The Flood Insurance Guru Blog
The National Flood Insurance Program also known as the NFIP has been broken for a very long time, but they are attempting at starting to fix it. Before we can discuss why it is broken we must understand why the program was created.
The NFIP was created in 1968 as a response to the lack of availability of flood insurance and continued availability after a flood. What is the goal of NFIP? The NFIP has three goals provide flood insurance, floodplain management, and develop maps of flood hazard zones. As we have mentioned before the NFIP has been broken for a long time, but why?
In 1968 when NFIP was set up the need for flood insurance availability was crucial and provided a great option for that. However lack of technology, adaption, and government funding have handicapped the program for many years. When it was originally set up it addressed issues of continuous flooding along areas of the Mississippi river. This helped people in areas like Memphis Tennessee, Saint Louis Missouri, and New Orleans Missouri. As the program has exceeded 50 years old many changes have been needed and cost have continued to rise as a result of the number of flood disasters. Massive development across the country has removed many protective measures over the years that has exposed many areas to flooding.
For example when a new neighborhood is built trees are removed and land is cleared. What happens when this land is cleared is it changes elevations numbers. So areas that may have been above the base flood elevation before may not be anymore. As this has happened over the years it has put a lot of stress on the NFIP because the number of disasters.
This stress level has continued to rise as many rates have had to be subsidized to make It affordable. When this happens NFIP cannot collect the funds it needs to cover the risk correctly creating a continuous increase of debt.
When dealing with any government agency change can be challenging to get done. This is exactly what has happened with NFIP. As mentioned before land development has had a major change on the flow of water through areas across the country. As this has happened NFIP just can not keep up with the need to map these areas every year. Lack of adoption of technology has caused many of these areas to be mapped wrong. Let’s look at some areas like New Orleans that has recently been newly mapped.
2005 taught us a lot of things about flooding especially in low lying areas. New Orleans sits below sea level which exposes it to flooding more. So of course this area should be in high risk zones but NFIP recently put it into a low risk zone. Because of the mapping they are using has put many property owners at risk. Houston Texas showed us this as many of these areas were considered low risk and should have been high risk. Areas of Nebraska along the Missouri river have shown us the same thing with snow melt flooding occurring in 2019. There are many more stories like this across the country. So as the need for NFIP change is needed what will actually change?
NFIP recently announced the launching of NFIP 2.0 in 2020. There are many drastic changes that are taking place. A few of these changes include expansion of coverage in the program and flood zone ratings. Right now NFIP only offers building coverage on residential properties up to $250,000 but with the expansion of NFIP 2.0 this coverage is expected to increase to $500,000 which will be a great benefit to property owners. It could change the requirement banks have on properties as well. As of right now banks can only require $250,000 but with this expansion that requirement is expected to increase to $500,000. As of now there are standard ratings for high risk flood zones across the country. The new program is expected to take this to a new level where high risk flood coastal areas have different ratings than high risk flood river areas.
Another area that NFIP is addressing is the accuracy of flood premiums. Many people live in areas where premium is way too low and there are other areas where premiums are way too high. Let’s talk about low risk zones where premiums are generally around $500 a year. Low risk areas along the coast should obviously have higher ratings than low risk areas in Birmingham Alabama. They way it stands now these two areas would have the same ratings.
Higher risk areas like AE zones are the same way a lot of it depends on different foundation types and elevations of the home. As NFIP works towards changing these rating factors a more accurate rating system will hopefully become available. What NFIP wants to do is have rates based on how the structure relates to the flood zone. For example if a structure is in the center of a 100 year flood zone it should have a higher rating than a structure that might be on the edge of the flood zone, assuming they have the same elevations.
Private flood insurance companies have already adopted some of these factors into their rating system. This is one reason why private carriers can be more accurate on their rates right now and also know the risks to stay away from.
One of the other things that NFIP 2.0 hopes to minimize is the ability for people to rebuild in severe loss areas. These are areas that continue to get flooded but NFIP continues to help people rebuild. They hope to make it harder and harder to rebuild in these areas by enforcing higher mitigation standards and not offering coverage for the same pricing in these areas. The elimination of grandfathering rules also hopes to raise premiums in these areas where the correct premium can be collected for the correct risk. For example some areas might be able to grandfather a rate at $500 a year when it should actually be $2000 a year. As you can imagine this could put stress on any program even if it was not government funded.
