So you have been in the business as a realtor for a few years. You have just listed your first home of the new year only to find out its in a special flood hazard area in Huntsville Alabama. Home inventory is already at a 20 year low in the area, so all you need is more challenges. You have never had a listing in this type of area before, so what are you suppose to do?
Well lets discuss the first steps you should take when you find this out. The first thing is verify if there is an active flood policy on the property and the next thing is to verify the flood map. Now if its an investment property or the mortgage is paid off its not uncommon for there not to be a policy.
So let's say you are on the lucky side and find out that the current property owners do have a flood policy on the property. Now you want to find out if it is a National Flood Insurance Program policy also known as a FEMA policy.
Wait I thought the only option for flood insurance in Huntsville Alabama was FEMA?
Hold that thought we will discuss flood insurance options in Huntsville and Florence Alabama a little bit later on.
So you find out it is a FEMA policy that is on the property. The first thing you want to do is reach out to the insurance agent to see if the policy is transferable.
Now it could be that the policy is through what is called a write your own carrier or NFIP Direct either way you should be able to get this answer. Now it's not uncommon for many insurance agents to know if a policy is transferrable or not.
What is a transferrable flood policy?
This is a flood insurance policy that can be transferred from one buyer to the next keeping the rate locked in and sometimes allowing the buyer to wait until renewal to make a payment.
Now if it's an investor who is selling the property and someone is buying it as a primary residence then more than likely the policy can't be transferred. It has to be the same type of policy that is being transferred, whether its for a primary or non primary residence.
So you have gotten your ducks in a row and you know if the policy is transferrable or not.
The second thing you want to do is verify the flood map. Why you might ask the flood policy is there so we know its required?
Well properties being in the wrong flood zone is not uncommon. So you can click here to verify where the property is located on the flood map. It could be that the actual structure is not in the special flood hazard area after all or that the map recently changed.
If the map has changed within the last 12 months it could be that the property qualifies for special newly mapped rates.
It looking at this map if you are in an area outside the coast you want to look for three different zones, zone X, A, and AE.
If the property is in zone X then flood insurance should not be required but if its in A or AE then it will be in whats considered the special flood hazard area.
Remember earlier when we mentioned we would discuss flood insurance options later? Well lets discuss those options.
The majority of people across the Huntsville Alabama area think there is only one option for flood insurance.
This simply isn't true, you have two options for flood insurance in the Huntsville, Athens, Madison, and Florence Alabama areas.
You can choose to go through the National Flood Insurance Program like many people do or you can choose to go through the private flood insurance market.
There is no wrong answer here but if decide to go through the National Flood Insurance Program you will want to be prepared for what will be needed. If the property is in this A or AE zone and the it was built after the first flood map which is normally around 1982 there is going to be some documentation that is needed.
You are going to have to provide photos of each side of the house and an elevation certificate.
What is an elevation certificate?
This a certificate that is provided by a surveyor or engineer that shows the different elevations of the home compared to the base flood elevation. This will determine how cheap or how expensive your flood insurance will be.
So what does something like this cost in the Huntsville Alabama area?
These certificates usually cost between $500-$700 you can order one by clicking here.
Now that you have an understanding of what documentation will be needed for the National Flood Insurance Program, what documentation will be needed for private flood insurance?
The good news is most private flood insurance companies do not require photos or elevation certificates. This can be a big savings right off the bat, but private flood insurance can also be up to 40% cheaper than the National Flood Insurance Program.
One reason is private flood insurance companies in Huntsville and Florence Alabama use different technology to map risk in these areas. As a result they can get more accurate ratings than the National Flood Insurance Program.
So does every property owner in Huntsville qualify for private flood insurance?
No they do not
As long as you don't have a FHA loan then your bank should allow you to take out a private flood insurance policy. If you have an FHA loan then you will be required to go through the National Flood Insurance Program.
So we have talked about what to do when you find out your listing in Huntsville or Florence Alabama is in a special flood hazard area, to verify the flood map, and what the flood insurance options are in the area.