Growing up as a kid I had some cool experiences. My did was supposed to be an aerospace engineer until he had a chemistry lab accident in college. Like many of us he had to adjust his plans.

One of his first jobs out of college was building the NASA backpacks. We were all about NASA as kids. I remember watching the first night rocket launch in 1985 at Cape Canaveral. That booming sound and smell of fuel was incredible.

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So many years ago when the NASA shuttle program was shut down I was pretty disappointed. On May 30 2020 that all changed after a 10 year absence from space we were finally back in space with the new SpaceX program. SpaceX is basically privatizing the space program now by being the first U.S. private company to send astronauts into space.

So If Space X can do it then why can't the National Flood Insurance Program.

Why can't the National Flood Insurance Program work with a company to completely privatize the flood insurance industry like NASA did.

Well there seem to be alot of reasons, so lets discuss a few

  1. Giving everyone access
  2. Accurate risk models
  3. Accurate Pricing

As of today the National Flood Insurance Program still does not recognize private flood insurance as continuous coverage. You might have had a private flood insurance policies for years but when you sign up with the National Flood Insurance Program for a policy its like you haven't had one.

Another one of the major issues that is occurring across the United States is giving everyone access to private flood insurance. Private flood insurance companies have the right to reject a risk based on their under writing. One of the things that is a common rejection is previous flood claims.

So how do you continue to provide coverage to these properties that continue to flood?

Maybe the question should be should these properties continue to get access to flood insurance as they continue to rebuild in special flood hazard areas?

I recently talked to a property owner who has filed 7 flood insurance claims in 5 years. They stated they have received more money in flood insurance claims than they paid for the property.

As you can imagine this can throw up a major stop sign for private flood insurance companies who are trying to make a profit.

Something that is starting to really advance are risk models. Private flood insurance companies are doing a really good job of using data and technology to get more accurate risk models.

While a National Flood Insurance Program policy is based on the flood zone it doesn't truly measure the flood risk for a property.

I hear from people everyday that are shocked that a private flood insurance rate is double what a National Flood Insurance Program policy is in a minimal risk zone also called a flood zone x.

One reason is the private flood insurance company can see what the real flood risk of a property is compared to what the flood zone maybe.

One of the last things is accurate pricing. Have you ever heard the saying once you give somebody something its really hard to take it back. Trust me my 5 year old daughter found YouTube on my phone and now she always wants to find games on my phone. It's a real battle with her on this everyday as we limit these types of devices.

The same goes for the National Flood Insurance Program and subsidized rate. Certain properties in the special flood hazard area qualify for subsidized rates. These basically means FEMA is covering part of the rate.

You have many people who have taken advantage of this through the years. Especially higher end homes in coastal areas like Mexico Beach Florida which was devastated by a hurricane a few years ago.

The National Flood Insurance Program continues to push forward and is scheduled to release a new update to the program called Risk Rating 2.0 in 2021. While this will benefit many people it still is not addressing the issue of privatizing the flood insurance industry.

So as Space X continues to make history with its privatization we can only hope that one day the flood insurance industry will do the same thing.

If you have questions about what your flood insurance options are then make sure to visit our website Flood Insurance Guru. You can also check out our daily flood education videos on our YouTube channel.

Remember we have an educational background in flood mitigation which means we can help you understand your flood risks, flood insurance, and mitigating your property against flooding.

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Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com

Its 2020 and everyone is using google for everything. Google knows more about us than we know about ourselves.

 

I remember sitting in a college e-commerce class when google first came out. NO one took it seriously, I know I didn't or I would have bought stock in it.

So what does google have to do with flood insurance?

As we mentioned google probably has more data than any other service out there.

Private flood insurance and the National Flood Insurance Program use different resources for determining flood insurance rates.

One of the benefits of private flood insurance is the advancement in technology they use in determining flood insurance rates.

While the National Flood Insurance Program or FEMA looks at a parcel many times they can not tell if a structure is elevated or not. So you may have a structure that sits 50 feet high but FEMA still thinks it is in the special flood hazard area. This is one reason why elevation certificates are required so many times.

So what is the private flood insurance approach to this? Private flood insurance uses many tools when mapping a risk. One thing they look at to determine the rating for a risk is location. Generally google earth is used to help determine this rate.

Google earth can be a great tool when locating a property. However if you have multiple structures on a property it may try to show the wrong structure. Let's look at an example of where this might happen. Imagine you have a lake house on Smith Lake in the Cullman or Jasper Alabama or maybe Lay Lake in Shelby, or Lake Logan Martin in the Pell City area. If you live on the lake you probably have a boat house as most lake home owners do.

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This could cause a major impact on your flood insurance if you are not careful. As the photo below shows this boat house is much closer to the water than the main house.

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So as you can imagine you will probably pay more for private flood insurance based on location.

So what exactly can you do to make sure this is accurate?

When getting a private flood insurance quote from The Flood Insurance Guru or any insurance agent ask for a picture of the map for accuracy. What you want to look at is where the red pin drop is at. It needs to be located on the structure that you will be insuring.

 

We recently saw where it was a difference of almost $1200 a year for the property owner.

As you can see you could be overcharged for flood insurance without even realizing it. Imagine if this error occurred for multiple years that could be a lot of money out of your pocket.

So can you get some of this premium back?

Maybe or maybe not

It depends on the private flood insurance company that you are dealing with, generally it can be difficult to get flood insurance refunds on prior policies.

So maybe you think you are being over charged or want to verify that your flood insurance is accurate then make sure to click here for us to verify it for you.

