One of the biggest things that a lot of property owners might be worried about flood insurance is the mandatory purchase requirement. But, in some cases, you can actually fight this.

In this blog, we talk about how flood insurance can be canceled after getting your flood zone changed.

Changing Your Flood Zone

When it comes to flood insurance, it's important that you also are aware of the flood zone designation, especially for your property. One of the key things to remember is that flood zones are not permanent and they can change over time.

Let's just say you have a property that's mapped into a low-risk flood zone like flood zone X, this doesn't mean that that building will stay in that zone forever. This is especially true as flooding impacts how flood insurance rate maps (FIRM) work.

How to Cancel a Flood Insurance Policy After a Flood Zone Change?

Sometimes, when a flood insurance rate map update comes to your community, this could mean that you might see your property get moved into a high-risk area like flood zone A or flood zone AE. Having your property or building mapped into a high-risk flood area generally results in a mandatory purchase of flood insurance.

To see your revisions to your community's flood maps, you can CLICK HERE to visit the official website for FEMA flood insurance rate map (FIRM) changes.

How FHA Accepting Private Flood Impacts Coverage RequirementsHow to Cancel a Flood Insurance Policy After a Flood Zone Change?

This requirement might come from your mortgage lender or the state law itself such as the Federal Emergency Management Agency's (FEMA) standards. But, what if you know that your property shouldn't be in a high-risk flood zone? How do you fight these changes?

This is where what's called a Letter Of Map Amendment (LOMA) comes in to save the day.

Letter Of Map Amendment

A Letter of Map Amendment (LOMA) is an official document that's issued by FEMA to process the change of a flood zone designation for a property. A LOMA is achieved after a successful application for a Letter of Map Change (LOMC) thru FEMA's official website.

Flood Insurance Guru - Flood Risk Verification Tool

It helps to have the necessary information and documents when applying for a LOMA. One of the helpful supporting documents you can provide is an elevation certification. Although elevation certificates are no longer required — especially with the recent update to the National Flood Insurance Program (NFIP) and Risk Rating 2.0 — this can really help a lot in proving the validity of your request to be mapped out of a high-risk area.

An elevation certificate will show a more accurate representation of your property such as its risks from flood water, base flood elevation, its exact distance from your lowest habitational floor, and other relevant information.

Get Elevation Certificate

Once you get a LOMA secured for your property and have your property removed from the Special Flood Hazard Area (SFHA), that's the time when the mandatory flood insurance purchase will also be removed.

Canceling Flood Insurance

The next step is to inform your flood insurance carrier or provider that you are intending to cancel your flood insurance. Again, it's important to note that being moved out of a high-risk flood zone will automatically cancel your flood insurance.

In order to cancel your flood policy, you must send a signed cancelation letter to your flood insurance carrier. Regardless if you have a private flood insurance policy or federal flood insurance, you must show them this document to certify that you are intending to cancel your flood policy.

After this, you also need to inform your bank about the cancelation by sending them the same signed cancelation letter so they would no longer enforce the flood insurance purchase requirement on your property.

How to Cancel a Flood Insurance Policy After a Flood Zone Change?

This is important as both the flood insurance company and your bank are the ones determining the flood insurance requirement for the property. Additionally, you may also send them the Letter of Map Amendment (LOMA) that you were able to get to show them that your flood zone has been changed.

Flood Risks Now

Removing the flood insurance requirement with your property may really help in saving some money from flood insurance premiums however it's really important to remember why a purchase of flood insurance can help you long-term.

When it comes to actual flood risks, the reality is that even low-risk flood zones can be flooded too. This also means a Letter of Map Amendment (LOMA) won't guarantee that your home no longer has flood risks.

This is why we still encourage property owners to get flood insurance coverage for their property. A single flood policy will be able to provide building and contents coverage, so both the structure and your personal property inside it will have flood protection.

If you have questions regarding flood zones, flood insurance, or anything flood-related, click below to access our Flood Learning Center to get your answers.

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  • Fill out this form — Get A Quote
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2020 has been a year that no one will ever forget. There are three things we want to look at in 2020 and how they could impact the future of coastal private flood insurance.

  1. Covid
  2. Social Injustice
  3. Hurricanes

 

                                                           Covid

When Covid hit in March of 2020 it caused many businesses to come to a crashing halt.

The hospitality industry has basically been non existent and you couldn't pay someone to get on a cruise ship. Airlines are barely surviving. As this happened businesses turned to their insurance companies for coverage.

However many were surprised to find out that most insurance policies don 't cover this type of disaster. Government put pressure on insurance companies to provide coverage. However its difficult to provide insurance coverage when a premium was not charged for a risk.

As these businesses started to close they started to cancel their policies. This started to impact insurance companies as businesses were no longer needing insurance for a closed business. While this was a minimum impact on the bottom line when you add the next two things it creates a major problem.

 

                                 Social Injustice

2020 has seen the rise of social injustice and unrest across many parts of the country. Portland Oregon has seen many businesses burned and even Atlanta Georgia saw businesses damaged after a man was killed in an altercation with police. 2020 was problem the first time in 50 years that you have seen moratoriums put in place by insurance companies for selling business insurance.

At one point Target had to close its Minnesota stores because of looting.

 

                                                Hurricane Season

Now onto the third maybe the biggest thing to impact insurance companies in 2020. The 2020 hurricane season was predicted to be busy but no one predicted it to be this busy. In fact NOAA has had to make several adjustments to their hurricane predictions for 2020.

