Lowering Flood Insurance Premiums on Under-Construction Properties
Alabama has been getting more than a couple of flood incidents in recent times and this can really become a big concern to property owners. We've seen this happen in Birmingham City in the last two years.
Private flood insurance has been going through noticeable changes. Some of these things are beneficial to policyholders, some may hurt premium rates. In this video, we talk about private flood insurance companies and discuss what conditional flood insurance renewal is.
Private flood insurance can be complicated but it doesn't have to be.
Time and time again we have seen property owners disappointed when they try to file a flood insurance claim for a basement.
In today's video, we'll talk about one of the zones where flooding can really hurt and understand what flood zone AE.
Ohio is facing an increased risk of flooding as we move deeper into the spring season. This means properties in the state's central areas like Columbus, Ohio.
The whole country is moving out of the winter season which means a lot of melting snow for most areas in the United States. This is where your sump pump can be very helpful in reducing damage to your home...
But what if this gets flooded and needs to be replaced?
In this article, we want to talk about how using flood insurance to replace a sump pump could cost you way more than a sump pump alone, how flood impacts a property, and how this impacts future premiums as well.
First, we want to cover what sump pumps are for us to be able to get everyone up to speed on the things we'll cover in this article.
A sump is a low space that collects any type of water that comes from the soil. It's like when you're making coffee where the sump itself is the jar or mug and the soil around it acts like the coffee filter that allows the water to go through.
This water generally is the excess water that goes into the ground during the heavy rain — sometimes it could be due to snowmelt — so instead of it oversaturating your basement causing flooding, the sump collects all of this.
Now, what happens when there's too much water in that hole? That's where the sump pump comes in. The sump pump is a device that's connected to a lot of pipes that send all that collected water into the main water drainage in your area.
So what if there was a flood and your sump pump got damaged?
The basic response to flood damage or flood loss is to file a flood insurance claim from your flood policy, right? It's the only thing you can do to really manage the costs of whatever repairs you'd need.
However, it's a very different story when it comes to sump pumps.
— But Chris, filing a flood claim will get me coverage for the repairs and reinstallation of a new sump pump which can protect me long-term!
That is true, but only to an extent that your property is only protected from damage, but your wallet, not so much. Think of it this way, the current costs of installing a new sump pump range from $1,000 to $2,500. This includes the device itself and the labor that goes into it.
Generally, when it comes to flood insurance, deductibles start at $1,000. So when you file a flood claim, already, you might not be breaking even with what you're getting from your flood insurance.
Once you file that flood claim for a small repair or loss and you're doing a private flood insurance policy, the insurance company might non-renew your policy over this claim. That's already bad as it is and the same goes for federal flood insurance.
The National Flood Insurance Program (NFIP) has moved into what's called Risk Rating 2.0. Flood claims directly impact your premium rates here. This means that homeowners will be assessed on the overall flood risk that their property presents and, yes, this includes looking into your flood claims history.
You see, the claims variable is now a big thing with Risk Rating 2.0 since this is like a scoring system that depends on how many flood insurance claims you've made. Since these claims don't really expire and stay for the life of the property, filing a flood claim to get your sump pump fixed can hurt you more long-term.
The Risk Rating 2.0 mostly caused an increase in premium rates across all states. Even if you're just paying for a $500 premium, after you file that sump pump flood claim, you will see an increase twice, if not thrice that amount.
It may sound great to have your flood insurance cover the costs to repair your sump pump, but as a homeowner, you should look at the financial impacts this may cause you. Filing a claim for a sump pump alone can also hurt your chances of selling the home due to expensive flood insurance costs.
This is why we only recommend filing a claimif the flood damage to your property is more than $10,000. In the end, you may be able to save a few hundred bucks with this flood claim, but each year, you will be paying more for your flood insurance premium.
If you got questions on how to save flood insurance costs, when to file a flood claim, or anything related to floods and insurance, click below to go to our Flood Learning Center:
You can also click below to call us:
Remember, we have an educational background in flood mitigation which lets us help you understand your flood risks, flood insurance, real estate selling and buying, and mitigating your property's value long-term.
Birmingham is both literally and figuratively flooded with a lot of problems since the start of the year. One of the biggest culprits is the heavy rainfall that leads to flash flooding across the city and other parts of the state.
