Flood insurance in Alabama can be confusing. Many insurance agents in areas like Birmingham and Montgomery want nothing to do with it and others think people may not be in a flood zone.

Birmingham, Alabama Flood Insurance

After the 2019 Alabama flooding I can't tell you how many times I spoke to someone who said their insurance agent told them they were not in a flood zone.

Yikes!

Try explaining that to someone after they lost everything to a flood. Thats exactly what happened with people in Houston Texas and residents of Nathans Estates in Muscle Schoals Alabama.

So today we are going to look at 5 things that could cause flood insurance e and o claims to happen in Alabama.

  1. Building coverage
  2. Contents coverage
  3. Proper documentation
  4. Mistakes on application
  5. Cobra zones

 

Building Coverage

One of the leading causes of e and o claims on flood insurance can be building coverage. Many agents either don't offer building coverage or don't offer replacement cost on the building in Alabama.

It's important to understand these because a policy could default to actual cash value if the 80% rule is not followed.

 

The National Flood Insurance Program generally requires either the max coverage available or 80% of the replacement cost. So for example if the replacement cost of a building is $400,000 they would require $250,000 to be on the policy.

This is also the opportunity to have excess coverage which could cover the proper replacement cost.

 

Contents Coverage

The next area is contents coverage. We see many policies that do not have contents coverage. This ultimately is up to the customer but many times we see where it was never offered. 

Imagine losing all your personal belongings and not knowing you could have had coverage for it.

You would probably be pretty upset.

Recovering from not having contents coverage can be just as hard as recovering from not having building coverage.

Proper Documentation

Proper documentation on Alabama flood insurance policies is another area where we see alot of error and omission claims occur.

In many situations if the National Flood Insurance Program or FEMA does not receive the documentation they need they will drop coverage down.

I remember speaking with an insurance agent a few months ago. They had called us on this exact issue. The carrier had submitted some documentation to them but they did not see it in their insurance agency management system.

The customers coverage was lowered from $250,000 to $25,000. A claim occurred and to the agent and insureds surprise there was not enough coverage to cover the damages.

Some of the documentation that maybe needed is a signed application by the insured and the agent. Proof of payment, possibly an elevation certificate with color photos.

A big area we see mistakes everyday on is the application. So many times we will see agents mark a home has a basement not truly understanding how FEMA defines a basement.

 

If a property does not have all four sides below ground then FEMA may not consider it a basement. Things like this could cause problems during the claim process.

COBRA Zones

Lastly is writing coverage when it's not available. One big area this happens is Cobra zones and other protected areas.

 

Just a couple of months ago we where advising an agent in Savannah Georgia and Statesboro Georgia about these guidelines. They said well it let me write it. A couple of months later FEMA cancelled the policy for underwriting. We were able to help the client find coverage through the private flood insurance market but it was a difference of about $5000.

As you can see there are alot of things to pay attention to when setting up a flood insurance policy for a client. You want to make sure you have a good process of making sure all things are done.

Maybe you just don't want to offer flood insurance in Alabama and that is fine. We work with insurance agents across the country everyday because of our educational background in flood mitigation. Click here to learn more

If you want to learn more about flood insurance make sure to visit or YouTube channel where do daily flood education videos or our podcast.

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

 

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

2019 and 2020 has brought some serious flood threats to Alabama during the winter months. 

So today we will look at the following

  1. Why the flooding occurred
  2. Impacts on insurance
  3. What to expect in 2021

 

Why Flooding Happened

Alabama received a large amount of rainfall in 2019 and 2020. As a result then water tables were full for a long time. According to WAAY 31  rain continued to fall there just wasn't anywhere for the water to go.

 

Even the power companies through out Alabama had a hard time managing the amount of water coming through the state. Water levels on the Tennessee River, Lake Logan Martin, Smith lake, and Weiss lake set records.

Some people on Weiss lake had total losses to their properties as a result of flooding.

In Muscle Shoals Alabama Nathan estate residents lost everything to flooding. This area was not even in a special flood hazard area so many people did not have flood insurance.

As a result they had to depend on disaster assistance to help them which is a very little amount of money.

Since this flooding in 2019 and 2020 hit it has caused a ripple effect when it comes to private flood insurance options.

Some carriers are not currently writing flood insurance in certain parts of North Alabama and East Alabama.

As a result many property owners have had to find either get a higher private flood insurance option or go back to the National Flood Insurance Program.

What to Expect in 2021

So can we expect the same thing to happen in 2021?

It's important to make sure to have flood insurance in place if this flooding was to occur again.

However 2021 is bringing some different challenges with it. Unlike 2019 and 2020 the water tables are not nearly as high as they were. This will allow for more water absorption, less runoff, and better water management by local watersheds.

This doesn't mean that winter flooding won't occur in Alabama in 2021.

So what can you do to be prepared if this flooding does occur?

As we mentioned making sure your have your Alabama flood insurance in place is the first step.

Waiting until the end of January to try to do this is a bad idea.

Almost all flood insurance companies have wait periods. This is the time frame between when a policy is issued and when a claim would be covered.

 

The National Flood Insurance Program generally has a 30 day wait period. Private flood insurance companies can range from 1 day to 15 days.

Flood Insurance Options

So what flood insurance options are available in Alabama?

As we have mentioned before you have the National Flood Insurance Program and you have private flood insurance companies.

One is backed by the government and one is backed by private flood insurance companies.

It's important to understand that National Flood Insurance Program should be the same price no matter where you get it from, but private flood insurance will widely range on price.

Each private flood insurance carrier has their own rating model so coverages and pricing are unique. If you want to learn more about your options then click here.

You can also check out our YouTube channel where we put our daily flood education videos.

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

 

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

 

Flood Insurance can be confusing especially has often as the rules change. Your rate might go from $500 a year to $2500 a year with not much explanation.

Today we hope to eliminate some of that confusion for you.

Before we get into that I want to tell you a story about a property owner in Marion Illinois.

This property owner had 4 investment properties that were all in the preferred flood zone also known as flood zone x.

The premium on the first 3 properties was $790 for each property and the 4th property was $2690 a year.

Holy cow that is a difference

So why such a big difference in premium?

In order to understand the difference in premium we must understand what the National Flood Insurance Program defines residential and non residential properties as being.

According to FEMA in order for a property to be considered residential 75% of the building must be used for residential purposes.

So what about those properties that are not?

Well different rating models could come into play which would explain the difference for the property owner we discussed.

If you are an investor or commercial property owner its important to understand these things. They could have a major impact on your profitability.

So is there any way around these higher premiums?

Well there are many options in the private flood insurance market that look at these risks differently.

They may not charge you differently if it is being used for residential or non residential purposes.

So when purchasing a property you want to look at how this property is used now and how it will be used in the future.

Flood insurance options

So if you have further questions on how to understand residential and non residential flood insurance make sure to visit our website.

You can also checkout our YouTube channel where we do our daily flood education videos or our podcast. You can also find this episode below.

 

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

 

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