The Flood Insurance Guru Blog
In episode 7 of The Flood Guru Podcast we are discussing everything elevation certificates. So many people think when purchasing flood insurance you have to have an elevation certificate and this is not the case. Also many people get an elevation certificate when one is not needed because it would not help. We discuss some things to look for to avoid wasting money on an elevation certificate. We also discuss the price of an elevation certificate and who can do it.
Remember we are here to help you understand your flood risks, flood insurance, and mitigating your property. Visit our website Flood Insurance Guru to learn more.
.Today we are discussing should the government be involved in flood insurance or not. The National government has been looking at privatizing flood insurance.
Flood premiums have continued to come through the years. Some areas have seen more than a 700% premium increase over the last 10 years. The National Flood Insurance Program is more than $20 billion in debt. Each time a disaster hits they have to be given more money to provide the right disaster assistance to property owners. This has many people upset and desperate to find another option. So the conversation is started in D.C. should the government privatize flood insurance? Lets talk about this a little bit.
One of the major struggles with privatizing flood insurance has been making sure a stable private option is in place. Congress wants to avoid a company taking on a large amount of losses and not being able to keep affordability. Another struggle has been making sure people in areas that continue to flood are protected. One last thing has been correctly determining risk but private companies are actually doing a better job of this because of technology.
These struggles have made it very challenging through the years. So what do you think? Should flood insurance be privatized? Comment below to let us know what you think.
If you have questions about flood insurance or private options you can always visit our website Flood Insurance Guru. You can also visit our YouTube channel or Facebook page where we do daily flood education videos.
In this episode of rumor has it we are talking about the rumor that there is a law requiring elevation certificates. While elevation certificates might be required in certain situations there is no law that states they are required for new flood policies.
Let's talk about when they may be required. First of all there are two types of structures. We have pre-firm and post-firm structures. Pre-firm structures are structures that were built for 1978 or the first local flood map. Post firm structures are structures that were built after the first flood map.
Lets talk about when elevation certificates might be required on these structures. First on pre-firm structures elevation certificates are not required unless one of two conditions exist. Either the property has had an addition or been substantially improved. In order to be considered substantially improved generally a property has to have 40-50% improvement within a given year.
If either of these conditions exist then the year built of the property changes to when these things take place. However even if these things have taken place it still doesn't mean an elevation certificate will be required. A property still has to be in a special flood hazard area or a flood zone A or V in order for an elevation certificate to be required. Now lets talk about post firm structures.
On post firm structures it doesn't matter if a home has had additions or not if it . is in a special flood hazard area then an elevation certificate would be required. What's important to understand is these elevation certificates are only going to be required if you are going through the National Flood Insurance Program for your flood insurance.
So if you have questions about if you need an elevation certificate or not please visit our website Flood Insurance Guru. You can also visit our YouTube channel or Facebook page where we do daily flood education videos.
So you found out that you need flood insurance and that you also need an elevation certificate. So you start your search for some one to complete it. Generally this will be done by a surveyor. However before you have it completed you want to ask a few questions.
Here are 5 questions you should ask before hiring a surveyor.
1. Are you licensed
2. How long have you been doing this?
3. How long will it take to get certificate
4. What happens if some of the information is wrong
5. Will you provide color photos
So lets talk a little bit about why these questions. First of surveyors are generally licensed by a state board. This board makes sure that they follow certain ethics and guidelines. The next thing is how long have they been doing this? You want to make sure you are working with someone who has a lot of experience doing elevation certificates as they can be confusing and FEMA can be demanding.
Once they do the work how long will the certificate take? Whether you are waiting on the certificate to get insurance or get a flood zone change you need to know how long it will take. If it is going to take up to 7 days it may have an impact on your home closing if you are purchasing a property.
So you get the elevation certificate back but something is wrong. Your house is a slab but says basement or it says you have an attached garage and you don't. You want to make sure the surveyor is willing to make quick changes if some of the information is wrong. If they are not it could have a huge impact on your flood insurance rates or FEMA may not accept it at all.
The last question you may want to ask is if color photos will be included. If they are not it won't be a deal breaker. You just may have to take them on your own. The reason is if you are doing a new policy through FEMA they will require a color photo of each side of the house. This helps them verify the foundation time, lowest adjacent grade and other things. It also important to know photos must be taken within 90 days of new policy being set up.
As you can see there are a lot of things that go into a surveyor doing an elevation certificate. You want to do your homework to make sure they are done correctly as many are not. So If you have questions about surveyors or elevation certificates please visit our website Flood Insurance Guru. You can also visit our YouTube channel or Facebook page The Flood Insurance Guru where we do daily flood education videos.
So you get a call from the bank about the home you are trying to buy or already own. They state its in a high risk flood zone and they are requiring flood insurance for the loan amount. So you start searching for flood insurance to cover the loan amount. This is where 3 dangers of covering the loan amount can be created which are cost to rebuild, personal property, and additional living expenses.