As we write this blog at the end of October in 2020 we have had 27 named storms, 11 hurricanes have made landfall in the U.S. and 5 hurricanes have made landfall in Louisiana.

This ties the record for most landfalls in a year within one state. Florida set the same record in 2005.

Hurricane Sally, Marco, and Delta have all created major damage in the gulf states. In fact Delta and Sally made landfall only 15 miles a part.

Like most people in 2020 insurance companies are eating through their reserves fairly quickly and they are discovering that many of their risk models were off.

So what does this mean for coastal states like Florida, Alabama, Mississippi, Louisiana, and Texas.

In Mississippi we are already seeing some private carriers halt business completely and we have seen this in Louisiana for a few years. Texas has also had this issue since Harvey.

We could see this pattern start to work its way towards Florida and Alabama.

Does this mean flood insurance will not be available?

No

The National Flood Insurance Program is available for properties where communities participate. It just means that the private flood insurance options could be limited for a while.

This will be a crucial time for you to work with an insurance agency that can defend your risk?

What does this mean?

This means being able to show how a risk may have changed because of mitigation efforts even if it has flooded. We see customers rejected everyday because someone did not defend their property correctly.

If you have questions about what your flood insurance are in these areas then click here. You can also check out our

where we do daily flood education videos. You can also check out our

Remember we have an educational background in flood mitigation. This means we are here to help you understand your flood risks, flood insurance, and mitigating your property.

 

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It's the question that gets asked probably a hundred times a week. Insurance agents, property owners, and even banks want to know the answer.

Everyday we see FHA loans fall apart because of flood insurance. Many times flood insurance through the National Flood Insurance Program can be higher. Then you might have to pay the cost of an elevation certificate.

In 2019 FDIC made a major move in the industry when it started to allow private flood insurance.

People assumed this meant FHA would start accepting private flood insurance. However, because FHA insures loans they have different guidelines they do not accept private flood insurance. As of July 2022 FHA still only allows flood insurance through the National Flood Insurance Program, but hopefully, that will be changing soon.

On November 10, 2020 FHA made an announcement they were looking at accepting private flood insurance. They opened up a 60 day comment period for people to leave comments on this possible action.

So what happens next and what will be the impacts?

 

What's Next

After this 60-day comment period FHA will look at the comments and probably make a decision by the 2nd quarter of 2021. If they decide to approve it then they would probably delay it going into effect by 6 months. This is what FDIC in 2019.

So what could the impacts be?

 

The Impact

Well if you currently have an FHA loan then these could possibly cause a major decrease in your mortgage payment. You might see a 40% rate decrease in the private market.

 

However if this is passed don't go and try to jump to the private market right away.

FEMA has strict guidelines for cancellation. Unless you are refinancing your house you may not qualify until your policy is up for renewal.

 

In 2019 we saw a lot of people lose money because of FEMA cancellation rules. Many times private carriers require payment up front and charge minimum earned premiums.

This means you might be out 25% of the money you paid for a private policy because FEMA won't let you cancel.

 

We will continue to monitor this situation and continue to educate the public as this process moves forward. If you have questions about your flood insurance options then click here.

Want to learn more about flood insurance?

Check out our YouTube channel and Podcast.

Remember we have an educational background in flood mitigation which means we are here to help you understand flood risks, flood insurance and mitigating your property long term.

 

Buy Flood Insurance Now!

Flood zone AE also referred to as the 100 year flood zone has the highest premiums other than coastal areas. These are generally because most of the structures have a negative base flood elevation. So what determines the premiums of these zones?

Well there are a few things that have a major impact on flood premiums in these zones. The age of the structure, the foundation type, flood loss history, and the elevation of the home.

Let's start with the age of the structure depending on when the house was built it will have a different rating model through FEMA. Its based on the first flood map for structure which generally occurred after 1978. If it was before the first flood map its called a PreFirm structure and if its after the first flood map its called a PostFirm structure. One of the big differences between these two types of structures is called grandfathering where you can keep the property in a preferred flood zone that no longer exists. This is allowed on PostFirm structures but not PreFirm structures.

The next thing that has a major impact on flood insurances rates in flood zone AE is the foundation type. Let's start with crawlspaces above grade compared to subgrade. Above grade is a crawlspace that sits above ground and subgrade is going to be crawlspace that sits partially below ground. The big difference here is subgrade generally will sit a certain level below the base flood elevation which increase the premium. While above grade sits above ground it could still be below the base flood elevation. The difference is things like flood vents can significantly lower the premiums with above grade crawlspaces.
The next type of foundation that will have a major impact on premiums are basements. As you can imagine basements can sit a good distance below the lowest adjacent grade creating a significant negative elevation. This can have a big difference on the rate so its very important to understand this when owning a house and purchasing a house. Also just because a basement is below grade does not mean that it is below the base flood elevation. Now that we have talked about foundations lets talk about how the elevation of the home in a flood zone Ae can impact the rate.The only real way to know this is to have a survey or elevation certificate completed. Now that we have discussed how the elevations of a home can have a major impact on flood insurance rates as you can see from the different foundation types.

Lets talk about positive elevations first and how they can have a big impact. The further your home is above the base flood elevation the better the rate is going to be. If all the elevations of your home are above the base flood elevation your home might even qualify for a letter of map amendment. This means that your property might be removed from the high risk flood zone and placed in a low risk flood zones causing a big improvement to property values. Now lets talk about the impact of negative elevations. As mentioned above basements can cause a home to have an extreme negative elevation. The higher the negative elevation a home has the higher probability of a flood occurring. This can create a double edged sword because the NFIP rates can be through the roof sometimes exceeding $10,000 a year for non coastal properties. However the other problem is the higher the negative elevation the less likely that a private insurance carrier will offer coverage on a property. So these are some things to think about when buying a home with a basement or building a home. we have discussed the impact foundation types can have on a structure lets talk about flood loss history.

