to thwart this $5-billion development plans ahead of time.

What Rivian's Electric Plant Development Mean for Flooding in Georgia?

The plant is planned to cover land across the Walton and Morgan Counties in Georgia. What is notable about these two counties when it comes to flooding is that Walton has an increased risk for roads, commercial areas, and infrastructure. This is something noteworthy because most of the fatalities we see when there's flood are located or involves road, so this could mean an increase in flooding for these locations can also present dangers for the lives of motorists.

On the other hand, Morgan county is facing more concern when it comes to flooding already as their increasing risks from moderate levels might also see some significant impacts of this development. It's notable that roads and infrastructures might move into a major risk level whereas residential, commercial, and social areas are going to move into more of a moderate risk of flooding.

Flood Insurance Protection

There's no other way out when floodwater starts inundating your property. Flooding has been considered for many years to be the most common natural disaster that happens in the United States. We might not be able to thwart these plans for the plant, but we can still ensure that we will be able to protect ourselves from the expected results of development on that scale.

Flood insurance isn't just insurance for your property but also acts as an assurance that you don't really need to worry about what gets taken by flood damage because you will definitely have coverage for it. Georgia residents can get flood insurance from either front: the federal government-backed through the National Flood Insurance Program (NFIP) and the Federal Emergency Management Agency (FEMA) or through the private flood insurance market.

What Rivian's Electric Plant Development Mean for Flooding in Georgia?

Getting this type of insurance is one of the most important things to have for a homeowner, business owner, and even renters especially in the 21st century. Nowadays, a lot of factors come into play when it comes to the increased risk and amount of flooding we're getting; not just developments and urbanization.

To learn more about flood insurance, how you might be impacted by this development in Georgia, what your flood insurance options are, or any questions about floods, click below to access our Flood Learning Center.

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You can also click here to call us, so we can talk about your flood concerns.

The Flood Insurance Guru | 2054514294

Remember, we have an educational background in flood mitigation which lets us help you understand your flood risks, flood insurance, and mitigating your property long-term.

Welcome to the second part of our two-parter blog on real estate and flood insurance in Alabama. We've covered the things you need to know as a realtor when it comes to buying a house or a property for a potential buyer. You can read our blog about it by clicking here.

Alabama Real Estate: Selling Properties in a Flood Zone

In today's blog, we want to talk about the other side of the coin and note some important things to keep in mind when selling a house.

Regardless of whether you're the homeowner or just a real estate agent, you should be aware of these things when it comes to flood insurance, flood zones, and what impacts they have on properties in Alabama.

List of Flood Claims

We've already mentioned in our previous blog that it's important to have a basic, if not in-depth, awareness of the history of flood insurance claims made on a property. This way, as a buyer, you get to find proper expectations when it comes to your flood insurance policy and its respective premium.

On the other hand, if you're the one selling the property, this goes the same. It's common courtesy for your potential buyers to be given an idea of where the current flood insurance stands especially when it comes to claims. This also gives a substantial idea of the flooding history as well. For some states, information like this is federally required to be disclosed to a buyer before closing a deal.

This can be done by requesting a list of the claims made through your insurance carrier. Retrieving claims history is a very easy process for both federal and private flood insurance. This list of claims can be requested or ordered from the National Flood Insurance Program (NFIP) and Federal Emergency Management Agency (FEMA).

On the other hand, private insurance companies will have to be contacted by you or your real estate agent to get this list firsthand. It's important to note that the flood claims history on a property may not be readily available when you order it from private flood insurance, so it's important to keep tabs on your claims history.

Alabama Real Estate: Selling Properties in a Flood Zone

Policy Assumption

One of the key things to know when it comes to the seller-side is mostly on the policy itself. You see, you don't really have to cancel your policy once you have sold the house, it can remain and be passed on to the new owner. This option of transferring the currently active policy to the new owner (buyer) is called policy assumption.

A policy assumption or policy transfer can help you keep the current flood premium and lower-risk flood zone which in turn will also help you avoid those expensive premiums within that period. You also won't have to pay for the flood insurance premium that the policy also has – this can be discussed between you and the seller.

This way, you can make sure that you have proper protection for the new house you're buying without emptying your wallet or bank account. The policy contract will be transferred to you and you'll be the new policyholder in the eyes of FEMA once the reinsurance or renewal day kicks in.

Policy assumption or transfer in your flood insurance can really help you out if you're mapped into high-risk zones in FEMA's flood map or the flood insurance rate map (FIRM). Now, when it comes to properties or houses in that high-risk flood zones, you have to keep in mind that your mortgage lender will be very keen on requiring you to carry a policy for that property.

This mandatory flood insurance purchase can cause a hefty price since we're talking about a lot of flood insurance requirements to be secured before you can get a flood policy for the property.

So other than the higher risk of flooding, you also face a higher risk of emptying your wallet because your mortgage company really needs you to carry flood insurance for your property.

Impacts of Recent Flooding

One of the things you always have to consider when selling a house is recent natural disasters. The most common one is flooding and considering that we're already emphasizing the importance of flood claims which is a direct indication that the house has a chance of flooding.

Recent flooding, most especially, will be a key factor in selling your house and we believe the biggest concern is how much protection does your house has against flood damage and flood loss. It's important to always keep your flood mitigation measures in check in order to have a better chance of selling your home.

Alabama Real Estate: Selling Properties in a Flood Zone

Equally, FEMA is also very heavy on flood frequency when it comes to flood insurance rates. The new Risk Rating 2.0, launched on April 1st and October 1st of last year, changed the rating structure for the federal flood insurance.

One of the flood risk variables being considered by FEMA and the NFIP when rating your property's flood insurance policy is both how often the insured building gets flooded and what type of flooding it experiences. This can take a very hard hit for your selling strategy as most buyers would shy away from flood-prone houses.

As a realtor, it's important that you are aware of this as well, if not an expert when it comes to it. A lot of potential buyers get frustrated when they get surprised about this requirement, so as a realtor it's best you let them know ahead of time.

When it comes to selling properties, you really want to help your buyer consider what the flood risk is and the chance of flooding. Some states like Texas actually require realtors and sellers to fully disclose the flood history and claims on a property, but regardless it wouldn't really hurt being transparent about these things. After all, we're talking about the safety of someone moving into a residential property.