As mentioned before these are changes that people have been asking for a long time. It could have a negative impact on many property owners and could even force some people out of their homes. However these are changes that are desperately needed in order for the program to stay in place.
If you have questions about flood insurance, maybe your policy is misrated, or you want to see if you can get your property removed from a flood zone then fill the form out below.
Flood insurance for decks.... Is your deck impacting your flood insurance rates in Knoxville TN, Memphis TN, Huntsville AL, Birmingham AL, or Atlanta GA?
We are always getting a lot of questions regarding flood insurance for decks. So today we want to answer a few of those questions. First of all are decks covered for flood insurance?
Coverage for decks can be a little tricky lets’ say you have a deck that surrounds a pool but the deck is not attached to your home. This type of deck would not generally be covered. There are some exceptions in coastal flood zones where flood insurance in Florida, South Carolina, Alabama, Georgia, and North Carolina may cover these types of decks. Some private carriers are also starting to cover detached structures like decks on their flood insurance policy, but generally speaking these types of decks are not going to be covered on a National Flood Insurance Program policy. Lets talk about a little bit different scenario which is attached decks.
Attached decks are decks that are permanently attached to the primary structure. NFIP states that these types of structures are covered by their flood insurance policy. The condition is they meet the same guidelines as the structure, if they do not then they would not be covered. The next thing we want to talk about is how these decks can impact flood insurance rates.
You may or may not know it only takes a tiny piece of your property to be in a special flood hazard area in order for the entire structure to be in one. For example 99% of your home is in a low risk zone or zone X, but the very corner of your house is in a special flood hazard area then the entire property is in a high risk zone. So how do you change this?
Well unless you plan on raising up the foundation of your home which could cost thousands to do there is not much that can be done. However the same cannot be said for decks that cause the same issue. We speak to people everyday who are looking at making additions to their homes like decks. They always want to know how will it impact their flood insurance? This is a valid concern and one that should come up more often. Many people put themselves into high risk flood zones without realizing it. So what can be done?
When an a surveyor performs a survey they can complete an elevation certificate that measures the different elevations of the home, attached structures, and detached structures. If it is found that your deck falls within the special flood hazard area, then you have a few options. The first thing you can do is have that portion of the deck removed which should remove the entire structure from the special flood hazard area. You could simply leave the deck and get flood insurance on the property. If you do these there are tow different paths to go.
The two paths for flood insurance are the National Flood Insurance Program which we have already mentioned and then private flood carriers. What is the difference? One is backed by the government and other is backed by private insurance companies. Generally FEMA is going to have higher rates in these areas, because they cannot pick and choose the risks they take on like private carriers can. The third option is detaching the deck from the structure.
As crazy and as difficult as this might sound, it is becoming very popular. If the deck is not attached to the structure then it should not impact flood insurance rates. Now you would not want to simply detach it but move it a good distance away from the structure like 5-10 feet where you can clearly see it is its own structure.
While flood insurance on decks can be challenging it doesn’t have to have a major impact on property values by following some of the actions we have discussed. If you have questions about exactly how decks are covered? Maybe a deck is impacting your flood insurance rates then please fill the form out below to see how we might be able to help you with this problem.
Floods can be devastating especially if you don't have the right resources. Having additional living expenses on a flood insurance policy is crucial. First of all what are additional living expenses?
Additional living expenses are where you are given additional funds to pay for rent and utilities while your property is being repaired from a flood.
Most people are unaware of additional living expenses when it comes to flood insurance because it is not offered on a policy from the National Flood Insurance Program. While it is not offered as part of a NFIP policy there are still a few ways you can get it.
One way to get additional living expenses on a flood insurance policy is by doing a private market flood policy. What is private flood insurance? This is flood insurance that is offered by a private flood insurance company compared to NFIP which is backed by the federal government. Generally most of these policies will provide additional living expenses up to $25,000.
Another way to get additional living expenses covered is if a presidential disaster declaration has been declared. This paves the way for additional funds to help certain communities during a disaster. One of those resources is temporary living expenses. One important thing to understand is sometimes this assistance can be in the form of a small loan and have a limitation of up to three months.
