This is no April Fool's joke, but a big change is coming to the claims process and rating for federal flood insurance.

In this article, we want to discuss the changes to the claims variable and how your flood insurance premiums are going to be impacted by the new claims rating system with the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP). We want to discuss three (3) things that you to know about this upcoming change to flood insurance on April 1st, 2023.

Flood Insurance Claims

First, let's cover how flood insurance claims can impact not only your flood insurance policy but also how risks are viewed for your property or home.

When it comes to the federal side of flood insurance under the National Flood Insurance Program (NFIP), flood claims can directly impact your rates. This happens in two forms with Risk Rating 2.0: the Severe Repetitive Loss (SRL) and the Claims Variable. As a policyholder, it's important to keep in mind these keywords.

The Severe Repetitive Loss (SRL) list for properties indicates that the property has filed more than one flood claim in a 10-year period. Generally, this indicates a higher risk for flooding and will in turn impact the flood insurance premiums of a certain policy.

The claims variable on the other hand is the newer claims rating factor that was introduced with Risk Rating 2.0. Initially, this new system will clean the policyholder's flood claim history and start from scratch.

However, if a claim is filed and paid out, the policyholder will see a potential increase in premium rates as FEMA will conduct a 20-year lookback where they will count all of the flood claims made during that period. This claim variable will produce a number that becomes a multiplier for the rates and is dependent on the number of claims made during that period.

But what are the coming changes to claims with FEMA for April 1st, 2023?

3 THINGS CHANGING WITH CLAIMS

1. 10-YEAR WINDOW & CLAIM DATES

One of the big things to have changed when it comes to federal flood insurance claims rating factor is dates.

Previously, if you were to file a claim under Risk Rating 2.0 with FEMA, they will start to do a 20-year lookback which means that they will look at all the claims made on the property for flood insurance for the past 20 years. The number of claims made will be used as a claim variable which acts as a multiplier for your flood insurance rates.

This lookback is changed to only do a look back for 10 years only. This can make it easier for property owners to avoid a higher claim variable.

Another change that involves dates is more focused on when FEMA's claim rating factor kicks in. Previously, any and all claims made during Risk Rating 2.0 will immediately trigger the claim review. These claims may be from any time prior to April 1st, 2023.

Basically, all of the claims made in the past 20 years regardless of the date will be sent as part of the review. Generally, this could also mean that there will be higher rates due to having a higher claim variable. 

For this new update, you will have to file a claim on April 1st, 2023, or later for the claim review triggered. This simply gives more leniency and a chance for property owners to get more breathing space before claims impact their rates.

This is important because...

2. WHAT TRIGGERS THE CLAIM REVIEW

Before this upcoming update, even if you file just a single claim during Risk Rating 2.0 — which means any flood insurance claims made before April 1st, 2023 — will immediately trigger the review. This can really hurt especially with how flooding behavior has changed in the past decade.

With this update, you will now have to file 2 claims within this 10-year period for the claim review to be triggered.

We recently had a customer who had these troubles with the previous system where they had two flood claims made in the last 20 years but only one in the last ten years. In the Risk Rating 2.0 claim review, this meant that both claims will be part of the claims variable however with this update, only one of them will be considered. 

3. WHAT CLAIMS ARE EXCLUDED

Let's move into another category in this update which concerns more about what types of claims are excluded in the Risk Rating 2.0 review and which ones are excluded in this April 1st, 2023 update.

Previously, the only exclusions are for Increased Cost of Compliance (ICC) and Closed Without Payment (CWP). So this meant that if you filed a Loss Avoidance Claim, you will see this included. Generally, this meant that the previous system also uses Loss Avoidance Claims to trigger the claim review.

With this new update, Loss Avoidance Claims will be added to the exclusions. These are claims made for helping your property avoid damage from flooding which includes things like sandbagging, and creating temporary levees, or water pumps to name a few. Generally, this goes around for $1,000 with a standard flood insurance policy.