If you've got any questions on a flood policy, the flood zone status of the property you're looking to buy, how the floodplain impacts flood zones, or anything related to floods, click below to go to our Flood Learning Center where we try to answer these questions.

Flood Insurance Guru | Service | Knowledge Base

You can also call us if you need a second opinion from a flood insurance agent when it comes to your purchase of a property by clicking below.

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Remember, we have an educational background in flood mitigation which lets us help you understand your flood risks, flood insurance, real estate selling and buying, and mitigating your property's value long-term.

Business is booming as some would say to the real estate market in Alabama. Despite being in a pandemic, somehow real estate was able to keep up with the times. 2021 was one of these proofs as Alabama had an increase of 3.9% year-over-year (Y/Y) in real estate sales during the month of August.

Alabama Real Estate: Buying Properties in a Flood Zone

It's no secret that some of these listings sit on a high-risk flood zone, so today, we want to talk about things every realtor needs to know when it comes to buying and selling a property that's in a flood zone.

This is part one of a two-parter blog and for this article, we want to focus on the buyer's side of real estate.

Loan Types & Flood Insurance Options

When it comes to closing a house, most buyers don't really have the luxury to pay it all in cash. This is why loans exist to help ease up the expenses in maintaining a roof above your head. If you're reading this blog, you're most likely to be familiar with mortgages and how it works.

What you might not know is that mortgages and loan types can actually impact your flood insurance too.

You see, depending on the type of loan you have for your property, you'll get different options when it comes to flood insurance. We have different types of loans and we actually covered this topic on our podcast blog, but to further understand the situation especially after the Risk Rating 2.0 update with federal flood insurance let's give an example.

Alabama Real Estate: Buying Properties in a Flood Zone

If you have the Federal Housing Administration or FHA loan, you won't be able to get flood insurance through any private insurance carrier because your bank won't accept it. This only means that your only flood insurance source will be from the federal side which is through the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP).

There was a time that if you have a loan that's under the government such as an FHA loan, Veteran Affairs (VA) loan, or United States Urban Development Administration (USDA) loan, the only option you have is through the NFIP when it comes to flood insurance.

This meant those people with conventional loans are the only ones who can get flood insurance through private companies before. This was changed way back and only homeowners with an FHA loan are required to get flood insurance through FEMA and the NFIP.

So this is important to keep in mind. Consider first what loan type you have in order to get a proper expectation on where you can get flood insurance from.

Flood Insurance Claims

Another thing you want to consider when buying a property is its history of flooding and flood claims history. This way you get to have an immediate idea of the flood risks or flood hazards that the house might face.

It's also important to note that when it comes to flood insurance, you might not get a policy from the private insurance companies once they detect that the previous owner or the property is prone to flooding.

It's important to keep in mind that flood claims aren't like medical insurance claims where it goes wherever you go. What we mean by this is that when you file a flood claim on the property, regardless of who the owner is, the claims will stay with the property basically for its entire life.

Alabama Real Estate: Buying Properties in a Flood Zone

When it comes to the federal side, however, there won't be a refusal to provide flood insurance to properties like this however with the Risk Rating 2.0, having multiple claims on a property is sure to impact the overall costs of your flood insurance premiums with that house. This is what's called the claim variable.

For this one, it's crucial to always know the flood and claims history of the property. This way you protect yourself from unwanted non-renewals as per the carrier's discretion or expensive flood insurance rates.

Flood Insurance Premiums

One of the biggest questions asked by a potential buyer of a house concerns flood insurance rates. This opens the door for asking, "will my premiums skyrocket after I buy the property?"

Alabama Real Estate: Buying Properties in a Flood Zone

The thing about flood insurance premiums is that the rate is generally guaranteed only for 12 months. This means that after that, you may see some changes like a minor increase or decrease. This is considering that you weren't flooded. On the other hand, if the property was recently subjected to flood damage and there was a claim filed for it, the flood insurance premium can increase substantially.

Verifying the Flood Zone

One of the most important things a buyer or realtor should know about a property when it comes to flood insurance is its flood zone. Despite being removed from the rating consideration in FEMA and the NFIP, the private flood insurance market still look at this factor when it comes to rates. This means that flood zones directly impact your rates and risk of flooding.

Additionally, regardless of it being removed from the rating system, flood zones still have absolute control on whether or not the property is required to have a flood insurance policy with that property. Keep in mind that if you fall in flood zone A or AE, also known as high-risk flood zones or special flood hazard areas (SFHA), you're going to be required to carry flood insurance.

There are many cases where an incorrect flood zone is put in a policy — maybe because there was a recent flood insurance rate map or flood map update that wasn't known by the seller or confusion between different flood zones.

As a realtor, it's important that you are aware of this as well, if not an expert when it comes to it. A lot of potential buyers get frustrated when they get surprised about this requirement, so as a realtor it's best you let them know ahead of time.

When it comes to selling properties, you really want to help your buyer consider what the flood risk is and the chance of flooding. Some states like Texas actually require realtors and sellers to fully disclose the flood history and claims on a property, but regardless it wouldn't really hurt being transparent about these things. After all, we're talking about the safety of someone moving into a residential property.

If you've got any questions on a flood policy, the flood zone status of the property you're looking to buy, how the floodplain impacts flood zones, or anything related to floods, click below to go to our Flood Learning Center where we try to answer these questions.

Flood Insurance Guru | Service | Knowledge Base

You can also call us if you need a second opinion from a flood insurance agent when it comes to your purchase of a property by clicking below.

The Flood Insurance Guru | 2054514294

Remember, we have an educational background in flood mitigation which lets us help you understand your flood risks, flood insurance, real estate selling and buying, and mitigating your property's value long-term.

Shelby County's own University of Montevallo (UM) is celebrating its 125th anniversary and this is really something worth noting. However, during this time a concern that doesn't look like affecting flood insurance surfaced; local restaurants and the general population of Shelby County are experiencing supply chain issues.

The Impacts of Supply Chain On Flood Claims in Shelby County, Alabama

Today, we want to talk about what this could mean for flood insurance, its coverages, and what to expect as we celebrate the 125th anniversary of UM.

Supply Chain Issues

Local restaurants in the southern parts of Birmingham are having a rough start to the year as supply chain issues resurface. This is causing a lot of problems not just for food supplies, but even necessary utensils and such. From containers to equipment, business owners are having trouble handling the potential economic impact of the issues with supplies.

