If you live in Alabama, flooding might not be new to you however these flood events still surprise homeowners across the state. 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.

Birmingham, Alabama Flood: One Year Later

In this article, we take a look back at how this flood event of October 2021 impacted flood insurance in Birmingham, Alabama.

The Birmingham Flood of October 5th

On October 2nd and 7th of 2021, Central Alabama was met with off-and-on heavy rains and storms. This is 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.

 

The flooding caused a total of 66 emergency calls between October 6th and 7th which lead to 16 water rescues from flooded properties and stranded vehicles. Sadly, this flood event also caused a total of 4 fatalities in Marshall and Shelby Counties.

In less than 3 days, Central Alabama was easily ravaged by this flood event. So how did this flooding impact flood insurance for Alabama?

Birmingham, Alabama Flood: One Year Later

The Impacts of the Flood of October 2021

For those who have active flood insurance policies, regardless of whether it's from the National Flood Insurance Program (NFIP) or private flood insurance companies, this flood event meant filing flood claims. You might be wondering, how will these insurance claims ripple into the present day.

NFIP Risk Rating 2.0

First, let's discuss what this could mean for policyholders of the National Flood Insurance Program (NFIP). When it comes to the NFIP especially considering that this flood event already was when Risk Rating 2.0 first went live. If you filed a flood claim and got payment from the NFIP due to this flood event, this could impact your flood insurance premium rates.

This is because Risk Rating 2.0 uses a claim variable wherein your previous flood claims will be forgiven. However, once you file a flood claim, the Federal Emergency Management Agency (FEMA) and the NFIP Risk Rating 2.0 will do a 20-year lookback. This means that you will be rated on how many claims you have made in the last 20 years and it gets included in the calculation of your flood insurance premium upon renewal.

Birmingham, Alabama Flood: One Year Later

Private Flood

On the other hand, a private flood might also present some unpleasant situations upon filing a flood insurance claim. Some flood insurance carriers might stop providing to your community or also known as moratoriums. Equally, if moratoriums won't happen in a specific community, policyholders might find it difficult to renew their flood insurance policy

This also means that if you get to renew your flood policy, you might see an increase in your flood insurance rates.

You may be asking, does paying off my mortgage lower the cost of flood insurance for me?

Birmingham, Alabama Flood: One Year Later

Mortgage & Flood Insurance

Sad to say, paying off your mortgage will not really impact the cost of flood insurance for you. This means that you won't see any decrease in flood insurance costs. Regardless if it's an annual or monthly mortgage payment, it won't really have any influence on your flood insurance rates.

This will, however, impact flood insurance requirements. Keep in mind that even if you're in a low-risk flood zone, your mortgage or lender may require you to buy a flood policy for the property. This is especially true for properties that sit in high-risk areas. High-risk flood areas include properties that are mapped into Flood Zone A, Flood Zone AE, or the Special Flood Hazard Area (SFHA).

This doesn't mean that you shouldn't buy flood insurance even if you're in a low-risk area or flood zone like Flood Zone X. Remember, 30% of flood insurance claims from these zones. 

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.

 

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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.

 

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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

 