Recent flooding in Muscle Shoals Alabama, Birmingham Alabama, Knoxville Tennessee, Omaha Nebraska, Des Moines Iowa, and Minneapolis Minnesota have shown us how important additional living expenses can be. Let's say these areas suffered some flooding but not enough for a presidential declaration then temporary living expenses would not be available unless the property owner had private flood insurance.
A homeowner in Nebraska recently said if it was not for having additional living expenses on her flood insurance policy she is not sure what she would have done. So when reviewing what flood insurance covers and what flood insurance does not cover you always want to pay close attention to things like additional living expenses.
If you have questions about how to get this coverage or other flood insurance coverage then please fill the form out below.
Today we're talking about if you’re flood zone has changed, can you get a refund on your flood insurance? Well, we want to talk a little bit first about the different Flood Zones, and how exactly this scenario will play out. Remember that we have an educational background in hazard and flood mitigation. So what that means for you is we can help you understand your flood risks, your flood insurance, and help you mitigate your property against flood and other hazards long term.
So today we want to talk about what happens when your Flood Zone changes. Can you get a refund on your premiums? What are the scenarios? Well, we want to talk about the three main Flood Zones especially when looking for flood insurance in Knoxville TN, flood insurance in Birmingham, AL, flood insurance in Memphis TN, flood insurance in Atlanta GA, flood insurance in Montgomery Al, and flood insurance Minneapolis MN These flood zones are flood zone A, flood zone AE, and flood zone X.
Flood zone A is going to be like a 500 year Flood Zone and all this is a probability.
Flood Zone, AE is going to be a 100 year flood zone, or just the probability of a flood occurring during a given time period.
Flood Zone X, which is the minimum risk zone these include areas like Houston Texas, Nashville Tennessee, and Toledo Ohio. Probability for this zone, is not really determined because it's so low risk. The benefit of being in a Flood Zone X is flood insurance will never be required if you have a mortgage, or an additional interest on your house.
However, if you're in a Flood Zone A or AE, it is required. So today we want to talk about your flood zone has just recently been changed, can you get a refund on your flood insurance premiums? Well first of all, in order to get that refund, certain things have to happen.
So let's just say that your Flood Zone has changed from an AE, which is the highest outside the coast to an A. This recently happened in some areas like Savannah Georgia. What you want to do is reach out to your local insurance agent, or the Flood Insurance Guru to make sure your policy is rated correctly. Because if you were in the AE, and now you're being moved to an A, it could be a big difference in premium for you and could lower your mortgage payment. So you want to make sure it's rated correctly. Property owners in areas like Minnesota have seen significant savings because of taking this action.
Now, let's say that you were in a Flood Zone A and you were moved to an AE, then what's going to happen is you're actually going to see a difference in premium as an increase because you're going to a higher zone. Now where you're going to see a big difference is if you're moved from a Flood Zone A, or floods on AE, to a Flood Zone X. What this means is you're being moved out of a mandatory flood insurance zone to a non-mandatory. So it's not going to be required that you carry it.
However, it's highly recommended because 30% of flooding does occur in Flood Zone X. Even after back to back years of flooding areas like Tybee Island Georgia and Saint Simons Georgia recently had this happen. As mentioned before zone changes are done on historical data, so even though a property recently flooded does not mean a zone will change. What we really want to talk about is are you going to be able to get a refund? How much of a refund are you going to be able to get? So when you are moved to a flood zone X which is no longer required, what that means is the requirements were moved. So when that happens, FEMA will send you a letter and usually your mortgage company, if you have one, you will get a letter saying, this is no longer going to be required. So at renewal we're no longer going to require you to have it, which is great. Then they take the requirement off your mortgage. More importantly, how do you go about getting maybe that refund for this year?
Well, what happens is as soon as that zone is changed, you can go in and show that letter to the mortgage company, and you could actually either cancel the flood insurance policy and get a prorated refund for that year. Now, what we recommend doing, instead, is just having it rerated as a Flood Zone X keeping the flood insurance policy. As we've mentioned, flooding occurs about 30% of the time in Flood Zone X. So let's just say you're paying $1,200 a year for Flood Zone A, or $2,000 a year for Flood Zone AE, and they move you to an X, generally you're going to be looking at about $450 to $500 a year for that rate.