We've been talking about how flood insurance helps residents recover from the flood damage caused by these events, but today, we want to focus on the impacts this has on restaurants and other local businesses in Birmingham, Alabama, and how flood insurance helps these business owners bounce back from the damages brought about by the recent flooding in the city.
Just this year, Birmingham has faced a lot of flooding due to snowmelt, heavy precipitation, or a mix of both. This further adds to the data found that the flooding that Alabama's been getting significantly increased in the last 3 to 5 years compared to the last 10 to 15 years.
Last month, Birmingham experienced a couple of devastating floodings after heavy rainfall that came from storms. This caused a lot of major problems like road closures, people getting stranded in their vehicles, and overall increased flood risks. We were able to cover this in our recent blog on the Alabama floods.
This was also impacting local businesses who now have to face unwanted temporary closing because they need to still fix whatever damage these floods brought. This was one of the experiences for the people at Pies and Pints in Downtown Birmingham.
With this unprecedented flooding and the risks that this type of natural disaster can present, you might be wondering why does Alabama keep on flooding? More importantly, as a business owner, you want to know your game plan against flood loss for your investment and source of income.
Flood insurance is vital protection for business owners in Birmingham Alabama. Unfortunately, many business owners are not aware of the flood insurance options that are available to them for commercial insurance coverages or what the risk of flooding is.
This hurts not only your budget for your business but also the earnings you might get. So, here's where flood insurance comes in when it comes to saving you money and avoiding unnecessary losses.
There are a few different flood insurance options available to business owners in Birmingham Alabama.
The first option is a standard National Flood Insurance Program (NFIP) policy or a private flood insurance policy, both of which cover damages from flooding that occurs inside of your home or business. But how are they different?
Federal flood insurance has recently overhauled the services they're providing to home and business owners across the state. This comes in the form of the Risk Rating 2.0 program which changes the overall way of Federal Emergency Management Agency's (FEMA) approach to calculating flood insurance premium rates.
One of the biggest things that came out of this new program — which started impacting new business or newly-acquired insurances in October 2021 and now will take effect across renewing policies — is that flood zones no longer matter.
Now, we've talked about why flood zones no longer matter in Birmingham City and Alabama in general in our previous blog, but what Risk Rating 2.0 points out is that flood zones will no longer affect your rates.
This is because you will be rated based on the flood risks that your business is facing. A bit of a hard pill to swallow, but coastal or riverside restaurants in the community will find an increase in their premiums with Risk Rating 2.0. This is generally because one of the risk factors is your business' distance to water, so you might want to prepare for that as well.
A standard National Flood Insurance Program (NFIP) policy provides coverage for commercial properties of up to $500,000 on building coverage and $100,000 max on contents (the things inside the insured building).
You should keep in mind that it's best to maximize the 80% rule when buying an NFIP policy.
FEMA and the NFIP have a strict 30-day waiting period for each policy to take effect on a property. This is a good-to-know since you want to really be ahead of time if you want to buy federal flood insurance.
Now, what if this doesn't work for you and your business? That's totally understandable considering that a lot of money comes in and goes out when maintaining a business.
You might want to look into the private flood market for your needs especially if you have a big business.
Now, one of the key similarities between the NFIP and private flood insurance is that both can provide you with enough coverage for both the premises of your business and everything inside of it. However, this comes with one important catch: Private Flood doesn't have any coverage limits.
This simply means that you can actually get more than $500,000 in building coverage when buying a private flood policy and the same goes for content coverage. Still, you should best practice the 80% rule when it comes to these coverages.
Private flood also has more flexible coverage terms, this simply means that maybe you don't need $500,000 on building coverage because you're still in the start-up business, then you may choose to have that policy written for the substantial amount you need.
You can also easily get excess flood insurance through what's called loss of use. Click here to read our blog on the loss of use coverage in flood insurance.
It is important for business owners in Birmingham to have flood insurance and understand how flood insurance claims can impact you. The right policy can help protect your business from costly damages in the event of a flood and also help you easily bounce back.
For more information on flood insurance options for businesses and flooding concerns, click below to go to our Flood Learning Center where we answer your flood insurance questions.