This issue is just a few weeks after President Joe Biden implemented a presidential declaration to help homeowners across Jefferson County, Mobile County, and Shelby County when it comes to recovering from the October 2021 flooding.

The Impacts of Supply Chain On Flood Claims in Shelby County, Alabama

A local business owner, Naseem Ajlouny, shared with Shelby County Reporter how he's struggling with the supply chain issues. He quoted to have "spent around 30% of work now trying to source product". Moreover, there are also concerns with food supplies through crops such as the availability of corn on the cob and other protein products.

This is creating an increase in costs for menus across the county just to make ends meet. Worst case scenario, the item just has to be removed from the menu.

So what does this mean for flood insurance?

Supply Chain & Coverages

Now, when it comes to the concern of the supply chain, it's important to keep in mind that this doesn't just impact how businesses run. This also means that there may be unwanted impacts to flood insurance.

Let's all remind ourselves that Alabama, especially Shelby County, can be very prone to floods. There are a lot of flood hazards in the area which only contributes to the high-risk flood zones that the county is in when it comes to flood insurance rate maps (FIRM). So, this isn't really just a concern for business owners, but it can also impact homeowners.

You see, when it comes to flood insurance coverages, those replacement costs for recovering and rebuilding the building still need to come from sourcing out materials — the same goes for content coverages or the personal items included with the insured building.

If business owners are having trouble getting materials outside of flood insurance coverages and to keep their businesses afloat, what more when water starts overflowing from the floodplain?

This type of issue can cause a limited amount of coverage when it comes to additional living expenses from your flood insurance claim. This means that you won't really get an increase in premiums or payment, but you can expect to face higher costs when it comes to repairing the building.

The Impacts of Supply Chain On Flood Claims in Shelby County, Alabama

When flood insurance covers the repairs or recovery of an insured building, the market can still have an impact on the costs of materials like wood, bricks, metal, and things like that. Since the county is experiencing some challenges with importing these things, it's safe to expect that there will be higher costs on the materials.

This could also mean that if you have that $250,000 standard coverage for your $200,000 home, it will easily be maxed out when you file a flood claim when the reparation begins.

Even if we say that you will get 100% coverage on the repair of your insured building, there will be no room for flood mitigation measures since the building coverage or replacement cost is already maxed out.

The Impacts of Supply Chain On Flood Claims in Shelby County, Alabama

This can be very concerning especially since we're moving out of the winter season very soon and that also means that Alabama will face runoff from all directions. We've seen this happen before and it's not impossible to happen again. Despite the clearer skies in North Alabama, it's important to mention that Cullman County in the north-central areas of the state, faced 2 to 3 inches of rain in September before the October flooding.

Are you prepared to face possible flooding in the next few weeks?

If you have any questions on supply chains and flood insurance, how to review your insurance coverages, where to get flood insurance or anything at all, you can click our Flood Learning Center where we try to answer all your flood insurance questions.

Flood Insurance Guru | Service | Knowledge Base

You can also click below to call us and we can discuss your flood insurance needs.

The Flood Insurance Guru | 2054514294

Remember, we have an educational background in flood mitigation which lets us help you understand your flood risks, flood insurance, and mitigating the value of your property long-term. 

Alabama is no stranger when it comes to flood. When it comes to the continuous development in the city due to its relative increase with the population as well as non-stop oversaturation of the ground due to consistent heavy rainfall, the city just couldn't get a break from floodwater.

4 Lessons Learned from Birmingham October 2021 Floods

Today, we want to talk about the four lessons we've learned from the Birmingham Alabama floods of October 2021 and how this can help flood recovery moving forward.

Flood Emergency

Rain is always the culprit when it comes to natural disasters like flooding. This is why understanding flood emergency is very crucial when it comes to preventing all unnecessary bad experiences when it comes to flooding.

A flood emergency is any disaster wherein water goes into areas that are usually dry and this doesn't just cover regular floods, but also flash flooding which is something that Alabama was warned about during the October flood. Ready defines floods as a temporary overflow of water onto land that is normally dry. Floods are the most common natural disaster in the United States.

4 Lessons Learned from Birmingham October 2021 Floods

However, sometimes these emergency warnings go on deaf ears as people still drive into pools of water and flooded roads. Unfortunately, this causes a lot of casualties. Reuters reported in one article that at least four people died during the October flooding disaster in Alabama; three of these deaths were found inside two washed-up cars.

Being ahead of these emergency warnings is enough to have awareness of the possible flood risk that the current weather or rainfall can cause the impacted area. On October 7th, 2021, al.com reported that there's an estimated 13-inch rainfall during that week.

We hope that everyone understands by now, not just in Alabama, but across the country how important and essential these warnings are. If you're not driving or maybe planning to stay at home, but it's expected to flood there, being aware of a flood emergency can help you evacuate.

Flooding Can Happen Anywhere

We were able to brush through this in the previous item, but it's important to always remember that flooding can happen anywhere.

We've seen a lot of homeowners get blindsided with the words "Not In a Flood Zone" which is one of the biggest misconceptions we see in flood insurance. The thing is no property is not in a flood zone especially in the United States. Even deserts get flooded after a long time of drought, so what more areas like Alabama experience a lot of rain during the year?

If you want to learn more on this "not in a flood zone" concept, we actually did a blog on it clearing the air. Click here to read this blog and know more about flood zones.

4 Lessons Learned from Birmingham October 2021 Floods

It's a new year and we hope that you too get to accept that you can get flooded at any given moment; be it through collected water from rainfall, runoff from higher areas, or simply being located near a water source.

The thing about flood zones as well is that it doesn't really indicate a wall or border because flood doesn't really start at one zone and stop at a lower-risk flood zone. 

Our team understands that flood loss is something one can ignore. In one blink of an eye, everything can be lost due to the inundation of water. This is why we want to discuss the most important lesson we want everyone to understand.

Flood Insurance

When it comes to time during a flood emergency, most homeowners and business owners don't want to leave their property's premises because they want to make sure they have fewer losses as much as possible. This can easily be avoided with flood insurance.

If you've been following us, you know by now that we really put great importance when it comes to flood insurance. Forget about sales and all that. It's always safety first and most of the time, this safety comes in form of the insurance that you won't even feel the flood losses despite its scale.