So we recommend just basically changing the zone on your flood policy and keeping that flood policy. Now, if you choose not to keep it, what's going to happen when it comes to your refund? Let's say that you've had that policy for six months. When this Flood Zone change is done, then you're going to get six months of premium back. Now, here's the next question. You've had flood insurance for all these years, are you going to get it back? No, you're only going to get back the prorated amount for the current year. That's really important to understand, because a lot of people think, hey, I didn't need it all these years. Can I get my money back?" The answer to that question unfortunately, is no.
We just recently had a customer who's been in a high risk Flood Zone that we helped them get their flood zone change to a minimum risk zone. So we took him from that high risk policy to a minimum risk policy. The problem was they had the opportunity to do this for 20 years, but no one showed them how to do it. Once we completed that, of course the customers kind of upset and no one ever showed them how to do this. He could have had some significant savings over the last 20 years. So it's very important that you look at this every year, just like you look at your auto insurance and you look at your home insurance every year at renewal. It's very important that you look at your Flood Zone every year for these types of situations.
You want to make sure that you're still currently in the right zone. So what you want to do is reach out to any local insurance agent, or the Flood Insurance Guru and have them run what's called a zone determination. What that does is it's a determination to see what Flood Zone you're currently in. You want to check this every year because FEMA does do a lot of flood map changes. So for example, if you don't have a mortgage on your house, you may not even know that your Flood Zone changed, because you're not being notified.
The only way you're going to notice maybe if it's in a local newspaper, or a local city council. If you have a mortgage, you're generally going to get a letter in the mail from them. Or if you have some kind of additional interest on a property, you're going to get some kind of letter in the mail from them. So if you've got questions about how to get a refund when it comes to your flood insurance, how to maybe get your zone changed, or are you overpaying? Is there a way to get some of that money back? Please reach out to us, www.floodInsuranceGuru.com. Go to our YouTube or Facebook channels, the Flood Insurance Guru, where we do where we do daily flood educational videos. Or you can give us a call, (205) 451-4294 you can also simply click down and the link below and we'd be happy to walk you through some different scenarios that might be able to help you significantly when it comes to your flood insurance. Thank you.
February 2019 was one of the wettest months ever across the state of Alabama. As the state was already in a surplus for rainfall because of a very wet 2018 hazardous situations developed.
The ground could not take any more water and as a result the additional 9-12 inches of rain that month had no where to go. Many of the rivers and lakes in the area are managed by the power company and it even caught them off guard. As rainfall totals started to rise local lakes rose quickly and many dams could not handle the additional water. As a result many areas began to flood that have not flooded in 50 years.
One of these areas was Nathan Estates in Muscle Shoals, Al where people where told they didn't need flood insurance because they were in a flood zone x. So what is a flood zone x? Well lets discuss the three main flood zones outside of the coast..
The three main flood zones are X, A, and AE. Flood zone X does not have a base flood elevation because it is a minimal risk zone. However 30% of flooding occurs in these areas as a result of flash flooding. To give you an example of low risk areas that have been impacted, the majority of flooding in Houston, Texas after Hurricane Harvey was in low risk zones. Same thing for many parts of North Carolina after Hurricane Florence. Flood insurance in these areas may not be required but it is highly recommended and very reasonable. A policy in a flood zone x or preferred zone generally runs around $500 a year.
Flood zone A is the next zone this is generally areas that are in the 500 year flood zone. This is simply the probability of flooding occurring during a given year. If you have a mortgage and live in this zone then flood insurance is going to be required.
The last of three main zones is flood zone AE this is considered a high risk zone or also a 100 year flood zone. Just like flood zone a this is just the probability of flooding occurring during a given year.
Now that we know the three main flood zones how can this recent flooding event impact flood insurance rates in areas like Birmingham, Huntsville, Montgomery, Anniston, and even Cullman Al. Well these flood zones are determined based on historical data. So an event like this could change low risk zone to a high risk zone even though your property may not have flooded, it could also possibly take you from a high risk zone to a low risk zone.
So what happens if your property is moved from a flood X to a flood zone A or AE? Well FEMA tries to update these maps every year but generally 2-3 years is probably more accurate. How will you be notified? If you have a mortgage then you will received a letter from your mortgage company but if you don't then they will simply put a notice in the paper.
So once this new zone goes into place what can you do to fight it? Well for the first 12 months FEMA allows whats call the new mapping rule. This is where they give you the preferred zone pricing for the first 12 months to help you adjust to the rate. You can also get an elevation certificate to show that your home is above the base flood elevation. You can also look at the private market for flood insurance where many different options are provided.
