It's March 2nd 2020 and it feels like its been raining in Huntsville Alabama since the beginning of 2019. Realistically it has, 2019 was one of the wettest years on record. February 2020 ranked in the top 10 for the wettest February's on record.
While 2019 still holds the record for most rainfall on record will the rain ever stop? hopefully.
All that rain is starting to have a major impact on flood insurance options in the Huntsville Alabama area and especially Madison county. Many private flood insurance companies have placed moratoriums in the area.
What exactly is a flood insurance moratorium?
Well this is when private flood insurance companies stop writing flood insurance in an area. Sometimes this can happen after significant flooding in an area until they can handle the claaims and then other times it can happen when the flood risk rises.
This is is exactly what's been happening in the Huntsville Alabama area for the last few months. Thankfully the National Flood Insurance Program does not put moratoriums in place. As long as you live in a participating community then you have access to flood insurance through the National Flood Insurance Program.
Its during times like this where a National Flood Insurance Program policy can feel like its worth gold.
Let's look at the Huntsville real estate market. The Madison Alabama area is one of the fastest growing areas in the country. Many of these areas are in high risk flood areas because of the Tennessee River. As you can imagine flood insurance could have a major impact on mortgage payments.
Let's look at a scenario where it could make or break someone selling a home. For example let's say you have two properties in the same neighborhood. One is investor owned and they paid cash, so they don't carry flood insurance. Then there is the other one who has a mortgage and has had flood insurance since before it was required.
You have the same potential buyer looking at these two properties but the flood insurance is a difference of more than $3000 a year.
Why in the world is that?
Well the person who has the mortgage has whats called a grandfathered policy which means those rates are no longer available because they took out flood insurance before the flood maps changed. The other property has to go off todays rates and does not get access to these grandfathered rates.
So of course if you are a buyer you are going to go with the property that has the cheaper flood insurance.
So why can the buyer get access to this same rate on one property but not the other?
This is whats called a policy assumption or policy transfer. This is when the policy is transferred from one buyer to the next because they have had continuous coverage.
Now you can see that National Flood Insurance Program policy is worth way more than you would have ever imagined.
So maybe you have questions about how to do a policy transfer or you want to understand flood insurance options in Huntsville? Then make sure to visit our website. You can also check out our daily flood education videos on our YouTube channel.