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Is Affordable Flood Insurance coming to Alabama?

Is Affordable Flood Insurance coming to Alabama?

Alabama has been really at the center of flood events and this type of incident may not help flood insurance for property owners across the state.

Is Affordable Flood Insurance coming to Alabama?

In this blog, we want to answer: Is affordable flood insurance coming to Alabama?

 

Flooding & Alabama

If you live in Alabama, flooding might not be new to you however these flood events still surprise homeowners across the state. One of the biggest flood events that happened in recent times is the flood of October 2021.

This was when around 6-10 inches of rain was dumped on the area causing widespread flooding. The Birmingham area alone received at least 4 inches of rainfall with central Birmingham receiving more than 6 inches of rainfall. This immediately led to flash flooding in the area.

 

So you might be wondering, how can I fight these flood risks that I face especially in Birmingham, Alabama in Jefferson County, and Shelby County?

 

PROTECTING ALABAMA

One of the best answers to this question is getting flood insurance however this may be challenging for property owners as some insurance companies in the private flood insurance market started to pull out of some parts of the state. This generally might be due to the higher risks that these areas face.

Since homeowners insurance policies generally don't have flood coverage, most of these homes are left to go run to the National Flood Insurance Program (NFIP) for a flood insurance policy. With Risk Rating 2.0 and the NFIP, average rates can be around thousands of dollars.

This is especially true if you already filed a flood insurance claim for that damage and it starts to get considered on your claims variable. However, this may change significantly once the proposal of the Department of Housing and Urban Development (HUD) kicks in on December 21st later this year.

 

FHA Accepting Private Flood Insurance

We recently talked about this new flood proposal to further strengthen flood insurance options for property owners. This proposal from the HUD aims to allow expand the availability of flood insurance options for FHA-insured loans.

 

Generally, this new proposal will allow the purchase of flood insurance through private insurance companies when previously FHA-insured loans can only get a flood policy from the National Flood Insurance Program (NFIP).

We've detailed this new bulletin in our blog which you can read by CLICKING HERE.

So why is this a big help for making flood insurance more affordable in Alabama?

 

Private Flood Insurance Option

In order to understand, why getting the private flood option added as a consumer choice for FHA-insured loans, we first need to establish how a standard flood insurance policy is different from the NFIP and private insurance companies.

A flood policy from the National Flood Insurance Program (NFIP) will provide coverage against flood damage for residential properties for a maximum of $250,000 on building coverage and a maximum of $100,000 on contents or personal property coverage. This amount can only go up to $500,000 if you have a commercial property.

Flood Insurance Guru - Flood Risk Verification Tool

This is where private flood insurance coverage can really be different. Generally, private flood insurers do not have any coverage limits. This simply means that you can go way above that $250,000 limit for building coverage. The same can be said for their protection on contents that can be much higher than $100,000. Moreover, you can also get additional living expenses with private flood.

How FHA Accepting Private Flood Impacts Coverage Requirements

Another difference is that wait periods are generally shorter. With the NFIP, you are going to see a 30-day waiting period for your flood policy to take effect on your insured building. On the other hand, most private flood insurance carriers can have your policy take effect from 7 to 15 days maximum.

 

Affordable Flood Insurance

So, with this proposal changing flood insurance options in Alabama, this could also mean that homeowners, business owners, and other property owners like renters or investors would be able to find an alternative with the NFIP. We might be seeing a decrease in flood insurance premium rates of around 20% to 30% just by going through private flood.

Get A Quote

Giving people more options on their flood protection can really also help encourage people to get flood insurance and really reduce the risks of facing millions of dollars in damage to structures.

If you want to know your flood insurance options, how to handle your flood insurance in Birmingham, or anything related to floods, click below to go to our Flood Learning Center where we try to answer these questions for you.

Flood Insurance Guru - Flood Learning Center

Ready to solve your flood insurance problems? Here are the steps you can take:

  • Fill out this form — Get A Quote
  • Talk with our flood education specialist.
  • Get back to the important things in your life.
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