As we mentioned great options through the private market you have to be cautious because these are the first companies that will non-renew your policy after an area has a lot of flooding.
These type of flooding events can have a major impact on future flood insurance rates. We always recommend reaching out to The Flood Insurance Guru when looking at the different flood insurance options in Al. If you have questions about your current flood situation or want to learn more fill the form out below.
In this video we talk about the 2019 flooding in Knoxville TN that could have a big impact on flood insurance rates.
Most people do not realize that flood zones are based on historical data, so this flooding could have a big impact on future flood zones. For example properties that are currently in a low risk zone may move to a high risk zone. If you have a flood insurance policy through the private market they could non- renew the insurance policy due to claims in the area. Have questions about flood insurance in Knoxville Tn fill the form out below.
Today we're talking about, what are the flood insurance options in Knoxville, Tennessee? Do you have more than one option? What are the resources out there? Well, today we're going to talk a little bit about that. When you're out there getting quotes for flood insurance, you want to make sure you're working with a flood insurance expert. Maybe someone who has an educational background in it, like The Flood Insurance Guru, especially if you're searching for flood insurance in Knoxville, Tennessee, or surrounding areas.
You have several different options when it comes to flood insurance. The first one we're going to talk about is, really, just your traditional policy through The National Flood Insurance Program. Now, you have a couple options here, depending on when your house was built. Let's just say your house was built before 1978, or before the first flood map in Knoxville, Tennessee was put into place, then your property is what's called a Pre-FIRM Property. What this means is, an elevation certificate is not going to be required unless more than 50% of the building was improved within a given year.
Now, an elevation certificate might significantly help your rate, it might completely eliminate it, but it would not be required. Now, let's say your house was built after 1978, or after the first flood map was put in place in Knoxville, Tennessee, then if you're in, what's called a, flood zone AE which is 100 year flood zone, it is going to be required that you have an elevation certificate, if you're going through the National Flood Insurance Program.
However, if you're just in a regular zone A, which is a 500 year, flood zone, you may not be required. It depends if there's a base flood elevation or not. Because if there's not a base flood elevation, or one hasn't been determined, then an elevation certificate could be a complete waste of your money. So, these are just some things you'll want to be cautious about when searching for flood insurance in Knoxville, Tennessee.
Now, that's just the traditional policy for the National Flood Insurance Program. You still have a few different options there. Let's just say that, your purchasing a home, and someone there already has a policy on the property. Then you have the options of doing what's called a policy transfer, where you transfer the policy from one homeowner to the next. The only catch is, flood insurance premium is paid in full, whether it be by the mortgage company, or the homeowner.
So, if you're going to do a policy transfer, that seller has to be willing to walk away from the premium they've already paid. Now, many people will do this because they want to sell their home. However, that's just something you must understand. The benefit for the buyer of that house, though, is they don't have to pay anything on flood insurance until renewal.
Now, your next option is, other than doing a traditional policy through the National Flood Insurance Program, or a policy transfer is, let's say that your house was built to date of compliance, and you have an elevation certificate dated back to 1990, when the house was built. It shows that, then you can grandfather that property back to 1990s flood map. Now, the National Flood Insurance Program is slowly doing away with grandfathering. The reason is they're giving you a much better rate compared to the actual risk that is there currently. So, what it's doing is creating some additional exposure.
So, when it comes to flood insurance, you've got grandfathering, you've got a possible policy transfer, which is still all part of the National Flood Insurance Program, then depending on your loan type, who have an option called the private market.
Now, the private market's a little bit different than FEMA. FEMA, or National Flood Insurance Program, is mandated and funded by the federal government. Private insurance company, generally, when it comes to private flood insurance, most of that is funded by a company called Lloyd's of London, which the group of different companies.
There are some admitted and non-admitted companies. What is an admited company? This is a company that must follow state guidelines. If your non-admitted, it's called a surplus company, and you may not have to follow by state guidelines. What happens is, you also take the risk of this company possibly moving out-of-state without your claim being paid out. So, it's something you really want to think about when you're thinking private.
