The Flood Insurance Guru Blog
Today we're talking about, what are the flood insurance options in Knoxville, Tennessee? Do you have more than one option? What are the resources out there? Well, today we're going to talk a little bit about that. When you're out there getting quotes for flood insurance, you want to make sure you're working with a flood insurance expert. Maybe someone who has an educational background in it, like The Flood Insurance Guru, especially if you're searching for flood insurance in Knoxville, Tennessee, or surrounding areas.
You have several different options when it comes to flood insurance. The first one we're going to talk about is, really, just your traditional policy through The National Flood Insurance Program. Now, you have a couple options here, depending on when your house was built. Let's just say your house was built before 1978, or before the first flood map in Knoxville, Tennessee was put into place, then your property is what's called a Pre-FIRM Property. What this means is, an elevation certificate is not going to be required unless more than 50% of the building was improved within a given year.
Now, an elevation certificate might significantly help your rate, it might completely eliminate it, but it would not be required. Now, let's say your house was built after 1978, or after the first flood map was put in place in Knoxville, Tennessee, then if you're in, what's called a, flood zone AE which is 100 year flood zone, it is going to be required that you have an elevation certificate, if you're going through the National Flood Insurance Program.
However, if you're just in a regular zone A, which is a 500 year, flood zone, you may not be required. It depends if there's a base flood elevation or not. Because if there's not a base flood elevation, or one hasn't been determined, then an elevation certificate could be a complete waste of your money. So, these are just some things you'll want to be cautious about when searching for flood insurance in Knoxville, Tennessee.
Now, that's just the traditional policy for the National Flood Insurance Program. You still have a few different options there. Let's just say that, your purchasing a home, and someone there already has a policy on the property. Then you have the options of doing what's called a policy transfer, where you transfer the policy from one homeowner to the next. The only catch is, flood insurance premium is paid in full, whether it be by the mortgage company, or the homeowner.
So, if you're going to do a policy transfer, that seller has to be willing to walk away from the premium they've already paid. Now, many people will do this because they want to sell their home. However, that's just something you must understand. The benefit for the buyer of that house, though, is they don't have to pay anything on flood insurance until renewal.
Now, your next option is, other than doing a traditional policy through the National Flood Insurance Program, or a policy transfer is, let's say that your house was built to date of compliance, and you have an elevation certificate dated back to 1990, when the house was built. It shows that, then you can grandfather that property back to 1990s flood map. Now, the National Flood Insurance Program is slowly doing away with grandfathering. The reason is they're giving you a much better rate compared to the actual risk that is there currently. So, what it's doing is creating some additional exposure.
So, when it comes to flood insurance, you've got grandfathering, you've got a possible policy transfer, which is still all part of the National Flood Insurance Program, then depending on your loan type, who have an option called the private market.
Now, the private market's a little bit different than FEMA. FEMA, or National Flood Insurance Program, is mandated and funded by the federal government. Private insurance company, generally, when it comes to private flood insurance, most of that is funded by a company called Lloyd's of London, which the group of different companies.
There are some admitted and non-admitted companies. What is an admited company? This is a company that must follow state guidelines. If your non-admitted, it's called a surplus company, and you may not have to follow by state guidelines. What happens is, you also take the risk of this company possibly moving out-of-state without your claim being paid out. So, it's something you really want to think about when you're thinking private.
Now, there are some tremendous benefits that going through private compared to the National Flood Insurance Program. For example, the National Flood Insurance Program in Knoxville, Tennessee maxes out at $250,000 on residential properties when it comes to building coverage, and $100,000 on contents. And, generally, you don't have replacement in these things. Things that also aren't available, or additional living expenses. So, if your house floods, FEMA's generally not going to pay for, maybe, a hotel or for you to rent a place while yours is being fixed, a private flood policy would. Private flood's also going to provide replacement costs on a lot of things. They're going to be able to go up the $10 million in coverage if you want it to.
So, those are some things to think about when you look in the private market. The other thing is, if you have something high-risk. So, your house is more than 4 feet below base flood elevation, you're probably not going be able to find a good option in the private market. The reason for that is, private flood insurance can pick and choose what they want. FEMA kind of has to accept things the way they are, because it's a government program. Now, they might give you a different kind of rate, but they're not going to turn you down because of it, and they can't, because it's a federal program.
So, one last option that you may have, depending on some scenarios where your house is, is what's called a Letter of Map Amendment or Letter of Zone Change, which we do do here at The Flood Insurance Guru. Llet's say you get an elevation certificate, and your base flood elevation is 100 feet, but your lowest adjacent grade is 101 feet, and it hasn't had any flood losses. Then what we could do is take that information to FEMA, submit it to them, and say, "Hey, we are above the base flood elevation here. We shouldn't be in a high-risk zone." And many times they will say, yes, you're correct. We're going to issue a Letter of Map Amendment., which usually takes 30 to 60 days.
Then what we do is, we go through the process of getting this back from FEMA, submitting this to the mortgage company, having the mortgage company's requirement taken away that you have to carry flood insurance. This does two positive things for you. Now, it can help increase your property values, now that flood insurance is no longer required, and it allows you to take out a preferred policy with the National Flood Insurance Program, or even private flood, where you can get a preferred policy for about $450 year. It's going to give you that $250,000 in coverage, or 100,000 a year contents, or maybe more through the private market.
So, if you've got questions about what exactly your flood insurance options are in Knoxville, Tennessee, please reach out to us, floodinsuranceguru.com. You can go to our Facebook or YouTube channels, The Flood Insurance Guru. You can even fill the form out below, and we'll be happy to get in touch with you, with what exactly each one of these options may mean for you.