Flood losses can have a major impact on a property. It could even stop a property from selling if severe enough. Generally when one flood loss occurs you would lose the preferred rating with the NFIP if you had one. Having a flood loss can also eliminate most of the private flood insurance options as most will not insure a property that has had a loss. However when the second loss and paid claim occur is when disaster can strike. This can turn a property into a severity loss property which has to follow certain mitigation guidelines in order to get insurance through the National Flood Insurance Program and private flood insurance is not available on these type of properties. This is why you should really review things closely before filing a flood insurance claim.

Have questions about flood insurance? Click the link below or visit The Flood Insurance Guru Find My Flood Risk & Flood Rate

Alabama has been always front and center when it comes to concerns of flooding. It's no surprise then that one of the biggest worries of property owners is their flood risks and equally where they land when it comes to flood maps.

In this blog, let's talk about the different flood zones in Alabama. We also want to discuss what areas are in a required flood zone and what areas aren't in a required flood zone.

Finding My Flood Zone in Alabama

Flooding in Alabama

Just in the last 2 to 3 years, the number of flood risks in the state of Alabama has drastically increased compared to the last 10 to 15 years. This is very much evident in how common it became for some areas in the state that receive 10 inches of rain in a 12-hour period. This immediately shows how higher the chance of flooding is becoming for most of these areas which become flood-prone. This is also why some areas find it uncommon to see at least 4 inches of rain just within 2 hours.

Finding My Flood Zone in Alabama

About a week ago, Limestone County in Alabama was immediately terrorized with flash floods to a point where Chapman Hollow Road at Alabama 99 had to be closed by Commissioner Townsend because due to all of the water that was over the road. This is after Limestone County got about 1.49 inches to 3.20 inches of rain last Tuesday.

This type of scenario shows how much floods have changed in the last few years in Alabama, and it warrants a proper explanation of how flood zones have a hand in this concern.

Understanding Flood Zones in Alabama

The first thing you need to know about flood zones in Alabama is that we generally separate these between low-risk flood zones and high-risk flood zones. Historically, low-risk flood zones were also called preferred risk zones, but as we move out of using flood zones as a basis for flood insurance premiums due to the Risk Rating 2.0, this isn't applicable anymore.

When we talk about low-risk flood zones, we mostly look at flood zone X. Before we move forward in discussing these low-risk zones, it's important to always remember that there's no such thing as "not in a flood zone". Each property across the United States is in a flood zone. It's crucial to understand that "not in a flood zone" are properties that are simply mapped into a low-risk zone.

Finding My Flood Zone in Alabama

Flood Zone X was called a preferred zone because generally properties in this type of flood zone have a lower risk of flooding and don't really have a requirement to carry flood insurance. However, it's becoming more of a myth now that floods don't happen in Flood Zone X as we're seeing more common flash flooding in Alabama.

On the other hand, you also have these high-risk zones which are also called the special flood hazard area (SFHA) that generally indicate an increased risk for flooding in that specific location. Flood Zone A is one of the most common high-risk zones you'll see in Alabama. Generally, when you start getting mapped into these zones, mortgage companies expect that properties in flood zone A should have flood insurance policies.

Flood Zone A is a high-risk zone due to the zone not having a determined base flood elevation. Generally, if you want to lower your flood insurance rates or be removed from being mapped into a high-risk zone like Flood Zone A, you will have to use an elevation certificate or a letter of map amendment. Generally, properties being moved into or are already mapped into these zones see a slight increase in their premium rates and flood risk.

Lastly, we have the Flood Zone AE which is somewhat similar to flood zone A however for these zones, the base flood elevation has been determined. This zone is also called the 100-year floodplain and has about 30% of flooding in a 26-year mortgage. Just like the previous flood zone, your mortgage lender will most likely require you to carry a flood policy if you're mapped into a Flood Zone AE.

Flood Zone AE's flood premiums are not determined by a single measurement alone. Most insurance companies, and even the National Flood Insurance Program (NFIP), now look into different flood variables such as the structure of your home, the type of foundation of your home, how much flood you get, what type of floods you get, and how much flood claims were made in a Flood Zone AE property historically.

Finding Your Flood Zone

When it comes to flood zones, generally you have to follow whatever's being indicated by your current flood insurance rate map (FIRM) from floodplain administrator. This generally means that if you're moving deeper into the SFHA, then you will have to adjust your expectations not just with the number of floods you will get, but also with your flood insurance rates. There's a directly proportional relationship between flood zones and flood risks after all.

However, this doesn't really mean that you will have to accept whatever expensive flood insurance premiums just because you're in a high-risk flood zone. In Alabama, a lot of new insurance companies are coming in to support the state when it comes to flood mitigation and protecting people from flood damage. This means that there are a lot of options to go through now.

Finding My Flood Zone in Alabama

Finding your flood zone in Alabama doesn't just mean knowing the flood zone you have, but how you can manage this better especially when it comes to the cost of flood insurance. Sometimes, you get into the wrong flood zone or maybe you want to remove your property from flood zones. Either way, we want to help you go deeper into understanding how the costs of flood insurance in Alabama are determined.

Flood Variables

Let's talk about positive elevations first and how they can have a big impact. The further your home is above the base flood elevation the better the rate is going to be. If all the elevations of your home are above the base flood elevation your home might even qualify for a letter of map amendment. This means that your property might be removed from the high-risk flood zone and placed in low-risk flood zones causing a big improvement to property values.