Now, there are some tremendous benefits that going through private compared to the National Flood Insurance Program. For example, the National Flood Insurance Program in Knoxville, Tennessee maxes out at $250,000 on residential properties when it comes to building coverage, and $100,000 on contents. And, generally, you don't have replacement in these things. Things that also aren't available, or additional living expenses. So, if your house floods, FEMA's generally not going to pay for, maybe, a hotel or for you to rent a place while yours is being fixed, a private flood policy would. Private flood's also going to provide replacement costs on a lot of things. They're going to be able to go up the $10 million in coverage if you want it to.
So, those are some things to think about when you look in the private market. The other thing is, if you have something high-risk. So, your house is more than 4 feet below base flood elevation, you're probably not going be able to find a good option in the private market. The reason for that is, private flood insurance can pick and choose what they want. FEMA kind of has to accept things the way they are, because it's a government program. Now, they might give you a different kind of rate, but they're not going to turn you down because of it, and they can't, because it's a federal program.
So, one last option that you may have, depending on some scenarios where your house is, is what's called a Letter of Map Amendment or Letter of Zone Change, which we do do here at The Flood Insurance Guru. Llet's say you get an elevation certificate, and your base flood elevation is 100 feet, but your lowest adjacent grade is 101 feet, and it hasn't had any flood losses. Then what we could do is take that information to FEMA, submit it to them, and say, "Hey, we are above the base flood elevation here. We shouldn't be in a high-risk zone." And many times they will say, yes, you're correct. We're going to issue a Letter of Map Amendment., which usually takes 30 to 60 days.
Then what we do is, we go through the process of getting this back from FEMA, submitting this to the mortgage company, having the mortgage company's requirement taken away that you have to carry flood insurance. This does two positive things for you. Now, it can help increase your property values, now that flood insurance is no longer required, and it allows you to take out a preferred policy with the National Flood Insurance Program, or even private flood, where you can get a preferred policy for about $450 year. It's going to give you that $250,000 in coverage, or 100,000 a year contents, or maybe more through the private market.
So, if you've got questions about what exactly your flood insurance options are in Knoxville, Tennessee, please reach out to us, floodinsuranceguru.com. You can go to our Facebook or YouTube channels, The Flood Insurance Guru. You can even fill the form out below, and we'll be happy to get in touch with you, with what exactly each one of these options may mean for you.
Today, we're talking about what the flood insurance options are in Birmingham, Alabama? When it comes to Birmingham Alabama you have multiple options for flood insurance, especially depending on what part of Birmingham you're in. Maybe you're in a suburb like Vestavia, Hoover. Maybe you're actually in the city of Birmingham. Maybe you're in Pelham or Alabaster. Well, today, we're going to talk about the various options.
First, we'll talk about doing a policy just traditionally through the National Flood Insurance Program, which is the FEMA or federal government funded program that most people think about.
Now, you can do a traditional policy through them. Depending on when your house was built, you may have to have an elevation certificate, you may not. First of all, what is an elevation certificate? Well, an elevation certificate is a certificate that shows the different elevations of the different areas of your home. What it's used for is to compare your home to what's called the base flood elevation, which is the level that FEMA predicts flooding could come to, so if your house is way below it could have a big impact on it. If your house is above it, you might be able to get some things changed.
Now, if your house was built before the first flood map, you have what's called a prefirm property, so an elevation certificate should never be required, unless the building has had substantial improvements which is more than 50% within a given year. Now an elevation certificate could greatly benefit your rates. However, it's not going to be required.
Now, if your house was built after the first flood map, and you're in 100 year flood zone or what's called an AE zone, then an elevation certificate more than likely is going to be required, through the National Flood Insurance program.
Now, you may ask how much is an elevation certificate? Well, generally an elevation certificate costs roughly $500 to get done. Any surveyor should be able to come out and get it done for you, within seven to ten days.
Now, option number two is if you're purchasing a home in Birmingham Alabama, or Vestavia, Hoover, one of the surrounding areas, and the current homeowner has a policy through the National Flood Insurance program, then you can do what's called a policy transfer. What this is? It is when the policy's being transferred from that homeowner to yourself when you purchase the house. The only catch is that seller has to basically eat that money that they have paid for that flood insurance for that year. The benefit to you though is you don't have to pay anything until renewal. Now you might ask, Why would someone do this? Well, they might have a preferred rate, maybe a flood zone changed, and so when you do a policy transfer right now, it could keep you in that preferred zone. It keeps you in those preferred rates. This could be a difference of $1,000 or $1,500 a year. Policy transfers can be a great benefit.