pelham al home buyers beware

Hello, Chris Greene, with the Flood Insurance Guru here, where we have an educational background in emergency management with a specialization in hazard and flood mitigation. So we can help you understand your flood insurance options, how to minimize your flood risk, and possibly even how to get your flood zones changed. Today we're going to be talking about the major impact that the new flood insurance rates to the National Flood Insurance Program are going to have in areas like Pelham, Alabaster, and Helena Alabama.
Effective January 1st, 2019 the National Flood Insurance Program has put in some rate increases. Today we're going to talk about those rate increases when it comes to residential properties, investment properties, secondary properties, lake properties, second homes, commercial properties, properties that have been newly mapped to a new high-risk zone, and preferred policies.
So the first thing we're going to talk about is a primary residence. This is going to be your primary home. Let's say you have a policy now through the National Flood Insurance Program. It costs you $1,000 a year. You're looking at a 7.2% rate increase this year, effective January 1st, 2019, which is going to have an impact on you of about $72 a year, which isn't too bad. The big impact is going to be in areas like secondary residences, and commercial properties like we've mentioned. These areas are having a 24.2% rate increase. So let's say that you have a rental house that you're renting out, and it can't be considered your primary residence. If your flood premium is $2,000 a year then you are looking at almost a $500 rate increase per year, and that's just this year. So this could have a big impact on the profitability for a rental house.
Some other areas. Let's say you have a commercial business that has to have flood insurance and your flood premiums are $2,000 a year, you're looking at almost a $500 per year rate increase, for this year. The good thing is on other things like your preferred policies or zone X It's only having a 1%. So on a $1,000 premium, you're literally talking about a dollar and that's it, which is great news for these areas.
Remember, minimal risk areas or zone X generally have flooding 30% of the time. So just because you're in that low-risk zone doesn't mean you don't need flood insurance. It just means that FEMA has not determined it to be a high-risk area, and has not determined the base flood elevation. Other areas where you're going to see a rate increase are what's called newly mapped areas.
So let's say that a property is mapped to a flood zone AE, which is a hundred-year flood zone out from a flood zone X. Of course, during the first 12 months, you can take advantage of new mapping rules, which basically give you that preferred policy rate for the first 12 months. Well, you're going to see a 15% rate increase on those policies now. Now also remember that rate is only good for the first year, and that is there to help you adjust to what your flood premium's going to be. So it's very important that you look at these things.
It's also important that you understand the private flood insurance options and all your flood insurance options overall in Pelham, Alabaster, Helena, Alabama all these different areas where you're going to start seeing a lot of these flood rate changes. 

 

Remember we simplify flood insurance and understanding flood risks through education. If you want to learn more about flood education please visit our learning center by clicking below.

 

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Find all the Pelham flood insurance options

In this article, we want to talk about escrow billing nightmares from both the National Flood Insurance Program (NFIP) and the Private Flood Insurance Program. We discuss what you need to know about escrow billing flood insurance. We discuss how flood insurance claims might be covered if payment has not been received.

Flood Insurance: Escrow Billing Nightmares

We want to focus on everything that you should know to ask as a mortgage lender, an insurance agent, and as a property owner.

You could also listen to our podcast below while you read.

 

Everything NFIP

The insurance company that falls under that federal side of flood insurance is managed by the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP).

As you know by now, even with the Risk Rating 2.0 update, you will still find about a maximum of $250,000 for building coverage and $100,000 in contents coverage for flood loss with the NFIP and FEMA. For commercial properties, the building coverage maxes out at $500,000.

Flood Insurance: Escrow Billing Nightmares

Paying with Mortgage

It's important to point out a few things you need to know when getting your federal flood policy signed especially if you're paying it out of a mortgage loan or escrow payment.

One of these things is that you won't really be getting a declarations page or the actual policy with the National Flood Insurance Program right away. As a result, the signed application can serve as your proof of coverage for up to 29 days.

What does this mean?

Simply put, your mortgage company has 29 days to make a payment for your flood policy's insurance premium before the 30-day wait period kicks in. Think of this as a form of grace period for your mortgage company to pay your flood insurance premiums.

Flood Insurance: Escrow Billing Nightmares

REMINDER: The 29 days will only be for the payment of the policy. There will still be a 30-day waiting period for the actual flood insurance policy to be available.

What if you missed this grace period for your mortgage company to pay your flood insurance?

Well, because of the NFIP's strict guidelines, coverage would not start for 30 days. You might get set back when it comes to both your building and personal property coverage if this payment wasn't made in time because once payment is received after the 30th day is when the 30-day waiting period starts.