Let's discuss those three dangers of getting flood insurance for the mortgage loan amount. Let's say you own have a loan amount of $75,000 on a 2500 square foot house more than likely $75,000 is not going to rebuild it. While it is great that the loan amount would be covered if it was a total loss, but most flood losses are not total losses.
So how would you come up with the difference to repair your home. Well if you are in a presidentially declared area you might get a little disaster assistance or be able to apply for an SBA loan . What happens if you get declined?
Well you could be on the hook for the difference which could be more than a $100,000 hit to your wallet. This is why it is so important to insure your home for whatever the replacement cost is but many flood companies don't calculate this so what do you do? Well it is recommended that the flood insurance matches what the home insurance policy states.
The next danger that only covering the loan amount for flood insurance does is it exposes your personal property. Remember if your home floods your home insurance generally will not cover your belongings. If you are only covering the loan amount you could lose everything you own. So how much personal property coverage do you need? Well we generally recommend fifty percent of what ever the house is being covered for.
So the last danger is like pouring gasoline on the fire. So you only covered the loan amount and now you have lost all your belongings, so where are you going to stay. Well if you don't have temporary living expenses listed you might be in a shelter if you are lucky. This would pay for a place for you to stay while your property is being repaired.
As we have shown you only covering the loan amount for flood insurance can be a very dangerous situation. So if you have questions about how to add these other coverages or which coverages to pick please visit our website Flood Insurance Guru. You can also visit our YouTube channel or Facebook page where we do daily flood educational videos.
Today we are discussing the availability of flood loss history on a property. How will the release of this information be beneficial? How will it impact realtors, sellers, buyers, and banks?
For many years the public has been pushing for FEMA to make flood loss history on a property available. However FEMA has always made this information private and only available to the current property owner. As of June 2019 this information now available, so what does the release of this information mean?
Well lets talk about how it can help benefit possible home buyers first. Historically when it comes to buyer beware states like Alabama property owners did not have to disclose the flood loss history since FEMA did not make it available. As you can imagine many people are shocked to find out that their property has flooded before. Many property owners may not have purchased a property had they known it has flooded before. So the June 2019 flood insurance loss release can really help these potential property owners make the best buying decision with the correct information.
Now lets talk about how it could hurt sellers a little bit. As you can imagine if a house has flooded it can scare off a lot of buyers. It can also have a big impact on getting the most for your home when selling. One reason is if it has flooded multiple times a property could be on the severity loss history list. This can make flood insurance very expensive and very difficult to sell a house in the future.
As a realtor having this information can be very valuable because now you can be prepared if you are going to list a house and if you are a buyers agent you can help protect your clients better. Some areas where this is going to have a huge impact are areas like Muscle Shoals, Centre, Owens Cross Roads, and Hokes Bluff Alabama. Knoxville Tennessee, Houston Texas, and areas of New Jersey will also see big impacts. All these areas have seen historic flooding in the past. So this release of flood insurance loss history will protect the buying party.
What will be interesting is how banks treat the release of this information. Certain loan types like FHA have strict appraisal guidelines. So could the release of this information lower appraisal values? Yes it absolutely could if appraisers are able to use verified flood damage in determining values of homes.
Lets be clear the release of this information is a good thing. While it may have a negative impact on some parties like sellers, it gives the public the information they need to make the best decision. So how do you get this information in your hands.? Well it is available at OpenFEMA if you have questions about flood loss history on a property or you want to see how it could impact your flood insurance rates then visit our website Flood Insurance Guru. You can also subscribe to our YouTube Channel or like our Facebook page where we do daily educational videos.
Today we are discussing how the recent FDIC flood insurance ruling will impact the government loan process and people who have a government loan.
First we need to discuss what kind of loan is considered a government loan. These loan types are going to generally be FHA, VA, and USDA loans.
Up until July 1st 2019 the only flood insurance option for people with government loan has been the National Flood Insurance Program. It has been a long term battle getting banks to accept private flood because it follows different guidelines from the National Flood Insurance Program. One reason is the National Flood Insurance Program is regulated by the government are rates are the same. However as NFIP has been hit one disaster after another these rates have skyrocketed. Some property owners have seen rates go from $3500 to $15,000 over a course of 10 years.
As you can see the need for a much more affordable option flood insurance has been needed for a while. However there have been a few concerns the ability for claims to be paid out, finding a long term stable option, and getting private carriers to follow the same guidelines.
One of the struggles of affordability have been how each company determines rates and risk. We can all agree that NFIP has needed to update its mapping accuracy for a long time. However as private companies have come along they have started to use different technologies that are helping them more accurately determine risks.