When it comes to the impact of negative elevations. As mentioned above basements can cause a home to have an extreme negative elevation. The higher the negative elevation home has the higher probability of a flood occurring. This can create a double-edged sword because the NFIP rates can be through the roof sometimes exceeding $10,000 a year for noncoastal properties. However, the other problem is the higher the negative elevation the less likely it is that a private insurance carrier will offer coverage on a property.

Flood losses also can have a major impact on a property. It could even stop a property from selling if severe enough. Generally, when one flood loss occurs you would lose the preferred rating with the NFIP if you had one. Having a flood loss can also eliminate most of the private flood insurance options as most will not insure a property that has had a loss. However, when the second loss and paid claim occur is when disaster can strike.

This can turn a property into a severe repetitive loss (SRL) property which has to follow certain mitigation guidelines in order to get insurance through the NFIP and private flood insurance is not available on these types of properties. This is why you should really review things closely before filing a flood insurance claim.

Finding My Flood Zone in Alabama

Flood insurance is now more important than ever in Alabama especially as we prepare for the sudden shift when it comes to rainfall amounts as we move into the Spring season.

If you have questions on flood insurance, we have a Flood Learning Center dedicated to answering all your questions and more when it comes to flood insurance. Click below to go to our Flood Learning Center page. 

Flood Insurance Guru | Service | Knowledge Base

Remember, we have an educational background in flood mitigation which lets us help you understand your flood risks, flood insurance, and mitigating your property long-term.

The times have been changing and if we look at the world around us, we may see some things that shouldn't be like that. If we look at how weather patterns have drastically changed and natural disasters becoming more severe, we can see that there's something wrong with the planet. That's what we want to cover today, we want to understand climate change and global warming, how are they different, and their impacts on our planet.

The Flood Insurance Guru | Blog | Climate Change and Global Warming

Climate Change

First, it's important to preface that climate change is not a synonym for global warming. Climate change is a phenomenon that scientists have been looking into even 200-years ago. They were looking into how our activities impact the climate of the Earth. It took them about a hundred years before even arriving at evidence that suggests a link between the two.

Climate change, as the name would show, is the drastic global or regional changes to climate patterns. Now, it's important that you don't confuse weather with climate. Climate is the collective weather conditions that an area experiences in a long period of time whereas weather is just how the day or maybe the week will be (like situations where we say today is sunny, rainy, or cloudy). Climate is more concerned with the prevailing weather conditions over the course of the next three months or maybe the whole year.

The Flood Insurance Guru | Blog | Climate Change and Global Warming

Climate change includes global warming but also concerns itself with the drastic weather changes other Earth being too warm. We can look at what happened in Texas earlier this year, where the state had severe winter storms or Egypt receiving snow due to the cold snap in 2013. 

Generally, climate change is blamed to be caused by the significant rise of greenhouse gases since the industrial revolution and the modern age. These are gases we release every day from smoking to car emissions and large industrial factories releasing the smoke as a byproduct of making their products.

The Flood Insurance Guru | Blog | Climate Change and Global Warming

Global Warming

Global warming on the other hand, as the name would show, is the overall drastic and continuous warming of the Earth. This is one of the impacts of Climate Change. See, when we say global warming isn't a synonym of climate change, it's because global warming is one of the effects of climate change.

As the planet heats up, we can see a rapid rise in sea levels and this isn't just because there's a hurricane, but in a more permanent sense of the change regardless of the amount of rain. This in turn can cause a huge threat of storm surge and flooding in coastal areas because seawater can easily get through the land.

The Flood Insurance Guru | Blog | Climate Change and Global Warming

Global warming is also a catalyst for more severe storms and rainfall, especially for the United States. As we get over the winter season and its colder temperatures, the sudden surge of significantly warm air brings devastating rainfall, storms, and worse hurricanes when cold winter air clashes with the upcoming warm spring season

Global warming's unnatural levels of heat also melt — at an abnormally fast rate — the ice and snow from Winter which presents the constant threat of flash flooding in areas close to these once-frozen bodies of water.  This is what we commonly refer to as spring runoff.

The Flood Insurance Guru | Blog | Climate Change and Global Warming

Both climate change and its effect on global warming are the biggest threat when it comes to the natural response of Earth to natural disasters. Due to severe wildfires taking down trees that protect us from flooding, landslides, and mudslides, but this didn't come naturally.

What Caused It?

It's often mentioned that the climate change we're experiencing is the result of our actions as humans. Yes, there's a natural way that climate change can happen, but the impacts of these are smaller and short-term compared to the long-term and huge impacts that manmade climate change is bringing.

Numerous factors contribute to greenhouse gases known as the greenhouse effect. One of the biggest causes is because we're burning a lot of fossil fuels like coal, oil, and natural gas to power everything we need like cars or other transportation, and daily energy uses like electricity and heat. These fossil fuels we're burning actually contributed about 80% of the total greenhouse gas emissions. All the abandoned oil and gas wells that are now leaking produce more methane than initially estimated that which contributes to 20% of annual methane emissions

The Flood Insurance Guru | Blog | Climate Change and Global Warming

We can also look at deforestation and wildfires taking down trees that naturally help us fight these gases. Brazil, last year, reached an increase of almost 10% on deforestation. This became the highest level since 2008 and caused even more severe forest fires that further take down trees in the area.