Paying Directly as an Agent or Insured

Now, when paying as an insurance agent or maybe you want to pay it out of your own pocket as a property owner, you will only get a 10-day period to pay your policy. The same thing goes, if you miss this 10-day period, your coverage will not start for 30 days.

Flood Insurance: Escrow Billing Nightmares

What If a Claim Occurs?

Let's keep it simple, so long as you made your payment before a claim occurs, you will get the respective coverage written in your flood insurance policy.

Equally, this means that if your mortgage company missed the 29-day payment period, then you will not get any of the coverage you have with your policy until the payment is made.

It is only AFTER payment is made will you be able to get coverage for your flood insurance claims.

Flood Insurance: Escrow Billing Nightmares

Everything Private Flood

So you might be wondering, what about the private flood insurance carriers? Where do they stand on this topic?

Well, it's important to note that just like their flood insurance coverage, payment terms when it comes to escrow billing or escrow account may vary from one private insurance company to another.

This may mean that you will be able to get only 10 days to make a payment up to 15 days. This is regardless if you're paying through a mortgage, an insurance agent, or out of your pocket.

Again, this really depends on the private insurance carrier that you applied with, so it's important to really know the guidelines that your private flood carrier has when it comes to these types of concerns.

Flood Insurance: Escrow Billing Nightmares

What if a Claim Occurs?

Private flood insurance has different standards and guidelines when it comes to payment and flood policies. So you might be shocked to know that some private flood insurance companies will outright reject or deny a claim if it's made before payment is made.

Yes, that means that you won't get any of the coverage with your policy if there was no payment before the flood claim was filed. This is why we highly recommend that you pay your flood insurance premium upfront, as hard as it may be, to avoid this type of situation.

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As an insurance agent, it's important to know which carrier has these guidelines or simply know the guidelines of the carrier that your client is going for. This really helps you, as an agent, avoid E&O Claims since you get to inform your client everything about their flood insurance carrier.

Flood Insurance: Escrow Billing Nightmares

In our experience, we've had many clients file flood claims two weeks and even two days after closing. Thankfully, they get coverage for the flood loss because they were able to get the payment made before these claims.

If you want to know more about the differences between the NFIP and Private Flood Insurance, watch our video below:

So if you need assistance with these payment guidelines for your flood insurance, so you can make sure that you have coverage on your property, understand flood risks, or anything about flood insurance, click below to reach us.

The Flood Insurance Guru | 2054514294

We want to simplify flood insurance, so you can get a better understanding of flood risk, flood insurance, and mitigating your property long-term through education.

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The Build Back Better Act has been going back and forth on whether or not it aims to tax the higher-earning households or not. A lot of things are coming with President Biden's expansive social and environmental bill that aims to create a better quality of life for families across the United States. This includes providing and helping American families during crisis especially after what we experienced due to COVID-19 and addressing climate change impacts to our communities.

Does Build Back Better Mean Better Flood Insurance?

In the midst of the shape-shifting nature of political parties, the initial intent to address the risks and dangers of climate change is being scaled down. We won't dwell into the politics of it all despite it having a firm grip on how Build Back Better goes; that's a story for another day.

Will Build Back Better really build a better structure against climate change and really address the needs of our country's first line of defense against floods? Is Build Back Better just building a broken flood future for America?

What Build Back Better Includes

In the article of MSNBC on explaining the coverages of this act, they covered the following: $380 Billion will be for Child Care and Education, $555 Billion will be for Climate Change and Clean Energy Investments; this generally covers the $12,500 incentive for those looking to buy an electric car like Tesla or install solar panels. Capping prescription drugs costs at $2,000 per year for seniors as well as including Medicare coverage for hearing benefits, and $200 Billion for child tax credit extension to name a few.

Does Build Back Better Mean Better Flood Insurance?

However, as the bill was passed a lot of things got changed such as taking out the dental and vision coverage, free community college, lower prescription drug costs, and the paid family leave which was something that public polls were really hoping for.