So you can imagine that if these are still to be included with the rating factor for claims, it could really become a burden for policyholders, but that won't be the case anymore.

You can see the full breakdown of what we discussed here:

These are the upcoming changes to how flood insurance claims work with federal flood insurance. If you are ready to take the next steps to get the right flood insurance coverage then there are three simple steps.

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

Got more flood insurance questions? Visit our Flood Learning Center below to know more:

Shelby County's own University of Montevallo (UM) is celebrating its 125th anniversary and this is really something worth noting. However, during this time a concern that doesn't look like affecting flood insurance surfaced; local restaurants and the general population of Shelby County are experiencing supply chain issues.

Today, we want to talk about what this could mean for flood insurance, its coverages, and what to expect as we celebrate the 125th anniversary of UM.

Supply Chain Issues

Local restaurants in the southern parts of Birmingham are having a rough start to the year as supply chain issues resurface. This is causing a lot of problems not just for food supplies, but even necessary utensils and such. From containers to equipment, business owners are having trouble handling the potential economic impact of the issues with supplies.

This issue is just a few weeks after President Joe Biden implemented a presidential declaration to help homeowners across Jefferson County, Mobile County, and Shelby County when it comes to recovering from the October 2021 flooding.

A local business owner, Naseem Ajlouny, shared with Shelby County Reporter how he's struggling with the supply chain issues. He quoted to have "spent around 30% of work now trying to source product". Moreover, there are also concerns with food supplies through crops such as the availability of corn on the cob and other protein products.

This is creating an increase in costs for menus across the county just to make ends meet. Worst case scenario, the item just has to be removed from the menu.

So what does this mean for flood insurance?

Supply Chain & Coverages

Now, when it comes to the concern of the supply chain, it's important to keep in mind that this doesn't just impact how businesses run. This also means that there may be unwanted impacts to flood insurance.

Let's all remind ourselves that Alabama, especially Shelby County, can be very prone to floods. There are a lot of flood hazards in the area which only contributes to the high-risk flood zones that the county is in when it comes to flood insurance rate maps (FIRM). So, this isn't really just a concern for business owners, but it can also impact homeowners.

You see, when it comes to flood insurance coverages, those replacement costs for recovering and rebuilding the building still need to come from sourcing out materials — the same goes for content coverages or the personal items included with the insured building.

If business owners are having trouble getting materials outside of flood insurance coverages and to keep their businesses afloat, what more when water starts overflowing from the floodplain?

This type of issue can cause a limited amount of coverage when it comes to additional living expenses from your flood insurance claim. This means that you won't really get an increase in premiums or payment, but you can expect to face higher costs when it comes to repairing the building.

When flood insurance covers the repairs or recovery of an insured building, the market can still have an impact on the costs of materials like wood, bricks, metal, and things like that. Since the county is experiencing some challenges with importing these things, it's safe to expect that there will be higher costs on the materials.

This could also mean that if you have that $250,000 standard coverage for your $200,000 home, it will easily be maxed out when you file a flood claim when the reparation begins.

Even if we say that you will get 100% coverage on the repair of your insured building, there will be no room for flood mitigation measures since the building coverage or replacement cost is already maxed out.

This can be very concerning especially since we're moving out of the winter season very soon and that also means that Alabama will face runoff from all directions. We've seen this happen before and it's not impossible to happen again. Despite the clearer skies in North Alabama, it's important to mention that Cullman County in the north-central areas of the state, faced 2 to 3 inches of rain in September before the October flooding.

Are you prepared to face possible flooding in the next few weeks?

If you have any questions on supply chains and flood insurance, how to review your insurance coverages, where to get flood insurance or anything at all, you can click our Flood Learning Center where we try to answer all your flood insurance questions.

You can also click below to call us and we can discuss your flood insurance needs.

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

When it comes to insurance policies, these things involve a lot of commitment and hard-earned cash from everyone, so people are starting to become more careful with it.

Today, we want to talk about the three reasons why people across the United States don't buy flood insurance and understand why you should avoid this type of thinking.