You see, flood insurance can really help you avoid doing all the stuff you want to do to lessen the damages and losses you'll incur during a flood emergency. A standard flood insurance policy has enough coverage for both building and contents that homeowners and business owners don't really need to worry about "saving as much as one can".

4 Lessons Learned from Birmingham October 2021 Floods

Federal Flood Insurance

On the federal side with the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP), coverages on building maxes at $250,000 for residential buildings and can go up to $500,00 in commercial buildings. Both property types also get a max of $100,000 when it comes to contents coverage or every personal item inside the insured building.

This is outside of other coverages like the disaster assistance from a presidential approved declaration, the Increased Cost of Compliance (ICC) which is about $30,000 in coverages for flood mitigation, and when it the Community Rating System (CRS) Score which can create discounts of up to 45% on flood premiums with FEMA and the NFIP.

Private Flood Insurance

On the other hand, if this doesn't really cover your needs for flood insurance, Alabama also has a lot of private flood insurance carriers that we are also connected to. These private insurance companies can go beyond the building and contents coverage limits with FEMA and the NFIP. That means that a single flood insurance policy can cover you for more than $250,000 in building damages and more than $100,000 in contents.

These coverages from a flood policy can easily save you the trouble of worrying about what gets damaged and focus on keeping yourself safe from the debris and hurt from all that floodwater. But how are flood insurance and its claims different from home insurance claims?

You can read our blog comparing these two sides of flood insurance from our NFIP 2.0 vs Private Flood article.

Flood Claims vs Home Insurance Claims

When it comes to insurance claims, as a homeowner or business owner, you should be aware of when your standard homeowner's insurance applies and when flood insurance kicks in.

When it comes to flood insurance claims, you can't really get the coverage written on your policy if the surveyor detected that the damages to your home are due to water damage or a water backup. This means that flood claims won't pay out if your house was damaged from the inside and not due to getting inundated by surface water.

You can remember this through the "Number 2 Rule" wherein FEMA and most private companies will only consider water as a flood if at least 2 acres of usually dry land was covered by water or when at least 2 property gets inundated with water. Obviously, one of the properties or acres of land must be yours in order for your flood claim to payout.

4 Lessons Learned from Birmingham October 2021 Floods

You won't get your flood claim and insurance coverages in flood insurance if this rule doesn't apply to your situation. Another thing to keep in mind about flood insurance claims is that it usually covers and expects that the property owner also set up necessary flood mitigation efforts to prevent the same damage in the future. This is why the ICC exists for federal flood insurance as a means to avoid the same losses from future disasters like floods.

Equally, you can't use flood claims to cover damages due to fire, earthquakes, or any other natural disasters. It simply is strictly for flood disasters only; regardless of whether it is a minor flooding, flash flooding, or major flooding events in Alabama.

It's a bit difficult to write about this especially since there were a lot of people who got their homes damaged, lost their loved ones, and even just found themselves at a loss after all the water subsided.

The thing about lessons is we need to learn from them in order for them to be valuable and we hope that this refresher will also help you understand how we can avoid getting blindsided by an event like this again. So, if you have any questions on flood insurance, how to best protect your property from floods, or anything related, click the links below.

You can click here to access our Flood Learning Center where we try to answer most of your flood insurance questions:

Flood Insurance Guru | Service | Knowledge Base

Or click here to contact us and we can talk about your flood concerns for the Alabama flood of October 2021.

The Flood Insurance Guru | 2054514294

Remember, we have an educational background in flood mitigation which lets us help you understand your flood risks, flood insurance, and protecting your property long-term.

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Flood insurance coverage is something that all insurance agents and homeowners should know very well. Keep it close to the chest when it comes to fully understanding the extent of what you're writing on your policy.

Replacement Cost Versus Actual Cash Value

In today's episode, we want to tackle flood insurance coverages; specifically how replacement costs can be different from the actual cash value (ACV) and the dangers of choosing one thing from another.

What's the Difference?

When it comes to writing your flood insurance policy, you should be able to know which is the best option between replacement costs and ACV. Most insurance carriers provide homeowners with the ability to either opt into replacement costs or ACV.

But what is the difference between the two?

Replacement cost — from the phrase itself which is very self-explanatory — is the amount given to the insured in order to fully restore and/or rebuild the property after being damaged.

Let's give an example, if you choose to get replacement cost for your flood insurance for a home that's worth $240,000, then you will be able to get this exact amount from your insurance provider. In the NFIP, coverages actually max out at $250,000 building coverage and there are no amount limits in the private flood insurance market.

On the other hand, actual cash value (ACV) is a different story. This time around we won't be talking about the exact amount needed to fully restore your insured building, but its exact value in actual money.

This is calculated by using the replacement cost value of the property subtracted by depreciation. This means that the overall depreciation of the value of your insured building will be the sole basis of how much you'll be getting.

Replacement Cost Versus Actual Cash Value

This means that one way or the other, you won't be getting $240,000 on your insurance if you choose ACV. This is why choosing Actual Cash Value is dangerous for homeowners because you're getting less than what you really need.

How to Know Your Coverage

There are two ways to make sure that you won't get blindsided when your flood insurance claim pays out.

The first way to make sure that you don't get ACV in your insurance is by checking the policy. You want to make sure that you get to read your flood insurance policy very well before you proceed on purchasing it, and also make sure that you have replacement costs as your coverage option.

You can ask your insurance agent to help you with this and it's pretty easy for them to determine this. A great insurance agent will make sure that the policy you have is under replacement cost coverage.

Another thing you want to make sure of is that you're following the 80% rule. Both FEMA and private flood insurance have this type of rule. The rule states that you must ensure your property for at least 80% of its cost.

By following the 80% rule, you can have the assurance that you won't be getting a significantly lower amount of coverage when your policy starts to payout.

If you want to learn more about flood insurance coverages, how to manage your flood policy, or anything related to flood insurance, you can click below to access our Flood Learning Center where we answer your flood and insurance questions.

Flood Insurance Guru | Service | Knowledge Base

You can also click on this picture below to contact us and discuss your flood insurance concerns.

The Flood Insurance Guru | 2054514294

Remember, we have an educational background in flood mitigation which lets us help you understand your flood insurance, how it can be managed, flood risks, and mitigating your property to preserve its value long-term.

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In today's FEMA Cancellation Reason blog, we want to talk about payments and how they can lead to your flood insurance policy actually getting canceled. Sheesh!