The changes also include a significant scaling down of funding for the risk mitigation for climate change which is, to be honest, what Build Back Better was for.

Does Build Back Better Include Flood Risk?

Flood Map

We want to focus on the significant changes on how Build Back Better addresses one of the key concerns with climate change and safeties of families across the country: the federal flood insurance.

Build Back Better was initially drafted to cover $3 Trillion to ensure that all items are ticked by dotting all the i's and crossing all the t's, but across its 12-week course, a lot of things were cut down and only about $1.75 billion was approved by the senate. Simply put, this meant that some areas' overall costs were also lowered.

Does Build Back Better Mean Better Flood Insurance?

Initially, the original Build Back Better draft provided $3 Billion to improve the flood mapping hence addressing the overall understanding of the flood hazard of communities with or without an extreme event like disasters, hurricanes, and things like that. This proposed amount intends to create a system in which federal flood insurance will be able to provide you and your community with updated flood risks based on the flood mapping.

You might be thinking, this number's too big just to address flood mapping in which we would say the Association of State Floodplain Managers stated that FEMA would need between $3 billion and $12 billion to address this concern with flood mapping across the country.

This intends to prepare for the impacts of climate change especially with the frequency of flooding and its severity. With this funding, flood hazard mapping will not only address your current flood risk but also your future flood risk. This can really be helpful especially for disadvantaged communities who don't even have a flood map. In some cases, some flood maps take 15 years to get updated.

According to E&E News, the approved bill ended up cutting down the funding for this area to $600 million. That amount is just 20% of the proposed costs needed to make sure that flood mapping will be accurate and up-to-date.

Does Build Back Better Mean Better Flood Insurance?

It's important to keep in mind that the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP) don't have a flood map for all and communities across the United States. The impact of cutting down the funding for this area can mean that your community will still have to wait a year or maybe even more just to get a flood map that reflects your current flood risks.

Additionally, what officials should know is that flood maps are crucial in understanding where the water is coming from. This also helps everyone understand where and how to build developments as this direct changes how floodwater behaves especially for vulnerable communities like those surrounded by rivers or the coasts.

The thing is flood hazard mapping isn't just for everyone to know their flood zones for flood insurance, but also to understand first the risk of flooding in the area.

Flood Insurance Premiums

Another area of flood insurance that Build Back Better wanted to address is allotting $1 Billion for subsidizing flood insurance premium cost within the federal flood market. This intends to allow low-and-moderate income households to be able to buy flood insurance from FEMA and the NFIP. 

Generally, flood insurance with FEMA and the NFIP averages at about $1,000 per year, and with the Risk Rating 2.0 Program, this number can get more expensive for policies. It's important to keep in mind that a lot of people who aren't required to get flood insurance don't buy one because of its costs.

Does Build Back Better Mean Better Flood Insurance?

This funding helps get the program running and helps people understand that the cost of flood insurance can be cheap without the risks of not getting enough coverages. A lot of homeowners would be buying cheap flood insurance, not knowing that it won't fit their coverage needs. People do this to avoid the well-known affordability costs with FEMA and the NFIP.

However, this funding for the financial assistance when purchasing a federal flood insurance policy was also cut down to $600 million as well

The Future of NFIP

Looking at the bright side of the fence, it's still a good thing that federal flood insurance will still be included in the conversation as we move forward with the Build Back Better act.

Despite the funding being significantly scaled-down, this additional funding for FEMA and the NFIP can address the issues within the federal side of flood insurance. However, this action of scaling down what the Federal Emergency Management Agency (FEMA) really needs makes one ask...

When will flood risk become a priority for the government? For now, only time can tell as the Senate modifies this part of Build Back Better.

If you have any questions on how this will impact you, about your flood insurance, or maybe your flood insurance is trash and you want to update, click below to contact us.

The Flood Insurance Guru | 2054514294

You can also access our Flood Learning Center where we try to answer your common questions about floods, flood insurance, and everything in between.

