The Flood Insurance Guru Blog
Today, we're talking about what happens when flood insurance isn't enough? What happens if you don't have the right coverage? if there's a gap between the amount that your loan is for and the amount maybe the National Flood Insurance program offers? We're going to talk about some resources when it comes to assistance. Who's responsible in these different types of situations?
So today, first of all, we want to talk about the National Flood Insurance Program. The coverages that this program offers are 250,000 for your residential dwelling, that's the max you can get through them, and 100,000 for contents. Then you have what's called, Excess Flood, which you can use on top of this to go above and beyond. Then you also have what's called, Private Market, which you can pretty much take in up to $10 million, if you wanted to.
If you have a $400,000 to $500,000 house you really want coverage for that amount. Let's just say, even though your bank only requires $250,000 and your property is a total loss. You could be on the hook for another $150,000 to $250,000. When you're meeting with an insurance agent to get your flood quotes, you want to make sure that they understand this. You want to make sure they have access to the National Flood Insurance Program, to private flood, and to excess flood. The Nashville Flood of 2010 started to show some major gaps in what insurance agents where offering their clients. Many agents were just offering the normal $250,000 by the NFIP, few were offering excess flood, and even fewer were offering private flood. When getting flood insurance in Pelham Alabama, Nashville Tennessee, Huntsville Al, Memphis Tennessee, Atlanta Georgia, Phoenix Arizona and even areas like Toledo Ohio these are questions you want to ask.
In some of these areas that have consistent problems, when it comes to flooding, you want to make sure you have all the options out there. The last thing you want to happen is that if something does happen and you don't have enough coverage there. This can create a disaster situation like it did in Houston TX in 2017 where many are facing bankruptcy or foreclosure.
So the next question is who’s responsibility is it? Well first of all as insurance agents its our responsibility to properly educate consumers on the risks and what every option is. If we only offer one option for flood insurance then it as our responsibility to let the property owner know that so they can obtain the proper coverage. Once we have provided the property owner with every possible option it is up to them to decide how they want to protect their property. As in most things, preparation, in the form of documentation, is key. Plans and procedures should be instituted to document all coverages offered and declined and to track and follow up on any and all premium payments made. In the absence of documentation of these efforts, the proofs needed to defend a broker would likely devolve into a “he said, she said.” This can complicate a defense leaving the issue of credibility to a jury, which can tend to be predisposed to dislike insurers and those associated with insurers they decide to only insure for $250,000 instead of the $400,000 that the loan is for it is important that they understand what resources are out there to fill that gap.
Now, what we also want to talk about, what happens when flood insurance isn't enough? Are there resources out there? Yes, there are. FEMA's Disaster Assistance Program is available when disaster relief is going on in certain areas. Now, FEMA is not going to cover things that flood insurance would cover. Your flood insurance is going to have to cover that first, and if the flood insurance just doesn't get you back to where you need to be, then FEMA does have a process you can go through and request additional funds. For example, you might be able to get up to three months of additional living expenses with FEMA, even though it's not offered on flood insurance, if it's in a disaster relief area. You might be able to get certain things covered that flood insurance didn't cover. So there's a whole process you have to go through in submitting these things to FEMA to see if they'll approve them.
Now, if they were to deny you, you can still go through about a 60 to 90 day appeals process to see if you can get some of this funding. Disaster assistance is available in many of these situations, but what's important is that you understand, disaster assistance is not a grant program. Disaster assistance is, actually, a small loan program. What's happening is the disaster assistance program, especially, as I said, in areas, really, across the country that are taking on a lot of flooding right now. As we're mentioning, flood insurance in Nashville, Tennessee, flood insurance in Birmingham, Alabama, flood insurance in Huntsville, Alabama, flood insurance in Anniston, Alabama.
These can all be areas that are unfortunate, because of flooding. But, as I said, you really want to understand the difference between what FEMA is going to cover, with the National Flood Insurance Program and what private flood is going to cover and what's going to cover the gaps? Because, unfortunately, as the borrower of a loan, that responsibility is going to fall back on you. When you go to get these flood quotes, let your insurance agent know what your loan amount is. This way, if it's way over what the 250 requirement is, they can put the proper coverage in place for you. If they can’t reach out to someone like The Flood Insurance Guru.