FEMA Cancellation Reasons: Category #6 - Invalid Payment and Fraud

We've covered much ground when it comes to the changes that are looking to update FEMA's structure when it comes to policy cancellations. We've talked about the first five categories which are canceling your insurance due to no insurable interestsestablishing common expiration datesduplicate coverage, being ineligible for flood insurance coverage,  and policy is no longer required by the lender. These are Categories #1 through Category #5 respectively.

Let's talk about when your payment encounters a wall and also when the payment is fraud involved.

Category #6 - Invalid Payment and Fraud

When it comes to the legacy program of the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP) or simply NFIP 1.0, there's a separation between the cancellation of a policy due to invalid payment and fraud. You can actually see this on how they're numbered — exactly 17 numbers apart.

FEMA Cancellation Reasons: Category #6 - Invalid Payment and Fraud

Reason Code #06 — When it comes to invalid payments, this is mostly concerned with payments for your flood insurance policy not meeting the expected amount. Maybe there's been confusion between you and your agent that you sent FEMA a lesser amount of money than expected.

Sometimes, when renewing a policy, you might think that you will have the same amount as before, so you had the payment sent out when it's actually less than your updated premium. This can also happen, theoretically speaking, when your lender didn't provide them enough payment to cover all the insurance costs.

The thing about flood insurance payments (or any insurance payment to be exact) is that they have to match the expected amount for the total premiums. Yes, down to the taxes and cents, you're expected to provide your insurer with the proper amount of payment to proceed with your policy.

When this happens, your policy will be canceled by the insurer or FEMA due to Reason Code #06.

FEMA Cancellation Reasons: Category #6 - Invalid Payment and Fraud

Reason Code #23 — Now this is something that you should really avoid with all your power. However, here's an example in the name of knowledge, there are some situations where the insured will commit fraud by faking their payment for their FEMA policy.

We really don't need to expand on this since fraud is fraud even when it comes to flood insurance payments. Just keep in mind that when FEMA detected fraud on the flood policy's payment, there will be no refund and the policy will be canceled.

What's Changing?

When it comes to Risk Rating 2.0 or NFIP 2.0, these cancellation details will be updated. We'll no longer see Reason Codes since they will be changed to Cancellation Categories

Any cancellation of a policy due to invalid payment and/or fraud, which are Reason Codes #6 and #23 respectively, will be combined under Category #5.

It's important to note that flood insurance payment is a crucial factor in your purchase. Having a delayed payment might cause your effectivity date to move and your coverage to lapse. Having an incorrect payment will cause your policy to be canceled. Both of which can have a big impact especially now that we can't really predict when floods can happen.

FEMA Cancellation Reasons: Category #6 - Invalid Payment and Fraud

If you want to get help understanding payment terms on flood insurance, not only with FEMA and the NFIP but also with the private insurance carriers, reach out to us by clicking the links below.

If you want to know how flood insurance work, and how your FEMA policy can be canceled, where to buy flood insurance, understand your risk of flooding, or anything related to floods, click below to access our Flood Learning Center.

Flood Insurance Guru | Service | Knowledge Base

You can also click my picture below to call us for your flood insurance concerns.

a person wearing a hat

Remember, we have an educational background in flood mitigation which lets us help you understand your flood insurance, how it can be managed, flood risks, and mitigating your property to preserve its value long-term.

We've talked about the updates for canceling flood insurance policies from the federal side of flood insurance.
FEMA Cancellation Reasons: Category #5 - No Longer Required Insurance

We've covered things like no insurable interests, establishing common expiration dates, duplicate coverage, and being ineligible for flood insurance coverage which are Categories #1, #2, #3, and #4 respectively.

Today, we'll keep the train going as we want to discuss Federal Emergency Management Agency (FEMA) Cancellation Reason and what category covers it when your mortgage lender no longer requires you to carry flood insurance for your property.

Flood Zones & Why They Matter

Before we dive into the cancellation details in both the legacy and updated program, we want to review first the conditions where your mortgage lender will require you to get flood insurance for the property.

If you've been following us, you know that we really highlight flood zones when it comes to our content. Other than this being a threat to your safety as flood zones determine which areas are more prone to floods, it's also a headache when it comes to costs.

Depending on what zone your property sits on, your mortgage lender can actually require or not require you to carry flood insurance for the property.

One of the situations or conditions where this can happen is when your property sits on a high-risk flood zone like Flood Zone A, Flood Zone AE, or any flood zone that starts with an A honestly. This also includes the coastal Flood Zone V.

This is because both the federal government (i.e. FEMA) and your bank will make sure that the property has enough safeguard in place to protect your home from flood damage and flood loss. Another reason where your mortgage will require you to carry flood insurance is sometimes solely based on the lender's discretion.

The flood zone of your property will solely be based on the current flood insurance rate map (FIRM) or flood maps that your community has. The thing about FIRMs or flood maps is that properties will get moved into or outside of these high-risk zones or the SFHA. Whenever there are new flood maps, you can expect that properties will also be changed from a low-risk flood zone to a special flood hazard area (SFHA).

Category #5 - Lender No Longer Requires Insurance

Now, let's say you're in the SFHA which means that you're being required by your lender to have flood insurance on the property, and then FEMA and the NFIP release a new FIRM for your area which causes your property to be moved to a flood zone X. As you can remember, flood zone X is one of the most common low-risk flood zones and doesn't really require properties to have flood insurance.

This means that you can cancel your flood insurance for that property. Although we highly discourage canceling flood insurance when you're in a low-risk zone because you can still get flooded at any given time, you can still continue without flood insurance.

In the legacy program, you can have your policy be canceled through Cancellation Reason Code #8 to indicate that your lender no longer requires flood insurance on your home.

What's Changing?

As you know by now, FEMA's changing the cancellation details, and for Reason Code #8 or when a policy is no longer required by the lender will be classified as Category #5. This means that Reason Code #8 will no longer be available to be used as a cancellation reason because it's been changed to Category #5.

Here's a list of the conditions that FEMA wrote when it comes to the Category #5 cancellation reason:

  1. Your lender required you to get flood insurance for a loan closing, but later on, discovers that the property doesn't reside in the SFHA.
  2. There are no paid or pending claims.
  3. Your insurer has to inform you that you can keep the policy despite not being required instead of canceling it.