Not in a Flood Zone

The first reason we always hear that comes from not just property owners, but also mortgage lenders and insurance agents. This is a common misconception in the flood insurance industry which we've covered in our previous blog.

When a mortgage company tells you that you're not in a flood zone, this doesn't really mean that you won't get flooded instead it simply means that your property is no longer in a high-risk flood area or high-risk flood zone like a flood zone A.

A lot of people think that they're not in a flood zone, so they don't need flood insurance however this isn't really the case. When your mortgage company or insurance agent tells you that you're not in a flood zone hence you don't need flood insurance, this doesn't mean that you're not going to be flooded.

It's important to note that when you're not required to carry flood insurance is due to the fact that maybe your house sits on or was moved into a low-risk area. Now, when it comes to the time that a flood event happens, these low-risk flood zones have less likelihood to get properties inundated with water.

We've seen this happen with New York where a lot of people couldn't find coverage for the flood damage that was brought by Hurricane Ida. The thinking that only high-risk areas need to have flood insurance is a big hoax in the industry since there's individual flood risk for each property.

This is why a flood map or flood insurance rate map would show you in a flood zone regardless. This requirements of when to get flood insurance based purely on flood zones are creating a bigger disaster than the water itself.

This isn't an exception from the damages, however. This brings us to the second reason.

Flood Risks

A lot of low-risk areas get inundated with water even after a storm or heavy rainfalls in other zones because there's a chance that the excess flood water will flow into these low-lying communities. You also have to consider that certain development disrupts the natural pathways of water and causes only 10% of the water to go into the ground.

This second reason will be coming from people who know that they're in a low-risk flood zone, but underestimates the damages that flooding can bring to their doors. It's important to note that these flood zones determine how much flood that your property might get. This doesn't indicate how severe the impact may be as flood damage varies depending on the circumstances.

A rapid flash flood can cause more damages than standing water that's inundated your home. This also means that it's very much possible to have the same flood impact regardless if you're in low-risk or high-risk areas.

According to Wharton School as cited by Zurich, in New York, eighty percent (80%) of residential property didn't have flood insurance and ninety percent (90%)  of business or commercial property also didn't have any sort of protection from the flooding during Hurricane Sandy. This shows how much property and business owners disregard the opportunity to get protected through a flood insurance policy.

Homeowner's Insurance Policy

Lastly, we have another common misconception when it comes to insurance, flood coverage, and more. When it comes to this part, it's important to understand that your homeowner's policy doesn't really cover any damages from flooding. A lot of people think that flood coverage can be attached to your homeowner's insurance once you secure a policy for the structures in your home.

Flood insurance is a separate entity when it comes to insurance coverage. Yes, this will still get you coverages for the damages on the insured building that's been inundated with water. So let's take a few steps back and understand what's covered by your homeowner's insurance and your flood policy.

Now, when it comes to damages any type of water damage that impacts your home will be covered in the policy jacket of your homeowner's policy. This is because when it comes to floods, there's what we call the "Number Two Rule" set by the federal government through the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP).

This rule determines if you need to file a claim to your homeowner's insurance company or through flood insurance, be it FEMA or the private flood insurance market. According to the rule, it will only be considered as flood damage and will be covered by your flood policy if it qualifies for either one of the two conditions. A flood will only be considered as a flood if:

1. At least two (2) acres have been inundated with water - This means that if standing water starts to impact a community, it will only be considered as a flood if there are at least two acres of land are impacted and, basically, is underwater due to excess water from rain, storm, runoff, melting ice/snow, or any type of natural disaster.

2. At least two (2) properties have been inundated with water - This means that any type of two properties; house, business, or park, for example, have to be inundated or impacted by floodwater that comes due to the aforementioned reasons. In order to qualify for a flood insurance claim, one of these two properties must be your insurance building.

This can be a very frustrating experience if you don't know when you can file a flood claim for the damages. There's also a chance that you were flooded and reach out to your homeowner's insurance provider only to be rejected and left with nothing.