You can also visit our website or YouTube channel where we do daily flood education videos.

 

Start My Flood Insurance Quote

 

 

Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com

 

When most people think about flooding they normally think about areas like the coast. They don't think about inland areas like Birmingham Alabama, Huntsville Alabama, Hoover Alabama or even Montgomery Alabama. This is one reason why many times insurance agents, realtors, lenders, and property owners are not aware of the flood insurance options in Alabama.

In this blog we are going to particularly talk about private flood insurance in Alabama and everything you need to know about.

The majority of people in Alabama still think the only flood insurance option available in Alabama is through the National Flood Insurance Program.

However this simply is not the case. Private flood insurance and the National Flood Insurance Program are both available in Alabama. Private flood insurance has really made a push into Alabama in the last 10 years.

However before you start rushing to the private flood insurance market there are some things you need to know.

  1. Who qualifies?
  2. What does admitted and non admitted mean?
  3. What coverages are available?
  4. Pricing
  5. Claims process

Qualifications

So let's talk about  who qualifies for private flood insurance in Alabama?

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Almost any body can qualify for private flood insurance in Alabama except those that are on the severe repetitive loss property list.

This is a property FEMA has designated because of a certain number of flood losses within a certain time frame.

There are a few things that could disqualify you based on the private flood insurance company. For example some private flood insurance companies will not insure a property that has had any flood loss, then there are some that only restrict it within the last 5 years, and then there are some that restrict it to just none claim within the last 5 years.

Something else that could disqualify you for private flood insurance in Alabama is the type of loan you may have on a property?

FHA loans restrict flood insurance options to only the National flood insurance Program, so this is one thing that could disqualify you. While other loan types in Alabama do allow private flood insurance it still has to meet certain guidelines.

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In order for banks to accept private flood insurance it has to meet the U.S.C 402C. which is the private flood insurance standard of being the same as the National Flood Insurance Program.

The reason for this is because it's a different type of program.

Private flood insurance in Alabama is broken into two different categories. You have non admitted and admitted.

So whats the difference?

Admitted insurance companies are companies that are licensed to do business in a state. They have to follow certain state laws and consumers have certain protections if the company goes out of business.

Non admitted insurance companies are not licensed in a state but are still allowed to do business there. They do not have to follow the same state laws but do have other guidelines they have to follow. Consumers do not have protection if these companies go out of business. Non admitted companies can also charge different fees that admitted companies can not.

It's important to know as of 2020 Alabama does not have any admitted carriers for private flood insurance.

So what coverages are available?

 

Private Flood Insurance Coverages

Well this is where private flood insurance in Alabama can be very beneficial. Private flood insurance offers unique coverages on commercial and residential flood insurance in Alabama.

Let's look at residential flood insurance first. The National Flood Insurance Program only offers up to $250,000 on buildings and $100,000 on contents. Private flood insurance can go up into the millions on building coverage. They also offer additional living expenses so if your property floods then you would have a temporary place to stay. This can be really important if repairs take 3-6 months.

Now let's look at the commercial coverages. The National Flood Insurance Program only offers building coverage up to $500,000. As you can imagine this would not go very far on a commercial building. Private flood insurance also offers coverages into the millions here. One major thing that the National Flood Insurance Program does not offer is business interruption coverage. This is a critical coverage for a commercial flood insurance policy.

Let's look at an example of where you would use this coverage. Let's say that you own apartment complexes in Birmingham Alabama. Its been an usually wet few months and the Cahaba river starts to overflow causing water to enter the apartments.

Apartment building in Philadelphia, Pennsylvania.

Well residents can't live in these apartments until the repairs have been done.

Let's say that 30 units are damaged and you rent them for $1000 a unit. If it takes 3 months to repair them then thats $90,000 you could be out of pocket. However a private flood insurance policy could cover this expense. As you can imagine this could send some business owners into bankruptcy.

Now that we have a good understanding on the differences in coverage lets discuss pricing.

 

Pricing

We hear from people everyday in the Birmingham and Huntsville Alabama area that all flood insurance is the same. While this technically is the case for a National Flood Insurance Program policy. This is not the case for private flood insurance. Each flood carrier looks at risk differently. The two things that most are looking at are the elevations of the building and the location to flood risk in the area. FEMA is using their outdated flood maps and private flood insurance companies are using different technologies.

Because of this its not unusual for private flood insurance in Alabama to be 40% cheaper than the National Flood Insurance Program.

So what about claims?

 

Private Flood Insurance Claims

We can talk about all the other stuff all day long. However at the end what matters is when you have a claim you are covered and its a smooth process. FEMA claims can take 6 months to a year to settle if it is a smooth process. What about private flood insurance claims?

We had a client in Centre Alabama that suffered a total flood loss in 2019 from the flooding. While this customers neighbors were still battling with FEMA after 6 months he had is private flood insurance claim settled within 60 days. Since it was a total loss they paid off the mortgage.

We had the exact same thing happen with a client in Nebraska where they settled within 60 days and everyone else was waiting on FEMA.

So before jumping into the private flood insurance market in Alabama it's important to ask the questions we have discussed today. This will help you understand the type of company you are dealing with and confident that the claims process will go smoothly.

So if you have questions about private flood insurance in Alabama then make sure to visit our website. You can also check out our daily flood education videos on our YouTube channel or Facebook page.

 

Contact Us

 

Chris Greene

Author

Chris Greene

President of The Flood Insurance Guru
M.S. in Emergency Management with a focus in Flood Mitigation
flood@communityfirstagency.com