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.

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Homeowners across the country are faced with a lot of insurance policies needed to sustain their property and homes. This ranges from your standard homeowners' insurance policy to other damage insurances. 

Water Backup Insurance: Do I Really Need a Flood Insurance?

Today, we want to address one of the most common questions with insurance that homeowners usually ask. Does water backup insurance cover flooding?

What is Water Backup?

First thing's first, we have to address the actual definition of what a water backup is. Generally, water backup pertains to the incident(s) when something blocks or stops the natural flow of drains from the pipes that exit your home. This could be sewer backups that are clogged due to debris, overflow of rainwater, or when a sump pump fails so it forces water into your home.

Water Backup Insurance: Do I Really Need a Flood Insurance?

Basically, the water that's coming from your home but failed to get out. This area covers things like septic systems, sump pumps, and/or sewer systems. This time of damage actually has coverage from your insurance however do you still need flood insurance when you're already covered for water backup coverage?

Is Flood Insurance Necessary?

To understand the difference between these two coverages, we first need to go back and understand what floods actually are. Generally, flooding is any incident where surface water from outside of your home inundates your property. This may be due to a storm, continuous heavy rainfall, or coastal flooding.

You might say that they should be covered within a single policy since they are both water damages to your property or home. However, it's important to keep in mind that these two things are different coverages.

Water Backup Insurance: Do I Really Need a Flood Insurance?

Even if you already have water backup coverage, unfortunately, this won't really get you covered if we're talking about flood damage. This also means that flood insurance won't cover you for water backup since most insurance companies in the industry will be considering that "Rule of Two".

The rule of two on flooding, according to FEMA, states that surface water will only be considered a "flood" if it impacts at least two acres of normally dry land or two properties within the same area. Considering that water backup has a smaller scale which only impacts a single homeowner, it doesn't really fall into the coverage of flood.

Now, let's talk about your flood insurance options.

Flood Insurance Options

The NFIP

The National Flood Insurance Program (NFIP) is purely managed by the federal government since this is FEMA's answer to flood insurance. An NFIP flood policy can get you flood coverage on both your dwelling and the contents within it.

When we say dwelling, this simply pertains to either the residential property or commercial building that you're trying to insure with NFIP and FEMA; contents will be more about the personal property and items you have inside the insured building.

There is a coverage limit when it comes to federal flood policies. Flood damage to buildings will be covered to a maximum of $250,000 for residential policies and can only go up to $500,000 maximum if it's for a commercial property. Regardless of the type of property you have written, you can expect to get a $100,000 maximum contents coverage from an NFIP policy.

READ: National Flood Insurance Program Risk Rating 2.0 Update

There's also what's called the Increased Cost of Compliance (ICC) coverage. This is a $30,000 additional coverage for your property in order to make sure that there are flood mitigation efforts made on the property according to the federal government's standards.

Generally, this can include sandbagging your property, installing floodproofing walls, raising your lowest floor from the base flood elevation levels, and putting flood openings. The labor that goes into making these mitigation efforts happen will also be covered under the ICC.

Water Backup Insurance: Do I Really Need a Flood Insurance?

There are also perks with your participating community. A participating community gets access to federal flood insurance and disaster assistance by meeting their standards on flood mitigation and disaster preparedness. The efforts put in by a community won't be unnoticed as this can help on raising your Community Rating System (CRS) score.

The CRS measures and rewards the overall flood mitigation efforts done by the community according to FEMA's standards on floodplain management. Simply put, the higher your CRS score is, the bigger the flood insurance discount you'll get from FEMA and the NFIP.

You can start enjoying your NFIP policy after a 30-day waiting period from the flood insurance purchase.

The Private Flood

If the federal flood insurance option doesn't really work for you then you can manage this new floodplain mapping through the private flood insurance market. It's important to note that this market will solely be managed and provided by private insurance companies which generally means that the red tapes FEMA and NFIP has to go through won't be there.