Climate change is the biggest hurdle we're facing when it comes to preserving the state of Earth. We always talk about preserving the value of your property long-term by protecting it from flood damage, but it can only go so far. When faced with bigger, more volatile, and violent floodings, even the best flood mitigation efforts might not be able to handle it.

The Flood Insurance Guru | Blog | Climate Change and Global Warming

We should also do our part in helping fight this climate crisis, so we also avoid severe natural disasters which only become worse each year. If you have any questions on global warming, climate change, how this can impact flood insurance, how this can worsen flood events across the country, or anything about flood, reach out to us.

Remember, we have an educational background in flood mitigation and we want to help protect you and your property against flood loss long term. Click the links below to know more, get a quote to protect yourself from flooding, and visit our YouTube channel for our daily flood education videos.

The Flood Insurance Guru | 2054514294   Get Your Quote from Flood Insurance Guru    The Flood Insurance Guru | Chris Greene | YouTube

Many people understandably stop getting flood insurance since they're in a low-risk flood zone however as we've learned in the past, this doesn't really mean a no-risk flood area. Due to this, many mortgage lenders will require you to have a flood insurance policy for your property. 

The Flood Insurance Guru | Blog | What's the Penalty of No Flood Insurance?

Let's talk about what are the impacts on your mortgage payment or escrow account when you don't have flood insurance? What responsibilities do mortgage companies or lenders have to force-place a policy or coverage for my house?

Penalties of No Flood Insurance

First, let's talk about the possible penalties you may take place if you're required to get a flood insurance policy for your building.

The Biggert-Waters Flood Insurance Reform Act enacted penalties for flood violations of $2000 with no aggregate limit. The civil money penalties (CMP) will be included upon violation of either not being able to purchase adequate flood insurance, properly force placing flood insurance, providing notification on the availability of flood insurance, and proper escrow for premiums.

The Flood Insurance Guru | Blog | What's the Penalty of No Flood Insurance?

Now, for high-risk flood zones or the Special Flood Hazard Area (SFHA), a flood insurance policy is a must as per the regulations of the Federal Emergency Management Agency (FEMA). If you're doing a federal loan, it's most likely that your mortgage lender is managed by the government, so you may be able to easily get a flood insurance policy in place from FEMA and the National Flood Insurance Program. It's also most likely that your mortgage lender is going to be the one to immediately require you to have flood insurance for the building.

Mortgage Company and Escrow Account

Now, it's important to note that if your mortgage lender, lending institution, or the bank increases, extends, or renews a loan secured by a residential property, you're going to expect them to be required to escrow all premiums and fees for the flood insurance. This is unless the bank or the type of loan qualifies for an exception to the escrow requirement.

Escrow accounts generally get impacted by flood insurance however this doesn't give you a heads up in real-time or immediately. Many times, residents don't think that they're going to be impacted until six months later when they start to receive this massive bill that's been backdated several months.

Escrows are reviewed annually and are based on when your loan is made. Simply put, the month of your review depends on the date of the purchase of your house. This is important because if you decide to change flood insurance companies before your annual review, it won't be reviewed until the set month. For example, if you bought a house in November and decide to change your flood insurance company in February, it won't be reviewed until November. This can be very surprising and can really hurt you in the long run.

Picture this, you moved into another flood insurance provider and this was an increase on your mortgage for $400 per month. This can mean that the time between the change and your annual review, you might be collecting a huge sum of money that you only get to find out that you need to pay to catch up to your escrow several months after.

How can you avoid this? Reach out to your mortgage company, provide some form of notice to your bank, review the term on your loan, and make sure that there's a second review done considering the adjustments, or more simply get the flood insurance on your own. 

Force-Placed Flood Insurance

There will be times that your mortgage company, lending institutions, and the bank will do everything to make sure that the property will be insured against flood damage. This may lead them to force place a flood insurance policy on your property. Now, this may sound like a good thing since you won't have to do the nitty-gritty of applying for a policy from the federal flood insurance or private flood insurance market. However, this is generally a bad thing since you lose a lot of flood insurance purchase benefits.

It's equally important because maybe you're in a low-risk flood zone where flood insurance is available but isn't required by the federal government on floodplain regulations, the mortgage lender can actually decide on your behalf.

This is why we really encourage that regardless of your flood zone — be it preferred zones or special flood hazard zones — you still should start to purchase flood insurance from either the National Flood Insurance Program or the private flood insurance. Not only to protect your building and contents but also to make sure that you won't get flood insurance flood-placed on your property by your lender. 

The Flood Insurance Guru | Blog | What's the Penalty of No Flood Insurance?

It's important to note that force-placed policies aren't automatically under FEMA and the federal flood insurance or your preferred private insurance company. The only time that FEMA will be providing you flood insurance coverage and handling your flood claims is if the mortgage lender and/or loan works with the federal government. Most of the time, the insurer is the mortgage lender themselves. What does this mean for you?

Well, if the policy is force-placed, you can expect that the flood insurance premium to be expensive and you really don't have a say on it. Most of the time, the flood insurance coverage on these force-placed policies will just be for the building. This means that you're going to lose a lot on your personal property since the contents aren't really covered.

Getting Your Flood Insurance

This is a good thing about doing your own purchase of flood policy. You get to receive adequate coverage for both your building, be it residential buildings or commercial buildings, and everything it in. The National Flood Insurance Program provides both building coverage and personal property or contents coverage of $250,000 and $100,000 respectively.

The Flood Insurance Guru | Blog | What's the Penalty of No Flood Insurance?

When it comes to private insurers, you may get coverage from their private flood insurance policies for additional living expenses, contents and building replacement costs, and loss of use. These are simply additional coverage from the standard coverage they provide for buildings and items or personal property coverage. 