Now FEMA's starting to phase these out, because what's happening is they're realizing that they're keeping flood insurance at a much lower premium in areas where it should be a much higher premium because the risk is higher, which leads us to our next option what's called grandfathering.
Let's say that your buying a house. It doesn't have flood insurance now, or the flood insurance is being required, but the house is built in 1990. If you've got an elevation certificate or something that shows a lowest adjacent grade back to 1990, you can do what's called a grandfather. Where the house is grandfathered back to 1990, because it was built to compliance and you have proof that shows that. This is another way that you can grandfather. As we mentioned before, FEMA's doing away with these, because when your grandfather something back, you're lowering the rate. But the problem is, you're not lowering the risk. So they're taking on a lot more burden if a claim does occur.
Option number three, which is if they're still part of the National Flood Insurance Program is let's say that the elevations have changed, and the base elevations at 100 mfeet, but the lowest adjacent grade of your property's 102 feet. Then what we can do is take that information off the elevation certificate, make sure that there haven't been any flood losses, and we can submit it to FEMA and say, this should not be in a high risk flood zone, it should be in a low risk zone. FEMA will come back and say yes, you're right we can clearly tell. So we're going to do what's called a letter of map amendment. Or map change. This something that is currently taking place in areas like Karey Drive in Centerpoint, Al. So what we'll do is we send a letter to the mortgage company in Birmingham, Alabama, and when they do that, the mortgage company takes away your requirement. Now, this does two great benefits for you as a property owner. What it does is, it helps you increase your property value, because flood insurance is no longer required on that property. This may have been negatively been impacting you or maybe when you try to sell the property. Now, that's no longer a requirement.
The other benefit is, now that it's not required that you have it, and the zone's been changed, you can get a preferred policy for about $450 a year for coverage up to $250,000 on the building, and $100,000 on contents. Now, the last option is called the private flood insurance, and this is through private carriers. You may ask, how is this different in the National Flood Insurance Program? Well, the National Flood Insurance Program is backed by FEMA. Private flood insurance is just like it sounds. It's backed by private insurance carriers. A big difference is, FEMA basically cannot turn somebody down, because it's through the government. Private insurance companies can pick and choose what they want. They can turn you down, because your house might be a certain level below the base flood elevation.
You might ask, What is a base flood elevation? Well, base flood elevation is just the level of where FEMA feels like flooding could occur at. Maybe it's 100 feet, maybe it's 150 feet. That's something that pulls up when we order a zone determination. When you're looking at all these different options, you want to reach out to a flood insurance expert in Birmingham, Alabama, like The Flood Insurance Guru that has an educational background in flood mitigation, and can show you the accurate numbers when it comes to base flood elevations. Private carriers bring good news with that is you might get a great rate with double the coverage that you would through FEMA.
The bad news though is, let's say you have a claim. They might be able to non renew you, which that generally is not going to happen with FEMA. They might skyrocket your rate, because of a claim, but they're probably not going to non renew you. Just because they know there's no other option, and because you have a federally regulated loan through your mortgage company, it's going to be required. Some of the benefits of private flood insurance is, as I said they offer a lot more coverage than FEMA, where FEMA maxes out at $250,000 on a residential properties in Birmingham, the private carriers might go up to two million, three million, or four million. . They're going to be able to give you replacement costs. FEMA is generally is not going to be able to do that. FEMA is not going to give you coverage for additional living expenses while your house is flooded. Private insurance company will usually pay up to about 10% or $25,000 for additional living expenses while your house is being repaired. They may even give you contents coverage in your basement, which generally FEMA's not going to require.
There's some big differences there, and it can be big differences in pricing. If you've got questions about these different options we've discussed today, like the traditional National Flood Insurance Program policy, the policy transfer, the grandfathering, the letter of map amendment, or private flood insurance, please reach out to us www.floodinsuranceguru.com. You can also go to our YouTube and our Facebook channels, The Flood Insurance Guru where we do daily videos about flood insurance in Birmingham, Alabama. You can also just click the form below, fill the form out below, and we'd be happy to get in touch with you about what your different options are when it comes to flood insurance. Thank you.