The first thing you'll immediately see with the private flood market is that there are significantly shorter waiting periods for your flood policy. Once you have everything settled and paid for, the wait period for the private flood carriers will follow a much shorter timeframe compared to NFIP. A private flood insurance policy can take effect on 7 or up to 14 days maximum. 

Another good thing coming out of private flood insurance is that there are no coverage limits. This means that you won't really need to stress over how to get covered for a $500,000 home since it will be fully covered by your policy. This is the same with contents coverage and you'll also get additional coverages like replacement costsadditional living expenses, and loss of use.

Fair warning, it's a known issue in the private insurance market in general that they will do moratoriums when there are risks that are too high for their comforts.

This simply means that they will either put a stop or take a break from providing flood insurance policies to a certain area that has higher risks. There's also a chance that you might not get to buy flood insurance from them once they decide to non-renew your policy.

What Really Matters

Understanding your insurance coverage from a homeowners insurance policy, renters insurance policy, water backup insurance, and flood insurance is the key to ensuring that you bounce back from any possible damages due to natural disasters or lack of maintenance. You want to get yourself a good insurance agent who can help you explain these coverages and how they differ.

If you have any questions about flood insurance, insurance coverages, or anything related to floods, click the link below to access our Flood Learning Center where we try to answer your questions on flood insurance and beyond.

Flood Insurance Guru | Service | Knowledge Base

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. 

We're getting close to Thanksgiving, but something that we wouldn't be thankful for is all the rain and flooding that we are getting. This unpredictable weather has some areas of Washington for example in drought, but somehow the places that don't need rain got all of them at once.

Washington Flooding: Atmospheric River Hits Northwest

Today, we want to talk about the recent flooding that's going on around Washington County and also understand how this can impact flood insurance in the state especially with the Risk Rating 2.0 program taking place.

November Flooding in Washington

A category-5 atmospheric river hit the Northwestern region of the United States which caused a lot of flooding, especially in the Washington area. 75% of homes had water damage due to this event at the time of writing. The overall weather event raised the November amount to 6.83 inches of rainfall in Seattle alone as stated by Madie Kristell from the National Weather Service (NWS). The normal rainfall amount in the area during this month maxes at 6.3 inches.

About 500 properties in Whatcom County were displaced by severe flooding during this incident which prompted search and rescue efforts to ensure the safety of residents. At the time of writing, this flooding, unfortunately, cost a death on Highway 99 due to the mudslides happening in the area. and at least 2 persons are still missing.

Mudslides and flooding also caused a lot of trouble for commuters as the Interstate 5 highway was closed immediately after multiple reports of these mudslides and floods impacting the road conditions from the continuous heavy rain. 

Areas like Mount Vernon in Skagit County also received a flood warning just after receiving 2 to 4 inches of rain. Mount Vernon is also expected to get an increased amount of water as rainfall amounts can average 4 inches of rain in the next five days. This is also with the threat of major river flooding events in Skagit County as the Skagit River easily topped its major flood stage of 32 feet and is expected to go as high as 38 feet in the upcoming days of the week.

Although flash flood watch is canceled for Burlington, Sedro-Woolley, Mount Vernon, and Anacortes, Governor Jay Inslee continued to issue an emergency proclamation for fourteen other counties in Washington. The counties included in this emergency proclamation are as follows:

  • Clallam County
  • Grays Harbor County
  • Island County
  • Jefferson County
  • Lewis County
  • King County
  • Kitsap County
  • Pierce County
  • Mason County
  • San Juan County
  • Skagit County
  • Snohomish County
  • Thurston County
  • Whatcom County

These severe weather conditions also caused a lot of problems in the power infrastructure. As of 9:30 PM yesterday, at least 70,000 residents lost power in the Washington area.