This can really be a good thing when it comes to finances because you get to eliminate flood insurance costs from your budget however, as we said before, it's not really something we encourage since flood insurance protects you from losses even if you're not in a high-risk flood zone.

Equally, it's important to note that FEMA themselves has shown data that at least 25% of flood insurance claims come from low-risk flood zones. In layman's terms, low-risk flood zones get flooded too.

If you want to get help understanding when you'll be required to carry flood insurance, not only with FEMA and the NFIP, but also with the private insurance carriers, reach out to us, how flood insurance work, and how your FEMA policy can be canceled, where to buy flood insurance, understanding your risk of flooding, or anything related to floods, click below to access our Flood Learning Center.

Flood Insurance Guru | Service | Knowledge Base

You can also click my picture below to call us for your flood insurance concerns.

a person wearing a hat

Remember, we have an educational background in flood mitigation which lets us help you understand your flood insurance, how it can be managed, flood risks, and mitigating your property to preserve its value long-term.

We have talked about canceling your FEMA flood policy due to Category #1, Category #2, and Category #3 which are No Insurable Interest, Establish Common Expiration Date, and Duplicate Coverage respectively.

FEMA Cancellation Reasons: Category #4 - Not Eligible for Coverage

Today, we want to talk about the dreaded scenario when buying flood insurance and also may fall into the cancellation of your flood insurance policy with the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP): Not Eligible for Coverage.

Let's talk about this and what category number it falls into with the updated federal flood insurance cancellation reasons.

Category #4 - Not Eligible for Coverage

When it comes to flood insurance, homeowners and business owners alike are expected to follow a standard when it comes to insuring their property. With regards to the federal flood insurance, the SFIP always takes effect on properties looking to get flood insurance from FEMA and the NFIP.

The Standard Flood Insurance Policy (SFIP) contains a list of reasons why you may not be eligible for coverage against floods from FEMA and the NFIP. Generally, you can expect that if your property doesn't meet FEMA's and the floodplain management's regulation, you won't be able to get coverage for that property (i.e. mobile homes).

Now, when it comes to policy cancellation, either the insured or insurer can cancel the property because it doesn't follow necessary expectations to meet the eligibility for flood insurance coverage.

With FEMA and the previous version of the NFIP, this used to be written in Reason Codes #06, #27, and #29. Let's talk about the conditions that will cancel your policy per Reason Code.

FEMA Cancellation Reasons: Category #4 - Not Eligible for Coverage

Cancellation Reason Code #06 simply entails that a property will not eligible if it either (1) doesn't meet the structure code for to meet the definition of a "building", (2) the contents aren't located in the building/property, (3) the property is not in a NFIP participating community, (4) the property is located in the Coastal Barrier Resources System (CBRS), and (5) the building is declared a 1316* prior to the flood insurance application.

*1316 declared building is any property that does not meet floodplain management regulations.

What's Changing?

When it comes to the cancellation update and changes, this Reason Codes will be removed and will be categorized under FEMA Cancellation Category #4.

This means that if your property, by any chance, can't receive flood insurance coverage, you or your insurance agent will have to cancel the policy under Category #4.

You see, when it comes to flood insurance, it's a good thing that a lot of people already applies for a flood policy ahead of time to maximize the coverage time. However, we see a lot of homeowner and mostly business owners who will find out that they're not eligible.

In order to avoid having your resources go to waste, we really encourage that you communicate with your insurance agent first before getting a flood insurance for your home or business. A great insurance agent will help you check if you're eligible for FEMA flood insurance before they even help you apply for one.

FEMA Cancellation Reasons: Category #4 - Not Eligible for Coverage

Not being eligible for flood insurance, regardless if it's from the federal or private market, can really be a disappointing experience.

If you want to get help understanding  your eligibility for flood insurance, not only with FEMA and the NFIP, but also with the private insurance carriers, reach out to us, how flood insurance work and how your FEMA policy can be canceled, where to buy flood insurance, understanding your risk of flooding, or anything related to floods, click below to access our Flood Learning Center.

Flood Insurance Guru | Service | Knowledge Base

You can also click my picture below to call us for your flood insurance concerns.

a person wearing a hat

Remember, we have an educational background in flood mitigation which lets us help you understand your flood insurance, how it can be managed, flood risks, and mitigating your property to preserve its value long-term.

The Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP) are stepping on the gas to upgrade their services when it comes to flood insurance.

FEMA Cancellation Reasons: Category #3 - Duplicate Coverage

In today's blog, we want to address one of the most important changes coming with the Risk Rating 2.0 when it comes to the cancellation federal side of flood insurance.

What happens when your coverage is duplicated between two policies? How will it be canceled now that's NFIP switched to Risk Rating 2.0?

Category #3 - Duplicate Coverage

When it comes to purchasing flood insurance, it's not impossible that a homeowner will get duplicate policies. After all, having an option is better than none at all. However, this type of situation creates a possible chance that the flood policy of the insured will be duplicated.

This is why FEMA and the NFIP allowed policyholders to have a flood policy canceled if there's an unintentional or, basically, accidental duplication of your flood insurance.

In the previous NFIP Legacy Program, this is known as either Cancellation Reason Code #04, #10, or #26. Let's talk about how these three are different from one another.

FEMA Cancellation Reasons: Category #3 - Duplicate Coverage

Reason Code #04 indicates that a policy may be canceled if there's a duplicate in coverage. This means that you might be registered under two different flood insurance policies for the same name, address, coverage amount for the building and its contents.

When it comes to this Reason Code, one of your duplicated policies will be canceled in order to either (1) establish a common expiration date, (2) the dwelling/building policy coverage due to RCBAP (more on this later), (3) there's a force-placed policy from the mortgage when the insured/borrower already bought a flood policy, (4) a policy of earlier date already expired, or (5) a Group Flood Insurance Policy (GFIP) needs to be canceled to move into a standard-rate policy.

Reason Code #10 mostly concerns renters. This Reason Code's cancellation indicates that the policy needs to be canceled due to either the policy with only building coverage is being replaced by the Residential Condominium Building Association Policy (RCBAP), or the unit owner or RCBAP building limits are more than what FEMA coverages offer.

Reason Code#26 is for those who bought a policy from private flood insurance carriers and didn't want to push through with their NFIP policy's purchase or renewal.