The Flood Insurance Guru | Blog | What's the Penalty of No Flood Insurance?

Another bad thing about a force-placed flood insurance policy is that they aren't transferrable. Generally, the National Flood Insurance Program will allow a property owner to do a policy transfer and policy assumption when selling a house. When it comes to the force-placed policy since the flood policy was made with your loan, then once you sell the house the policy won't stay on the house, but you're going to have to carry it with your loan.

If you have questions on how a mortgage lender work, how to avoid getting force-placed policies, getting the choice to pick your flood insurer, special flood hazard areas, or anything about flood insurance, please reach out to us.

Remember, we have an educational background in flood mitigation and we want to share this knowledge with you. Click the links below to get started, so you too can be prepared when crap happens.

The Flood Insurance Guru | 2054514294    The Flood Insurance Guru | Chris Greene | YouTube    Get Your Quote from Flood Insurance Guru

The federal government is consistently working on the Federal Emergency Management Agency (FEMA) in order to provide proper flood protection and mitigation for residents across the country. We've covered that one of the steps is to become a participating community in the National Flood Insurance Program (NFIP), but this isn't a simple sit-down and settle the thing. In order to be able to start participating with the NFIP, you have to follow the proper pacing set by Congress.

The Flood Insurance Guru | Blog | Flood Insurance Options for Communities in the Emergency Program

Let's talk about the initial phase of becoming a participating community in the NFIP, the Emergency Program, and figure out what it is, its benefits for you as a property owner, and your flood insurance options while you're in this program.

National Flood Insurance Program's Participating Community

Other than encouraging communities to adopt and enforcing floodplain management regulations in order to reduce the flood damage from future floods and developing flood maps of flood hazard zones, the NFIP's main goal is providing affordable flood insurance for homeowners across the country.

The Flood Insurance Guru | Blog | Flood Insurance Options for Communities in the Emergency Program

In order to obtain this, FEMA, the National Flood Insurance Program (NFIP), and the community must be in agreement to voluntarily participate in the NFIP's flood mitigation efforts. When this happens, the participating community will get access to the federal flood insurance policy, disaster aid, and disaster grants. In order to continue participating, however, the community must follow and abide by the guidelines and floodplain management ordinances set by FEMA. Doing this also means generates points through what's called Community Rating System (CRS), the more points a community has, the higher benefits they get in form of discounts on flood insurance premiums.

The Flood Insurance Guru | Blog | Flood Insurance Options for Communities in the Emergency Program

These discounts start at around 5% and can go up to 45% on your flood insurance rates depending on your participating communities' efforts in reducing the general flood risk for the area. Rates for flood insurance can really be expensive especially for those in high-risk flood zones or special flood hazard areas (SFHA). 

But before you get to becoming a fully-fledged participating community, you'll be put in the Emergency Program first. 

NFIP Emergency Program Flood Insurance Coverage

Now, when you're starting with the NFIP participation program, your community will have to start with the Emergency Program. It's important to recall that when you're doing a flood policy with federal flood insurance, your overall flood coverage from flood loss and flood damages will be capped. This means that you're going to have coverage limits since the National Flood Insurance Program (NFIP) has a max of $250,000 for building coverage for a residential property. This can only go up to $500,000 if the building listed is commercial property. Regardless of the property type, a standard flood insurance policy from the NFIP will provide $100,000 max for contents coverage or personal property.

The Flood Insurance Guru | Blog | Flood Insurance Options for Communities in the Emergency Program

This is generally what you can expect once you go past the Emergency Program however if you're still in the initial phase of participating with the National Flood Insurance Program (NFIP), your coverage against flood damage is capped at $35,000 only. Considering property value nowadays, this isn't even half of what you might lose due to flooding. So, what if this isn't the right thing for you?

Flood Insurance Options

You can still go through with your community's participation with the NFIP despite having the downside of the Emergency Program's capped coverages. It's important to note that once your property starts participating, you can go through FEMA for your flood insurance.

On the other hand, there's a more viable flood insurance company compared to this that can really help you recover and prepare for the possible losses from flood events: private flood insurance.

The Flood Insurance Guru | Blog | Flood Insurance Options for Communities in the Emergency Program

Private insurance companies also provide flood policy for a much lower flood insurance premium compared to the National Flood Insurance Program. Now that your loan type won't really get in the way of getting flood insurance from private insurers, you can go with this flood insurance market. What's in it for you?

First, let's talk about the process purchase of flood insurance in the private market. When you start your flood insurance purchase with the NFIP, you may have to follow a 30-day waiting period whereas the private flood generally takes up to 15 days max for your policy to take effect after the initial date of purchase. This goes the same for flood insurance claims wherein it takes a much shorter amount of time to be completed.

The Flood Insurance Guru | Blog | Flood Insurance Options for Communities in the Emergency Program

More importantly, there's basically no maximum amount when it comes to limits of coverage. This is because private flood doesn't really do a capped amount for coverages. You can get more than $250,000 and even up to $10,000,000 for the listed building affected by flooding — or should we say buildings since you can list multiple structures in a single policy which is something that you'd need a separate policy for if you're doing a National Flood Insurance Program policy. Contents coverage can go up to $1,000,000 or even more. Apart from these, you also get additional coverage with your policy such as additional living expenses, replacement costs, and loss of use.

Overall, the choice of which flood insurance road you'll take is solely in your hands. You can wait out the participation process and do your best to help rate your CRS or you can move into the private market with its own risks like the chance of the private company deciding to pull away from your area and non-renew flood policies. At the end of the day, any form of insurance is better than having no insurance considering how flooding and disasters can happen in an instant. 