Right now, we might even see widespread flooding in areas that are new the Ferndale downstream and the Skokomish River which at 16.5 feet can cause a lot of water to go into pasture lands to West Bourgault Road.

How This Impacts Flood Insurance

Federal Flood Insurance

We're currently moving into fully adopting the new Risk Rating 2.0 program from the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP) and although we're still in the first phase which mostly impacts new business flood policies, it's still important to note that everyone that has flood insurance through the NFIP will still get impacted by this weather event.

Washington Flooding: Atmospheric River Hits Northwest

First, it's important to note that if you're one of the properties that got inundated with water — regardless of minor flooding or severe flooding — this data will still be collected and considered in your new flood insurance rates with Risk Rating 2.0. This applies to both new business and renewals which is phase 2 where everyone who has FEMA flood insurance will adopt the new rating structure of the NFIP.

This flood will be taken into account because one of the variables that determine your flood risk score, which equally impacts your premium rates, is flood frequency and type of floods.

Washington Flooding: Atmospheric River Hits Northwest

Another thing you want to take into account also is the impacts when you make a flood claim during this time. Although FEMA will basically hit that hard reset button and have everyone start with a clean slate when it comes to flood claims history.

The claim variable is the new Risk Rating 2.0 system in which everyone will basically go back to zero with the Risk Rating 2.0 however once you file a new flood insurance claim under the new program, FEMA will do a 20-year lookback and count the claims you've made during that timeframe. The number of your flood claims made within the last twenty years will be your claim variable score.

Washington Flooding: Atmospheric River Hits Northwest

These are just a few of the things that will surely have an impact on your flood insurance due to this flooding that happened in Washington. You can see the overall changes in rates in Washington state through our Risk Rating 2.0 blog by clicking here.

Private Flood Insurance

This weather event and the flooding it brought isn't just going to impact those who have federal flood insurance and to be honest, the same can be said for those who are getting flood policies through private insurance carriers.

Although private flood doesn't necessarily need to follow all those changes with a rating from FEMA's Risk Rating 2.0, this type of flooding event still has significant impacts on policyholders in this market.

Washington Flooding: Atmospheric River Hits Northwest

One of the most significant impacts of flooding, when you have a private flood insurance policy, is how your increased risks due to recent floods can cause these flood insurance companies to back out from your providing your community flood insurance. Generally, this happens only on a small scale where some homeowners won't be able to buy flood insurance from the private market however sometimes these companies can go on full moratoriums.

Moratoriums in the private market generally mean that you won't have the private flood insurance option for your whole community, city, or county because of risk for flooding in the area got a significant increase in recent times. With the Risk Rating 2.0, this type of impact can be very expensive since you will no longer have the option to get cheaper premium rates through the private market.

Washington Flooding: Atmospheric River Hits Northwest

Equally, filing a flood insurance claim in a private flood policy can also reduce your chances to get flood insurance from them again. The private market is known to have the choice to non-renew your policy with them. Non-renewals are generally something we see seldom with federal flood insurance and in most cases, it doesn't happen at all. 

Regardless of how this weather event will impact you when it comes to flood insurance, we should always put first safety. One of the reasons why we strongly encourage getting flood insurance is to easily remove that worry that you may have when flooding happens where you will lose the things you value most. The right flood insurance policy can easily cover these things for you, so you want to get one.

Equally, finding safety and security for your home as well as everything inside of it is less important compared to your safety. If there is an announcement that you need to evacuate an area, we highly encourage you to do so and avoid gambling with the risks. Floods are very unpredictable and are highly deadly.

If you have more questions about this flooding event in the northwest region, how flood insurance can protect you, and how to be safe in this type of situation, click the links below to reach us or look at our Flood Learning Center where we try to answer all of your flood-related questions in just a few clicks.

Contact Us

Flood Insurance Guru | Service | Knowledge Base

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

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The federal flood insurance industry has changed a lot since the Risk Rating 2.0. One of the biggest changes is how the Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP) will look at flood zones. FEMA, NFIP, and mortgage lenders would have to only follow the new rating system and regulatory standards of the Risk Rating 2.0.