The NFIP policy will be canceled depending on your discretion, so they won't really cancel it for you without your confirmation. This is very helpful to keep in mind especially for FEMA policyholders who are switching to private carriers for their flood insurance needs.

FEMA Cancellation Reasons: Category #3 - Duplicate Coverage

What's Changing?

Generally, the details and conditions of the three aforementioned Reason Codes still apply to the new Risk Rating 2.0 program. However, in order to avoid confusion, FEMA and the NFIP decided to combine Reason Codes #04, #10, and #26 into one Category.

FEMA Cancellation Category #3 is basically what you'll need whenever you need to cancel a federal flood insurance policy because it's a duplicate. This change can really be helpful for homeowners and business owners alike who won't have to keep on reviewing the FEMA handbook to know what's the best Reason Code for their situation.

This is also a great tool for those looking to move into the private insurance carriers to get a more fitting policy for their coverage needs.

These changes can be confusing, so if you need help understanding how flood insurance work and how your FEMA policy can be canceled, where to buy flood insurance, understanding your risk of flooding, or anything related to floods, click below to access our Flood Learning Center.

Flood Insurance Guru | Service | Knowledge Base

You can also click my picture below to call us for your flood insurance concerns.

a person wearing a hat

Remember, we have an educational background in flood mitigation which lets us help you understand your flood insurance, how it can be managed, flood risks, and mitigating your property to preserve its value long-term.

We moved out of the legacy program of the Federal Emergency Management Agency (FEMA) and are now officially going to adopt the Risk Rating 2.0 program for the federal flood insurance. In our previous blog, we were able to establish what's changing with these cancellation reasons with the Risk Rating 2.0 program.

FEMA Cancellation Reasons: Category #2 - Common Expiration Date

Other than the changes coming to the overall rating structure of flood policies with the National Flood Insurance Program (NFIP), we're also going to see some changes to cancellation reasons.

Today, we want to focus on Category #2 of FEMA Cancellation Reasons: Establishing a Common Expiration Date. Let's talk about it.

Category #2: Expiration Dates and More

When it comes to flood policies, it's important that you have the correct effectivity and expiration dates. This is a matter of life and death when it comes to your property's status.

When we say effectivity date, we're simply talking about when you're policy is going to start covering flood damages that may occur on the insured building or property. On the other hand, the expiration date is when the flood policy will no longer take effect when it comes to coverages to flood loss.

The thing about these dates is that it's pretty common to get it mixed up and two policies will be written for the same property with different effectivity and expiration dates. This isn't allowed even in private flood insurance.

FEMA Cancellation Reasons: Category #2 - Common Expiration Date

In order to resolve this issue, FEMA and NFIP handles the situation by canceling the other policy. The policy that will be canceled won't be based on when it was written, but whichever has the higher coverage.

Simply put, you will take up the FEMA flood policy that has higher flood insurance coverage for your insured building no matter what. This also means that the approved policy's expiration date will be followed and the rejected one will be canceled.

If you ever get into the situation where your policy is written for two different expiration dates, one obviously needs to get canceled. In the NFIP Legacy Program or NFIP version 1.0, the cancellation will be written with Reason Code #03.

What's Changing?

When it comes to the updated cancellation reasons for Risk Rating 2.0, Reason Code #03 will be changed into what's called Category #2. Generally, the numbering was moved up because the previous Reason Code #2 already gets covered in Category #1 alongside Reason Codes #01 and #07.

In order to have a policy canceled due to Category #02, the policy must meet two conditions:

1. The insurer must remain the same for the new flood policy with the same or higher amounts of coverage. The agent must submit a new application and premium.

This simply means that your insurance agent must submit a new application finalizing your flood policy application to FEMA and NFIP in order to match the correct expiration date and the higher coverage limits for your property.

This condition also means that you can no longer change to another insurer. Generally, condition #1 asks the insured and agent to simply correct any mistake within the flood policy, especially the expiration date.

2.  The other insurance coverage for which the common expiration date is established must be for building coverage on the same building insured by the current in-force flood policy.

You can cancel your policy however according to condition #2, FEMA Cancellation Category #2 will only be written to establish the same expiration date of the policy. You can't insure a property that's different from the current one you have.

FEMA Cancellation Reasons: Category #2 - Common Expiration Date

Having the correct dates and coverage on your policy is really important and getting it wrong will only cause you more headaches once floodwater starts to inundate your property. Having two different expiration dates can mean that your policy will already lapse when you need it the most and you're not going to get covered.

These changes can be confusing, so if you need help understanding how flood insurance work and how your FEMA policy can be canceled, where to buy flood insurance, understanding your risk of flooding, or anything related to floods, click below to access our Flood Learning Center.

Flood Insurance Guru | Service | Knowledge Base

You can also click my picture below to call us for your flood insurance concerns.

a person wearing a hat

Remember, we have an educational background in flood mitigation which lets us help you understand your flood insurance, how it can be managed, flood risks, and mitigating your property to preserve its value long-term.

We moved out of the legacy program of the Federal Emergency Management Agency (FEMA) and are now officially going to adopt the Risk Rating 2.0 program for the federal flood insurance.

FEMA Cancellation Reasons: Category #1 - No Insurable Interest

Other than the changes coming to the overall rating structure of flood policies with the National Flood Insurance Program (NFIP), we're also going to see some changes to cancellation reasons.

Today, we want to focus on Category #1 of FEMA Cancellation Reasons: No insurable interests.

Category #1: No Insurable Interest

First, we want to address the following conditions wherein this new category falls. In the previous version of the NFIP, "No Insurable Interest" actually falls under three separate reason codes. These reason codes are #01, #02, and #07. Let's do a quick review directly lifted from FEMA's handbook on cancellation rules.

First, let's cover the conditions wherein this cancellation reason can be considered under Reason Code #01.

The conditions mostly cover the idea that the property can't be insured either due to it failing to meet the standards of the NFIP and FEMA to be eligible for flood insurance coverage. These conditions are either (1) the building/property is at a total loss due to damages and it's basically unsavable, (2) when the developer or builder has requested to cancel the policy mid-term due to the homeowner moving into another property, and (3) maybe even due to a failure of the property transfer or the closing of a deal on the house's purchase.

FEMA Cancellation Reasons: Category #1 - No Insurable Interest

In Reason Code #02, the conditions are either (1) the property has been transferred to another owner, (2) the contents are completely removed or moved from another place due to the previous condition, and (3) the contents were destroyed by a peril like floods, earthquake, or a fire.