At the end of the day, it's always best to find security through a flood policy. This is the only way back up when all that water starts to destroy your home, the buildings you have and all their contents, and important personal property.

If you have any questions about flood risks, how to get flood insurance through FEMA, NFIP, or the private market, or anything about floods, reach out to us by clicking below.

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

Flood insurance is slowly but surely transforming itself as we veer closer to the new Risk Rating 2.0 program with the National Flood Insurance Program (NFIP) and the Federal Emergency Management Agency (FEMA).

If you've been with us, you know that we're talking a lot about flood maps or flood insurance rate maps (FIRM), flood zones, flood claims, and flood insurance premiums. Today, we want to discuss a very crucial aspect of flood insurance that may not seem impactful, but can either make or break you. We want to answer, what role does time play when it comes to flood insurance?

Wait Period

FEMA and NFIP

There's a lot of things that come into play when it comes to flood insurance. One of the most important things to know is the waiting period. Depending on where you're getting flood insurance, this can really have a huge difference especially if you're concerned about when your policy is going to take effect.

If you were to get a flood policy from the National Flood Insurance Program (NFIP) as preparation for protecting your property as a homeowner when it comes to natural disasters that cause flooding — like what's happening right now with Hurricane Ida — you will have to really strategize on when you should buy flood insurance.

We strongly encourage that if you're buying from the National Flood Insurance Program (NFIP), do it as soon as you can since they have a 30-day waiting period for all policies to take effect. This will stay the same even with the Risk Rating 2.0 update for the NFIP. If you were to buy a policy on September 1st, all the building coverage and content coverage won't kick in until October 1st.

We've said this many times; don't wait for the water to come rushing to your door because you're not in a flood zone. It's important to have a look back on events just this year with Baton Rouge in Louisiana, Monnett in Missouri, Nashville in Tennesse, and more recently with multiple counties in Virginia. These were times where heavy rain caused a lot of problems for residents due to flooding.

If you want to best prepare for your flood insurance policy with the NFIP, you'd want to do it as soon as now because there's no telling when floodwater can come to your own porch.

Private Flood Insurance

When it comes to private flood insurance, there will be significantly shorter waiting periods for your policy to start to kick in. Most private flood insurer can get you a policy as soon as all the purchase process itself has been completed and will only take 7 - 10 days for the policy and its flood coverage itself to kick in. This is because any private insurance company you pick is no longer under the federal government, so you won't really have to go through all those red tapes.

We recently helped a customer get their policy renewed with a private insurance company with only a 7-day wait period without any lapse on their coverage. Simply put, they are able at all times with this renewal of the policy.

As you can see, this shorter waiting period can give anyone peace of mind when it comes to preparing for flood damage. This immediate turnaround time also helps any property owner across the country understand their risk of flooding ahead of time.

Understanding your flood risk is a key step in preparing for dangerous flash floods, be it through a flood map or your flood risk score.

Claims

FEMA and NFIP

Another thing that you want to look into how time plays with flood insurance is the flood loss claims themselves. When it comes to the federal program, there will be a 20-year look back on the flood insurance claim on the property. This 20-year look back can change how the rates for flood insurance will go. This is what's called a flood claim variable. We've already covered the nooks and crannies of this through our previous blog.

There's also the 10-year rolling period for flood claims which determines whether or not your property will be included in the severe repetitive lost property list. Generally, this happens once you file more than one claim in a 10-year rolling period with FEMA.

Private Flood Insurance

When it comes to private flood insurance, time is still a big player since it's most likely that an insurance carrier will refuse to give you a flood insurance policy because you had a claim from 5 years ago. This is one of the things you should look out for when it comes to private flood insurance. These carriers can pick and choose who to provide insurance to, when to provide it, and when they will pull back. 

Time and Time Again

These are just some roles that time plays when it comes to flood insurance. However, one of the most important things that time plays into when it comes to flood insurance or flooding, in general, is when you hear people say: I wish I had more time preparing for this, or I wish I knew that homeowners insurance policies don't cover flood damage at an earlier time in my life.