The Flood Insurance Guru | Blog | Flood Insurance Options for Communities in the Emergency Program

Remember, we have an educational background in flood mitigation, so if you have any questions on flood insurance options, flood zones, flood map changes, or anything about flood, please reach out to us. You can also check out our daily flood education videos over at our YouTube channel, so you too can be prepared when you face flood water.

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In this blog, we'll answer one of the age-old questions: do flood vents lower flood insurance policy rates in Alabama?

The Flood Insurance Guru | Blog | Does Installing Flood Vents Lower my Flood Insurance Rate in Alabama

As Alabama seems to experience a slew of severe weather leading to floodings in areas, like what we've seen more recently in Birmingham and Smith Lake, flood mitigation may become the key feature in making sure that property owners like you and your property will be protected from unwanted flood water damage and a bunch of headache in the aftermath.

Flood Vents

First, it's important to understand what is a flood vent and how does it work. Also known as flood gates or flood ports, flood vents are flood openings generally built-in with the structure of your home. This allows flood water to flow through the building instead of hitting the actual property. You can recognize this as the grills on the lower part of certain buildings and if you're living in Alabama, you might want to take notes.

The Flood Insurance Guru | Blog | Does Installing Flood Vents Lower my Flood Insurance Rate in Alabama

Think of this as a new pathway for when flooding happens and you're directly in front of the water flow. These vents in turn take the water that should be hitting the foundation walls of your home or straining its exterior walls and allow it to simply pass through your property thus reducing and minimizing the damage of flood. Most of the time, the standard is that a property has at least two flood vents on two different sides of the exterior walls of your building in order for it to become viable as a flood mitigation step. 

The Federal Emergency Management Agency (FEMA) actually considers this as one of the most acceptable flood mitigation activities in reducing the risk of flooding on your building, removing the building from the severe repetitive loss list, and doing an elevation certificate. Now, does this really lower your flood insurance rate?

Federal Emergency Management Agency - WikipediaThe Flood Insurance Guru | Blog | Does Installing Flood Vents Lower my Flood Insurance Rate in Alabama

Flood Insurance Rate

To answer the question that might've been bugging you all this time, yes. More than a utility in your home's structure, flood vents are key to helping FEMA, the National Flood Insurance Program (NFIP), or even private flood in lowering your flood insurance premium rates. Any flood mitigation steps to reduce flood risks and possible flood damages are generally accepted as a condition for lowering your rates and the overall flood insurance cost for your building. This can mean that if you're paying about $1000 for your premiums, this can be lowered down to maybe $800 to $600

The Flood Insurance Guru | Blog | Does Installing Flood Vents Lower my Flood Insurance Rate in Alabama

Flood mitigation activities include raising your lowest adjacent grade at least a foot above the base flood elevation. Now, the required distance between the lowest adjacent grade or your lowest floor compared to the base flood elevation depends on your floodplain management ordinances. Some states perform a "freeboard" level where a fixed distance should be followed on the construction in order for the elevation to be accepted.

This can really be helpful for those in high-risk areas, flood-prone areas, and the Special Flood Hazard Area (SFHA) since they're going to be the ones with the higher or more expensive flood insurance premiums 

The Flood Insurance Guru | Blog | Does Installing Flood Vents Lower my Flood Insurance Rate in Alabama

Keep in mind that installing flood vents is just a single step in lowering your flood insurance rates. It's important to note that FEMA has other requirements on flood openings in order to lower your flood insurance premiums. For example, if you have an elevated building that's in any flood zone that starts with an A or high-risk flood zones, the NFIP minimum floodplain management ordinance will require the enclosures of the structure on the lowest elevated floor to be designed with proper openings.

The Flood Insurance Guru | Blog | Does Installing Flood Vents Lower my Flood Insurance Rate in Alabama

Another question that comes up with this how much lower will the rates are going to be once you have met the standards of FEMA and the NFIP via installing these vents? Well, this generally depends on how your rating score comes out. If we were to look at how this can be looked into when it comes to your Community Rating System (CRS) as a participating community, this move can bring your rates 40% less than they should have been.

Keep in mind as well that the purpose of these openings is to reduce or minimize not only the flood risk for the building but also its flood loss. Since the NFIP can only cover a max of $250,000 for residential buildings and $100,000 for its contents, the cost of flood loss may not be fully covered if, for example, your property was severely impacted by flooding.

At the end of the day, these flood openings and making flood insurance cheaper can only do much in flood mitigation. We encourage that you reach out with your local floodplain administrator to check on the best steps that you and your community can do when it comes to flood mitigation.

Remember, we have an educational background on flood mitigation, so if you have questions on private flood insurance, mitigation activities, flood coverage, or anything about flood policies, feel free to reach out by clicking our links below or checking our YouTube channel where we post daily flood education videos.

The Flood Insurance Guru | 2054514294  Get Your Quote from Flood Insurance Guru    The Flood Insurance Guru | Chris Greene | YouTube

The Flood Insurance Guru | Will the Smith Lake Flooding Impact my Birmingham, AL Flood Insurance?

In the latter part of March 2021, for three consecutive weeks, the community of Birmingham, Alabama experienced severe weather however unlike the past two weeks, flooding and strong winds presented a threat to the city. We observed the saturation of land causing trees to fall and the Smith Lake becoming the culprit to the flood damage to the area. This can really be alerting for this region since it does look like the state is experiencing flooding that's becoming worse each time.