So as the deadline approaches how is this going to impact the government loan process? Well NFIP has a payment guideline of 30 days if a mortgage company is making a payment at closing. However many private carriers require a property owner to make the first payment up front. This could cause some buyers to come up with more money before closing eliminating some of the 0% downpayment loans.
Something else that could have a huge impact is how flood insurance impacts a persons debt to income ratios. This is how many banks determine if someone will qualify for a loan. So lets say you have a $2000 NFIP quote and a $600 private quote that could be more than a $100 a month on a mortgage payment. So this could help more buyers get into a house they want or get more house for the money.
When it comes to coverages we are talking about two different worlds. NFIP maxes out at $250,000 on building while private flood insurance does not. Private flood insurance provides temporary living expenses while NFIP does not. Lastly private offers replacement cost on contents while NFIP doesn't.
So lets recap a little bit about what impacts the FDIC ruling on flood insurance will have. It will give a much more affordable flood insurance option in many situations, a policy that offers more coverage, and could require buyers to pay up front for flood insurance policies.
So maybe you have a government loan and want to know how this will impact you? You can visit our website Flood Insurance Guru. You can also visit our YouTube channel or Facebook page where we do daily flood education videos.
2019 has seen alot of flooding across the country. So much rainfall has fallen in certain areas that there just isn't anywhere for the water to go. So hard decisions are having to be made like spillways and dams being opened up flooding people down stream.
Areas like the Mississippi and Missouri rivers have shown us that hard decisions have to be made when there is no where for the water to go. Sometimes spillways have to be opened up or dams have to release more water downstream than they want. This is exactly what happened in areas like Fort Smith Arkansas, Tulsa Oklahoma and on Lake Keystone in Oklahoma. So what happens?
Well when this water was released downstream properties and lives can be lost, so who is responsible for the damage? Well if you have flood insurance the damages should be covered if either 2 acres is flooded or more than 2 properties. If you don't have flood insurance then you might be able to get disaster assistance if a presidential declaration is filed. However areas like Centre Alabama showed us earlier this year sometimes there just isn't enough disaster assistance. This area had about 25 property owners get flooded with only $5000 in disaster assistance available.
When living in areas like this that are downstream from dams its important to keep your flood insurance active at all times, especially with all the climate change going on. Its also important to understand how your communities dam maintenance can impact local flood insurance rates.
So maybe your property was recently flooded from a spillway or dam being opened and you want to know what your options are? Please visit our website Flood Insurance Guru. You can also find our daily flood education videos on our YouTube channel and facebook page.
The Nebraska flooding that occurred in early 2019 caused widespread damage across the state. Homeowners, property owners, and farm owners lost everything. So now that the flood waters are gone what is taking disaster recovery so long? One thing that slows down the disaster recovery for an area is flood insurance.
Disaster recovery is a long road as areas like Nebraska and Iowa have shown us. What makes disaster recovery even longer is disaster assistance and flood insurance. FEMA has stated that disaster assistance is not intended to make you whole again after a disaster, but to have some things covered to get you back on your feet. After Hurricane Harvey in Houston FEMA stated that it paid out an average of $4000 on disaster assistance compared to $110,000 on flood insurance. So as you can see the lack of flood insurance can really slow down a disaster recovery.
So how is this impacting the Nebraska flooding disaster recovery? Well according to FEMA less than 1% of property owners who had flood damage in Nebraska had flood insurance. As a result 99% of property owners who had damage are depending on disaster assistance. So why did so few property owners have flood insurance? Well unlike coastal areas like Galveston and Houston Texas who have to deal with the threat of flooding often due to hurricanes, areas like Nebraska do not. According to FEMA Nebraska experiences a major flood every 5 to 10 years. As a result many property owners do not see the exposure serious since it is a passive hazard and does not happen often.
One reason these people do not carry flood insurance because they have been told they are in a low risk flood zone and can get it. This is completely false flood insurance actually has better insurance rates in low risk zones.
Another reason is they have been told there is only one flood insurance option and its not affordable. This also is not true you have access to the National Flood Insurance Program and private flood insurance.
The third reason why so many property owners did not have flood insurance is they were told that flood insurance is not affordable. The average flood insurance policy cost around $750 a year which covers up to $250,000 on the building and $100,000 on contents in most situations. So let's say you pay this premium for 10 years which is a premium of $7500 and you have a deductible of $2000 then suffer a flood loss. The flood loss could cover up to $350,000 compared to not having flood insurance and getting maybe $5000 from disaster assistance.
As you can see not having flood insurance can really slow down a disaster recovery period after a flood disaster. So if you have flood insurance questions or want to know what options are available in Nebraska click the link below to learn more. You can also visit our website Flood Insurance Guru, our YouTube Channel, or Facebook page The Flood Insurance Guru where we do daily flood education videos.
In this video we discuss the recent extension of the National Flood Insurance Program. What does it mean for you? Watch this video to see how you might be impacted.