Are Preferred Flood Zones Gone?

As natural disasters are becoming progressively more destructive and unpredictable, we want to discuss how changes on looking at flood maps would change.

Risk Rating 2.0

The implementation of the Risk Rating 2.0 or simply NFIP 2.0 significantly impacts the rates going around with federal flood insurance. For the most part, this means that there will be an increase in rates as the new program gears towards a more accurate flood risk per property. We'd like to call this the fingerprint of your flood risk due to the nature of having an individual property getting a unique risk rating score.

This program basically says that each property will get a unique flood risk score per variable with the rating engine system in from both the legacy program from Federal Emergency Management Agency (FEMA) and new things coming into consideration.

The things that will carry over from the legacy program which will still have a bearing on your flood insurance rates are as follows:

  • Flood zone designation based on community flood maps. Flood zones also have the bearing to require flood insurance if you're in the Special Flood Hazard Area (SFHA) or High-Risk Zones
  • Flood Insurance Claims. Despite changing to a claims variable system, flood claims with FEMA may still impact your overall rates.
  • Policy assumption and policy transfer.
  • The Grandfather Rule.
  • Pre-FIRM and Newly Mapped discounts.

Are Preferred Flood Zones Gone?

The new things that will impact your rates will be from:

  • Types of flooding that your property experience.
  • Flood frequency.
  • Distance to any water source.
  • First-floor height or distance of the first livable area to grade (ground).
  • Elevation of the structure or the property itself. How high is the first floor of the property compared to the ground hence properties that are elevated are most likely to get a decrease due to this.
  • Replacement costs. This means that higher-valued homes will get an increase and lower-valued homes will get a decrease due to the overall expenses to rebuild the property due to flood damage.
  • Flood Risk Mitigation Measures made on the property.

Despite these changes to the overall rating engine systems in the Federal Emergency Management Agency (FEMA), your flood insurance policy will still follow the same amount of $250,000 for building and $100,000 in contents max for flood coverage.

The Increased Cost of Compliance (ICC) is also one of the things that will carry over from the legacy National Flood Insurance Program to this new program as well as the Community Rating System (CRS) discounts.

 

Are Preferred Flood Zones Gone?

Traditionally with the National Flood Insurance Program (NFIP) and even in private flood insurance companies, you'll see low-risk flood zones and special flood hazard areas (SFHA) or high-risk flood zones. I can even remember the time where I can tell your flood insurance premiums in these low-risk flood zones like Flood Zone X depending on the coverage amount. So you'd see immediately how these low-risk zones or preferred zones immediately impact your rates and these rates are about $400 to $600 per year.

On the other hand and you would notice with the new program through Risk Rating 2.0, flood zones no longer impact your flood insurance rates with FEMA and the NFIP. So the perks of being in a preferred zone and that preferred rate will no longer be in the picture. This means that federal flood insurance will no longer rely on a Flood Insurance Rate Map (FIRM) to say that you will get a preferred rate since flood zones don't impact rates anymore.

Are Preferred Flood Zones Gone?

On the other hand, it's a different story when it comes to the private flood insurance industry. We're still noticing a lot of private flood carriers who look into these low-risk zones and provide that same preferred rating on premiums of about $400 to $600. It's important to note also that since these insurers are managed by private companies, they don't necessarily need to follow the changes coming to federal flood insurance.

Despite these changes and flood zones only becoming more of a factor that determines whether or not you're not required to buy flood insurance for your property, it's still important to get a form of security for a property. If you want us to help you get a desirable quote from both federal and private flood insurance, click the link below to reach us.

Buy Flood Insurance Now!

We also have a flood learning center where we try to answer your frequently asked questions about flood and flood insurance.

Flood Insurance Guru | Service | Knowledge Base

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

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