Now, when it comes to flood insurance, this can directly impact you whether you're doing a policy with the National Flood Insurance Program (NFIP) under FEMA or the Private Flood Insurance market. Let's talk about how this can impact you and the things you need to know when it comes to your flood insurance policy when you experience flooding like this.

The Flood Insurance Guru | Will the Smith Lake Flooding Impact my Birmingham, AL Flood Insurance?

Now, it's important to note that there will be flood insurance rates increase in the future due to your Birmingham community becoming more flood-prone in a short period of time. If the flood map also shows that the area should be considered under Special Flood Hazard Area (SFHA), then the flood insurance rates can be expected to become more expensive with FEMA and the NFIP. However, this can also mean a good impact if you're doing a policy with FEMA and the NFIP then you might be able to go through the Increased Cost of Compliance (ICC) coverage. 

What is the ICC?

The Increased Cost of Compliance (ICC) coverage is an additional property coverage provided by FEMA through the National Flood Insurance Program. This generally provides additional money for the property's flood mitigation compliance purposes of up to $30,000 in order to reduce the flood risk in the future. It's important to note that the increased coverage will be separate from your standard flood insurance property coverage of $250,000 if it's a residential property and up to $500,000 if it's a commercial building.

The Flood Insurance Guru | Will the Smith Lake Flooding Impact my Birmingham, AL Flood Insurance?

It's most likely that you're eligible for the ICC if you're one of the impacted properties by the Smith Lake flooding in Alabama. The eligibility for this requires that the property should either be substantially damaged or is considered a repetitive loss.

ICC Eligibility

When we say substantially damaged, this means that the property owner experienced a flood loss on his home that's worth 40 to 50 percent of the house's market value. This means that if you were flooded and the total damage is less than 40% of the house's market value, then you won't be able to get ICC coverage. Now this can be crucial since the market value of properties over at Birmingham and Smith Lake is very high, so you're really going to have to be very careful on reporting the total damage on your residence if you're looking to be eligible through this condition. 

The Flood Insurance Guru | Will the Smith Lake Flooding Impact my Birmingham, AL Flood Insurance?

Repetitive Loss, on the other hand, means that a property has had two or more flood claims over the last 10 years. Loss history includes all of the ownership on the building since 1978 or since the building's construction after 1978.

What's Flood Mitigation Compliance

When we say flood mitigation compliance, this means that the structure of the building itself should meet the floodplain management ordinances set either by the federal government or the local community. Now,  there are four accepted floodplain management activities when it comes to complying with FEMA's flood mitigation standards: elevation, floodproofing, relocation, and demolition.

Elevation

When we say elevation, this means that the goal of the activity is to raise your property's lowest adjacent grade above the base flood elevation (BFE) of your community. This means that you have to elevate your property's lowest flood at least a foot above the base flood elevation.

The Flood Insurance Guru | Will the Smith Lake Flooding Impact my Birmingham, AL Flood Insurance?

Floodproofing

For this activity, it's important to note that this is only for non-residential properties. This requires that the commercial properties should be watertight below the BFE by reinforcing your walls, installing a watertight shield for doors and windows, building a drainage collection system, sump pumps, and check valves.

The Flood Insurance Guru | Will the Smith Lake Flooding Impact my Birmingham, AL Flood Insurance?

Relocation

When a property's being relocated, it simply means that you're going to move to another location on the same lot or another lot, but in order to meet compliance standards, you want to make sure that you're at least moving in a lower-risk area. There's no problem with relocating to a new location within the Special Flood Hazard Area (SFHA) or the 100-year flood zone however you're still going to have to make sure that it's going to be compliant with FEMA still. This can be the greatest flood prevention activity that really helped a lot of homeowners avoid the impact of major flooding and significantly reducing the risk of flooding on their property.

The Flood Insurance Guru | Will the Smith Lake Flooding Impact my Birmingham, AL Flood Insurance?

Demolition

Lastly, this activity is only done when the first three are no longer a viable option due to the flood damage being too severe for your property. Now, it can still be possible that you can redevelop the building after demolition however it's important to make sure that the laws and requirements of the Federal, State, and community are followed. 

The Flood Insurance Guru | Will the Smith Lake Flooding Impact my Birmingham, AL Flood Insurance?

Beyond Flood Insurance 

Now, it's also important to shed light on the possible negative impacts of lake flooding and the future risk of flooding in the area on your overall flood insurance purchase. If you're doing private flood insurance, then this could mean that they may choose to pull out from providing Birmingham, Alabama flood insurance due to the high risks that it's presenting to the table. Since FEMA doesn't choose their risks, severe repetitive loss as we mentioned before is a condition to be eligible for the ICC coverage, but private flood may see this as a red flag to continue providing flood policies and decide to non-renew.

It's still important to note that private flood is still a fair market with its own standards and guidelines. In fact, the ICC coverage usually is included in the property's coverage if you're doing a private flood insurance policy.

The Flood Insurance Guru | Will the Smith Lake Flooding Impact my Birmingham, AL Flood Insurance?

If you have questions on FEMA ICC coverage, if you're eligible for it, your flood insurance options, or any question about flood, feel free to reach out to us. We'll keep our doors open for you! You can click the links below to get started or watch and subscribe to our YouTube channel where we post flood education videos daily.

Remember, we have an educational background in flood mitigation and we want to share this knowledge with you, so you can be prepared when crap happens.

The Flood Insurance Guru | 2054514294  Get Your Quote from Flood Insurance Guru   The Flood Insurance Guru | Chris Greene | YouTube