The Flood Insurance Guru Blog
Today, we're talking about what the flood insurance options are in Birmingham, Alabama? When it comes to Birmingham Alabama you have multiple options for flood insurance, especially depending on what part of Birmingham you're in. Maybe you're in a suburb like Vestavia, Hoover. Maybe you're actually in the city of Birmingham. Maybe you're in Pelham or Alabaster. Well, today, we're going to talk about the various options.
First, we'll talk about doing a policy just traditionally through the National Flood Insurance Program, which is the FEMA or federal government funded program that most people think about.
Now, you can do a traditional policy through them. Depending on when your house was built, you may have to have an elevation certificate, you may not. First of all, what is an elevation certificate? Well, an elevation certificate is a certificate that shows the different elevations of the different areas of your home. What it's used for is to compare your home to what's called the base flood elevation, which is the level that FEMA predicts flooding could come to, so if your house is way below it could have a big impact on it. If your house is above it, you might be able to get some things changed.
Now, if your house was built before the first flood map, you have what's called a prefirm property, so an elevation certificate should never be required, unless the building has had substantial improvements which is more than 50% within a given year. Now an elevation certificate could greatly benefit your rates. However, it's not going to be required.
Now, if your house was built after the first flood map, and you're in 100 year flood zone or what's called an AE zone, then an elevation certificate more than likely is going to be required, through the National Flood Insurance program.
Now, you may ask how much is an elevation certificate? Well, generally an elevation certificate costs roughly $500 to get done. Any surveyor should be able to come out and get it done for you, within seven to ten days.
Now, option number two is if you're purchasing a home in Birmingham Alabama, or Vestavia, Hoover, one of the surrounding areas, and the current homeowner has a policy through the National Flood Insurance program, then you can do what's called a policy transfer. What this is? It is when the policy's being transferred from that homeowner to yourself when you purchase the house. The only catch is that seller has to basically eat that money that they have paid for that flood insurance for that year. The benefit to you though is you don't have to pay anything until renewal. Now you might ask, Why would someone do this? Well, they might have a preferred rate, maybe a flood zone changed, and so when you do a policy transfer right now, it could keep you in that preferred zone. It keeps you in those preferred rates. This could be a difference of $1,000 or $1,500 a year. Policy transfers can be a great benefit.
Now FEMA's starting to phase these out, because what's happening is they're realizing that they're keeping flood insurance at a much lower premium in areas where it should be a much higher premium because the risk is higher, which leads us to our next option what's called grandfathering.
Let's say that your buying a house. It doesn't have flood insurance now, or the flood insurance is being required, but the house is built in 1990. If you've got an elevation certificate or something that shows a lowest adjacent grade back to 1990, you can do what's called a grandfather. Where the house is grandfathered back to 1990, because it was built to compliance and you have proof that shows that. This is another way that you can grandfather. As we mentioned before, FEMA's doing away with these, because when your grandfather something back, you're lowering the rate. But the problem is, you're not lowering the risk. So they're taking on a lot more burden if a claim does occur.
Option number three, which is if they're still part of the National Flood Insurance Program is let's say that the elevations have changed, and the base elevations at 100 mfeet, but the lowest adjacent grade of your property's 102 feet. Then what we can do is take that information off the elevation certificate, make sure that there haven't been any flood losses, and we can submit it to FEMA and say, this should not be in a high risk flood zone, it should be in a low risk zone. FEMA will come back and say yes, you're right we can clearly tell. So we're going to do what's called a letter of map amendment. Or map change. This something that is currently taking place in areas like Karey Drive in Centerpoint, Al. So what we'll do is we send a letter to the mortgage company in Birmingham, Alabama, and when they do that, the mortgage company takes away your requirement. Now, this does two great benefits for you as a property owner. What it does is, it helps you increase your property value, because flood insurance is no longer required on that property. This may have been negatively been impacting you or maybe when you try to sell the property. Now, that's no longer a requirement.
The other benefit is, now that it's not required that you have it, and the zone's been changed, you can get a preferred policy for about $450 a year for coverage up to $250,000 on the building, and $100,000 on contents. Now, the last option is called the private flood insurance, and this is through private carriers. You may ask, how is this different in the National Flood Insurance Program? Well, the National Flood Insurance Program is backed by FEMA. Private flood insurance is just like it sounds. It's backed by private insurance carriers. A big difference is, FEMA basically cannot turn somebody down, because it's through the government. Private insurance companies can pick and choose what they want. They can turn you down, because your house might be a certain level below the base flood elevation.
You might ask, What is a base flood elevation? Well, base flood elevation is just the level of where FEMA feels like flooding could occur at. Maybe it's 100 feet, maybe it's 150 feet. That's something that pulls up when we order a zone determination. When you're looking at all these different options, you want to reach out to a flood insurance expert in Birmingham, Alabama, like The Flood Insurance Guru that has an educational background in flood mitigation, and can show you the accurate numbers when it comes to base flood elevations. Private carriers bring good news with that is you might get a great rate with double the coverage that you would through FEMA.
The bad news though is, let's say you have a claim. They might be able to non renew you, which that generally is not going to happen with FEMA. They might skyrocket your rate, because of a claim, but they're probably not going to non renew you. Just because they know there's no other option, and because you have a federally regulated loan through your mortgage company, it's going to be required. Some of the benefits of private flood insurance is, as I said they offer a lot more coverage than FEMA, where FEMA maxes out at $250,000 on a residential properties in Birmingham, the private carriers might go up to two million, three million, or four million. . They're going to be able to give you replacement costs. FEMA is generally is not going to be able to do that. FEMA is not going to give you coverage for additional living expenses while your house is flooded. Private insurance company will usually pay up to about 10% or $25,000 for additional living expenses while your house is being repaired. They may even give you contents coverage in your basement, which generally FEMA's not going to require.
There's some big differences there, and it can be big differences in pricing. If you've got questions about these different options we've discussed today, like the traditional National Flood Insurance Program policy, the policy transfer, the grandfathering, the letter of map amendment, or private flood insurance, please reach out to us www.floodinsuranceguru.com. You can also go to our YouTube and our Facebook channels, The Flood Insurance Guru where we do daily videos about flood insurance in Birmingham, Alabama. You can also just click the form below, fill the form out below, and we'd be happy to get in touch with you about what your different options are when it comes to flood insurance. Thank you.