Let's all keep in mind that water doesn't know time. One moment it's just rain then a few seconds you're already knee-deep in floodwater and your property's already wrecked by water. So if you have questions on flood insurance timelines, when and how to buy flood insurance, or what your flood risk score is, click below to reach us.

Remember, we have an educational background in flood mitigation which lets us help you understand your flood risks, flood insurance, and mitigating your property for a much longer time.

When it comes to flood insurance, once you're exposed to it you also start to encounter one of the most prevalent terms in the industry: flood zone.

Many property owners would say that they're not in a flood zone because either their real estate agent, mortgage, or insurance agent would tell them so, but are you really not in a flood zone?

Flood Zone

First, let's go over what a flood zone is. The Federal Emergency Management Agency (FEMA) who manages the National Flood Insurance Program (NFIP) or the federal flood insurance would define flood zones as an area with a specific type of flood risk according to geographical and historical data.

It's important to note that, generally, all flood insurance companies depend on FEMA's words when it comes to flood insurance. The data is dependent on floodplain devolvement in that area, floodplain status, proximity to a body of water like creeks, lakes, or rivers, history of flooding, the chance of flooding, and things like that to create an output that what we call a flood map or Flood Insurance Rate Map (FIRM).

A flood map of an area or community can show multiple flood zones since it depends on the flood risks that this area faces. These zones can range from low-risk flood zones to high-risk flood zones or special flood hazard areas (SFHA).

Now, what does it mean when people start saying that they're not in a flood zone?

Not in a Flood Zone?

When it comes to flood zones and flood insurance rate map (FIRM), there's no such thing as not being in a flood zone. This is a common misconception that people can get because, truth be told, every house, building, and property actually sits in a flood zone. It just depends on what type of flood zone you're in.

You see, when people say that they're not in a flood zone, this generally means that the property is not sitting in the special flood hazard area (SFHA). When it comes to the Federal Emergency Management Agency (FEMA), every house has a flood zone designation.

Most likely, when your mortgage or agent tells you that the house is not in a flood zone, what they meant is that you don't have to go face a mandatory flood insurance purchase because it's not in a 100-year flood zone.

Examples of a 100-year flood zone are flood zones A (flood zone A, flood zone AE,  flood zone AH, flood zone AR, flood zone AO) or even a flood zone V which is the coastal flood zone.

What this probably means is that when it comes to flood zone maps, the property is sitting on a flood zone C, flood zone B, or even flood zone D. Most likely, this may show up as a flood zone X and the reason why they say that you're not in a flood zone is that your flood insurance won't be required since you're in low-risk flood areas.

The Problem with Low-Risk Flood Areas

Now, it's easy to find peace of mind when you realize that you're in a low-risk flood zone where the requirement for flood insurance isn't really there at all. The problem with these zones is that 30% of the flood insurance claims come from this area according to FEMA and the National Flood Insurance Program (NFIP). Homeowners that say that they're not in a flood zone are the ones that comprise that 30% and we're only talking about FEMA's numbers.

Being in a low-risk flood zone doesn't really mean that you won't get flooded like the high-risk flood zone. There might be minimal flood hazards in the area which is why it shows that you're in these zones, but there are varying reasons why a property owner in a flood zone X can be flooded.

We've also seen low-risk zones get flooding damage due to flash floods and other severe floods throughout the year.

This is why we encourage everyone to secure flood insurance policies for their residential property or even commercial flood insurance for their business. The chances of flooding can be very low one day then skyrocket the other day, given the right circumstances. 

So when you hear someone tell you that you are not in a flood zone or they are not in a flood zone, take time to reach out to your local floodplain management standards and officials or your insurance agent to really identify what your flood zone is. It's better to be safe than sorry when the risk for flooding becomes too high and loss from flood damage becomes too unbearable.

If you have any questions on flood zones, maybe you want to know what flood zone you're in, what your flood insurance options are, or anything about a flood. Reach out to us through the links below.

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