FEMA Cancellation Reasons: Category #1 - No Insurable Interest

Lastly for Reason Code #07, will consider either (1) an insurer issues a policy and the anticipated transfer of the property does not take place, or (2) the insured does not acquire an insurable interest in the property.

Based on these two items, this is mostly regarding homeowners who applied for flood insurance with FEMA and the NFIP before they purchase a property. Think of it this way, you bought a flood policy first to make sure that the property gets flood insurance coverage, but you haven't really bought the house or the transfer hasn't been completed yet.

FEMA Cancellation Reasons: Category #1 - No Insurable Interest

The cancellation reason will take place once this property wasn't transferred to the buyer, therefore, nullifying the proposed flood insurance policy on that property.

What's Changing?

In the new Risk Rating 2.0 update, this "No Insurable Interest" reason actually falls on Reason Codes #01, #02, and #07 when it comes to the legacy program of the federal flood insurance. However, the new update moves these three reasons into one Category that caters to any and all conditions where the property simply isn't there anymore to be insured by a flood policy.

In Risk Rating 2.0, this becomes Category #1 and is actually easier since if you can notice, there were multiple repetitions within the legacy program's Reason Code #01, #02, and #07. This avoids any confusion since we're talking about conditions which is a great move on FEMA and NFIP's part.

So if your house closing didn't push through, the property was completely destroyed, and/or builder requests for cancellation, this already gets covered in FEMA Cancellation Rule: Category #1. No need to go back into the three codes because this category already covers your concern and it's easier for both homeowners and insurance agents to help your policy get nullified and eventually canceled altogether.

These changes can be confusing, so if you need help understanding how flood insurance work and how your FEMA policy can be canceled, where to buy flood insurance, understanding your risk of flooding, or anything related to floods, click below to access our Flood Learning Center.

Flood Insurance Guru | Service | Knowledge Base

You can also click my picture below to call us for your flood insurance concerns.

a person wearing a hat

Remember, we have an educational background in flood mitigation which lets us help you understand your flood insurance, how it can be managed, flood risks, and mitigating your property to preserve its value long-term.

As the country steadily moved into the Fall season, the southeastern region of the United States was hit by a substantial amount of rainfall. This was enough to cause flooding in some states, but the one most impacted was Alabama.

Alabama Flooding; President Biden Approves Disaster Declaration

A lot of families were faced with flood damage and today, we want to talk about how the federal government — under President Joe Biden, Jr. — are looking to help the victims of the flooding. Let's talk about how the disaster declaration issued on December 21st is going to help the people of Alabama in recovering from the flood loss during the October flood.

Alabama October Flooding

Shelby and Jefferson County received a significant amount of rainfall in October. According to National Weather Service (NWS) Birmingham, Alabama, several waves of slow-moving, intense storms brought estimated rain rates as high as 4-5 inches (100 to 130 mm) per hour late on October 6th, 2021.

The flooding itself was so bad that fire officials said they responded to 282 calls for assistance. This is outside of the 82 rescues that had to be done in homes and about a maximum of 20 for stranded vehicles in Pelham, Alabama alone.

Alabama Flooding; President Biden Approves Disaster Declaration

This event also caused a lot of casualties. At least four people died including children. Most of these deaths were vehicle-related meaning to say that the victims got overwhelmed with water while they are in their vehicles. These people and their respective families are in our thoughts.

When there's a flood, there's also bound to have damages on multiple infrastructure and properties. 

The Presidential Declaration

As of December 21st, President Joseph R. Biden Jr. approves the disaster declaration for Alabama. This declaration is in order to provide federal assistance to the state's residents' wellness and recovery from the damages of the flood. The President’s action makes Federal funding available to affected individuals in the counties of Jefferson and Shelby.

According to the Federal Emergency Management Agency (FEMA), major declarations like this generally mean that provide a wide range of disaster assistance programs for individuals and public infrastructure, including funds for both emergency and permanent work.

Alabama Flooding; President Biden Approves Disaster Declaration

How It Helps

The federal assistance includes grants or financial assistance for temporary housing, low-cost loans to cover uninsured property losses, and other programs to help individuals and business owners in Alabama recover from the effects of the October flooding. Most importantly, this also includes home repairs.

Focusing on the damages of the storm on properties, we want to focus on how this assistance can help recovery efforts for both residential and commercial properties. Damage assessments will be made based on your property's cost to repair and not the cost of repair.

Cost to repair basically focuses on the actual value of your property in its before-damage condition or before it was damaged by the October flood. This also includes any necessary actions to meet the basis for hazard mitigation against floods as set by FEMA. We also call this flood mitigation which acts as the first line of protective measures to reduce the damages when floodwater starts to inundate your property.

Calculating this will be managed by the federal assistance team, but you can also do this by following the formula below:

Alabama Flooding: President Biden Approves Disaster Declaration

Cost of repair generally is concerned with any specific action done to repair a property. For example, getting your paint and tape redone will have cheaper costs and doesn't guarantee that it can bring back the property to its pre-damaged condition.

It's important to keep in mind this major difference between the two as you may also be involved in recovering, repairing, and rebuilding your home. Property damage as a whole will be considered and not just the specific costs to certain repairs being done to your home.

Recovering from flood damage can be very tedious especially now that Risk Rating 2.0 expects homeowners to have all of their properties meet flood mitigation efforts or else face expensive flood insurance rates from FEMA. This is for the best considering that flood loss isn't something to be taken lightly.

Alabama Flooding; President Biden Approves Disaster Declaration

If you have questions on the cost to repair your home, if you have flood insurance and want to know how this can be helped with the new disaster declaration, or anything related to floods, click below to reach our team.

The Flood Insurance Guru | 2054514294

You can also go to our Flood Learning Center where we try to answer your flood insurance questions.

Flood Insurance Guru | Service | Knowledge Base

If you are one of the eligible homeowners in Shelby and Jefferson County, Alabama, you can begin applying for assistance by registering online at http://www.DisasterAssistance.gov or by calling 1-800-621-FEMA (3362) or 1-800-462-7585 (TTY) for the hearing and speech impaired.

Remember, we have an educational background in flood mitigation which lets us help you understand your flood risks, insurance policy, and mitigating your property long-term.