Is It A Basement Or Not: How Does It Impact Flood Insurance Rates in Minnesota

Minnesota has more lakes than any other part of the country and people love a view of those lakes from their homes, especially on Lake Minnetonka. Many homes in Minnesota also have basements or at least they think they have basements.

Many of these homes in Minnesota have whats called walk outs.

Are these really basements?

Thats one of things we want to talk about today. It depends who you ask if this is considered a basement.

So what is a walk out ?

According to FEMA a  walk out is a structure where most of the walls of the lowest level are partially or completely below ground level and one wall is at ground level.

FEMA's definition of a basement is a structure where all 4 sides of the building are below ground.

We mentioned that walkouts have an entry level that is at the ground level. However they can still be basements. If there is a stair case immediately behind the door going below ground then this is considered a basement by FEMA. However if not then its not considered a basement.

So if its not a basement then what is it?

Well let's talk about elevated buildings and how they are different from basements.

Elevated Buildings

Elevated buildings can be in a few different forms like open enclosure, closed enclosure, partial enclosure, and walkouts.

So what is an elevated building?

An elevated building is as a building that has no basement and that has its lowest elevated floor raised above ground level by foundation walls, shear walls, posts, piers, pilings, or columns.

Let's take a deeper look at what elevated buildings with walk outs are?

A structure where most of the walls of the lowest level are partially or completely below ground level and one wall is at ground level is called a Walkout.

Now that we have a good understanding of basements and elevated buildings with walkout, let's look at the impact on flood insurance.

When talking about flood insurance premiums for basements it should not come as a shock that this can be where some of the highest flood insurance premiums in Minnesota are charged, but why?

If you have seen some of our flood educational videos or read some of our other blogs that you know that two of the biggest driving factors for flood insurance premiums are location and elevation.

Homes with basements in Minnesota have some of the highest flood insurance premiums in the state. The reason is that these types of homes normally have the most negative elevation. However the real questions is how many of these homes should actually be considered an elevated building with walk outs?

Say you own a home on Lake Superior in Minnesota you have come to expect that your flood insurance premiums are going to be high but they keep climbing, why?

One reason could be if you live in a home that was built before the first flood map and you have not provided an elevation certificate then it could be possible that you are being over charged for flood insurance every year.

Just recently we helped a property owner discover that their home was an elevated building and not a basement. We were able to help the property owner get these corrections done effective on the first day of the new term for the flood insurance policy. As a result the customer has an additional $2000 in their pocket.

Saving money on flood insurance is great and all, but what about when a claim has to be filed. This is where there is a big difference between basements and elevated buildings. We hear from property owners all the time that are shocked that they did not get anything for their basement after a flood or they got everything covered.

One reason for this the confusion about basements like we mentioned earlier alot of people are not aware of elevated buildings with walk outs. Those that have a basement generally are not going to be as happy with their claim as those that do not.

The reason is as the FEMA manual and private flood insurance companies guidelines state they limit coverages for anything that is below grade. While the National Flood Insurance Program will cover some things in a basement like things that make a property safe. Some examples includes things like a circuit breaker, furnaces, freezers, and stair cases. It will also cover things like foundation walls.

Where the coverage really gets limited though is on contents.

Let's say that you finally saved enough money to turn that basement into a man cave. You have put in new dry wall, sofas, and big screen TV's. Its been an usually cold and snowy winter. The snow pack is about 300% higher than it has been in years past. Spring arrives with its rainfall melting the snow at a much faster rate than normal. You come down stairs the next morning to realize that you have 4 feet of water in your basement or elevated building, who knows what it is.

You make a call to your insurance agent to get the flood claim process started. The adjuster comes out to look at things and gives you the shock of a lifetime when they tell you that none of your belongings in the basement are going to be covered.

You scream Whatttt!

The adjuster explains that the contents are below grade and there was a clause in the flood insurance policy stating that contents coverage would not be included for anything below grade.

Now is not the time to find out that you didn't have any coverage because you thought you had an elevated building with a walkout, but the stairs going to the door make it a basement.

Now its important to remember that private flood insurance companies do offer some coverage for contents in basements but it is still very limited.

As you can see understanding the difference elevated buildings with walk outs and basements is important for three reasons

1. Flood insurance premiums
2. Better coverage
3. Understanding expectations when a claim occurs

If you have further questions about flood insurance for basements or elevated buildings make sure to visit our website. You can also check out our daily flood education videos on our YouTube Channel or Facebook page The Flood Insurance Guru.