If you've got questions exactly what coverage might be right, when it comes to flood? Do I need to cover my home for same thing on flood, as I do on homeowners? That's a big question that's always out there. How much flood insurance do I need? Do I have to have flood insurance? Then please reach out to us regarding that. Fill out the form to learn if you have gaps in your flood insurance.
Hello, Chris Greene here with The Flood Insurance Guru, where we have an educational background in emergency management with a specialization in hazard and flood mitigation. We can help guide you through what your flood insurance options are, what your flood risks are, and helping you mitigate and reduce those risk. Today, we're going to be talking about three types of flood zones. We're talking about flood zone X, flood zone A, and flood zone AE. The benefits of being in each one, the dangers of being in them, and what coverage is right for each zone. The first thing we're going to talk about is flood zone X, or what's called the minimum risk flood zone. Any time anybody hears this, they start cheering because this means that it's not mandatory. However, 30% of flooding actually occurs in flood zone X. The reason for that is a lot of flash flooding. Flood zone X does not have a base flood elevation and as I mentioned before, it's not required when it comes to your mortgage company, so a lot of people don't carry it. What happens is, when losses occur in this area, most people don't have it because it wasn't required.
For example, most of Houston that flooded was in a flood zone X and they were told they didn't need it. So, many of them either had to face bankruptcy or foreclosure because they couldn't afford to repair their houses. Also, one of the things to understand about flood zone X is most people think they can't get flood insurance in this zone because it's not what people say is in a flood zone. Everything's in a flood zone, this is just low risk. That's actually completely false. Flood zone X actually has some of the best rates out there. Because it's a preferred zone, FEMA would rather you be proactive when it comes to protecting your belongings and protecting your structure. For that reason, most of the time with flood zone X you've got a rate of between $300 and $500 a year. Something to also understand is that flood insurance does have to be paid up front, so there's no way to do a monthly payment or anything like that on there. When it comes to flood zone X, as I said it's minimum risk, it's not going to be required by your mortgage company, but it's recommended that you do carry flood insurance there because that's where a majority of flash flooding does occur.
The next zone we're going talk about is flood zone A. Flood zone A is an area that is undetermined when it comes to the base flood elevation. What the base flood elevation is is what FEMA has determined that in the likelihood of a flood the level that water would come up to. What happens is a lot of people go out and get an elevation certificate. What an elevation certificate is is basically a surveyor comes out and surveys your property and gives you the different elevations of your home, like the top and the bottom floor, lowest [inaudible 00:02:51] grade, maybe an attached garage, your crawlspace, your slab, or your basement. Then they can compare that to the base flood elevation so maybe they can get your flood zone changed. The problem with flood zone A is many times, as we mentioned before, there's no base flood elevation, so many people waste money getting an elevation certificate because it's not going to help them because there's nothing to compare it to. This is one of the risks of living in a flood zone A and not knowing, many times, about elevation certificates, because everybody thinks you have to have an elevation certificate in order to get a flood quote, which just isn't true. Especially on the private market. Generally, elevation certificates are not going to be required for you to get a policy through the private market.
When elevation certificates are going to be required is when your houses has been built after the first flood insurance rate map or 1974, whichever one comes later, or you've had a substantial improvement to a property that was built before 1974. These are really the only two situations of when you're going to need an elevation certificate. Many times, as I mentioned, it can't help you. However, in flood zone A you have to be cautious. Find out if there's a base flood elevation before reaching out to a surveyor to have them come out and survey your property and maybe you waste $700 - $800. You can reach out to any local insurance agent, who should be able to do what's called a zone determination. This is just determining what flood zone you're in and what the base flood elevation is. You can reach out to any local insurance agent. You can also reach out to us here at The Flood Insurance Guru when it comes to something like this.
The last zone that we're going to talk about is the highest risk possible outside the coast. This is called an AE zone. An AE zone is also known as a 100 year flood zone. An A zone is known as a 500 year. All these are probabilities of a flood occurring within a certain timeframe. As I mentioned, A is going to be your highest risk. This is where your premiums are going to be really high, in this particular zone. It's important to understand when you're purchasing a house how these kind of things can impact your mortgage. If you were to be put into a flood zone A, how do you get it changed? What are you options there? But, the majority of flooding does occur in flood zone AE because it is your zone. These are generally going to be areas that are along the river, or maybe these are areas that are really flat, where water is coming in from another level, like a creek or run-off or something like that. It's important to understand that flood zone A is going to be your highest risk possible and flood zone A and AE are both going to be required for you to carry flood insurance if you have a mortgage or an additional interest on the property.
When it comes to maybe getting those zones changed, there's certain processes you can go through, but today we just want to cover what flood zone X is? It is the minimum risk zone, where it's not going to be required, but remember about 30% of flooding does occur in flood zone X. A zone is generally going to be an area that may not have a determined base flood elevation, so before ordering an elevation certificate, make sure to verify with a local insurance agent or us here at The Flood Insurance Guru what zone you're in. In an AE zone an elevation certificate could greatly benefit you there if you're changing it from an AE to an A. It might change your rate $2,000 to $1,000 a year. Like what we recently did with a client who had flood insurance in Pelham, AE is going to be the highest risk out there. If you've got questions about these zones or you've got questions about other zones, you're not sure what flood zone you're in, you can always reach out to us. www.floodinsuranceguru.com. You can go to our Facebook or our YouTube channel, The Flood Insurance Guru. You can even give us a call. 205-451-4294. If you want to learn more about your flood insurance options when it comes to these zones, you can also fill out the form below.
Hello, Chris Greene, with the Flood Insurance Guru here, where we have an educational background in emergency management with a specialization in hazard and flood mitigation. So we can help you understand your flood insurance options, how to minimize your flood risk, and possibly even how to get your flood zones changed. Today we're going to be talking about the major impact that the new flood insurance rates to the National Flood Insurance Program are going to have in areas like Pelham, Alabaster, and Helena Alabama.
Effective January 1st, 2019 the National Flood Insurance Program has put in some rate increases. Today we're going to talk about those rate increases, when it comes to residential properties, investment properties, secondary properties, lake properties, second home, commercial properties, properties that have been newly mapped to a new high risk zone, and preferred policies.
So the first thing we're going to talk about is primary residence. This is going to be your primary home. Let's say you have a policy now through the National Flood Insurance Program. It costs you $1,000 a year. You're looking at a 7.2% rate increase this year, effective January 1st, 2019, which is going to have an impact on you of about $72 a year, which isn't too bad. The big impact is going to be in areas like secondary residences, commercial properties, like we've mentioned. These areas are having a 24.2% rate increase. So let's say that you have a rental house that you're renting out, and it can't be considered your primary residence. Your flood premium is $2,000 a year then you are looking lat almost a $500 rate increase per year, and that's just this year. So this could have a big impact on profitability for a rental house.
Some other areas. Let's say you have a commercial business that has to have flood insurance and your flood premiums are $2,000 a year, you're looking at almost a $500 per year rate increase, for this year. The good thing is on other things like your preferred policies or zone X It's only having a 1%. So on a $1,000 premium, you're literally talking about a dollar and that's it, which is great news for these areas.
Remember, minimal risk areas or zone X generally have flooding 30% of the time. So just because you're in that low risk zone doesn't mean you don't need flood insurance. It just means that FEMA has not determined it to be a high risk area, and has not determined the base flood elevation. Other areas where you're going to see a rate increase are what's called newly mapped areas.
So let's say that a property is mapped to a flood zone AE, which is a hundred year flood zone out from a flood zone X. Of course, during the first 12 months, you can take advantage of new mapping rules, which basically gives you that preferred policy rate for the first 12 months. Well, you're going to see a 15% rate increase on those policies now. Now also remember that rate is only good for the first year, and that is there to help you adjust to what your flood premium's going to be. So it's very important that you look at these things.
It's also important that you understand the private flood insurance options and all your flood insurance options overall in Pelham, Alabaster, Helena, Alabama all these different areas where you're going to start seeing a lot of these flood rate changes. So if you've got questions about these rate changes, what your flood insurance options are in Pelham, Alabama, you can always reach out to us 205-451-4294. You can reach us on our website, FloodInsuranceGuru.com. You can even go to our YouTube and on our Facebook channels where we do daily flood videos, The Flood Insurance Guru. Want to learn more fill out the form below to learn about the flood insurance options in Pelham, Al.