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.
What Sump Pumps Are
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?
Why You Should NOT File a Flood Claim
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.
Risk Rating 2.0 & Flood Claims
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.
Birmingham Floods of '22
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.
Commercial Flood Insurance for Birmingham
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?
The NFIP Way
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.
The Private Flood Way
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.
Business Is Good
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.
When buying or selling a property, a lot of things come into play outside of money alone. One of the biggest things that you need to make sure of is to closely check the property you're looking at in the real estate market.
Buying a property is not something that anyone should underestimate. I mean, we're talking about moving to a place you would call home and it wouldn't be fun if you realize that it doesn't feel like one after a few years because of an issue with the property itself.
Today, we want to talk about disclosures and how this can help you avoid a bad experience when you look into the Arizona real estate market to purchase your new home.
The Caveat Emptor in AZ
As a buyer, it's important to know the disclosure law regardless of what state you're in. These laws and regulations help you get a quick look at the property you're buying and avoid getting blindsided by its risks.
Historically, a lot of states followed the caveat emptor rule where a buyer really doesn't get a chance to be given an idea of the history and details of the property. This is also known as buyer beware because of the responsibility of checking a property to know all of its information.
Buyers have to be aware of this and you are expected to do it by your own means. This includes using your own money to do a home inspection which can really put a dent in your purchase money.
Good thing this changed as Arizona is one of the states that moved out of this caveat emptor rule. This means that buyers will be proactively informed of the information that the seller knows about the property through a disclosure statement form.
However, unlike some of the states that moved out of the buyer beware rule, Arizona isn't heavy-handed when it comes to disclosing property information. This is because the seller is only required by law to share material information. This pertains to the materials that "have an impact on the value of the property, the buyer's decision to purchase, or use of the property".
This means that sellers are only required to disclose everything they know about the property when it comes to the materials. The form also allows them to answer "Do Not Know" when they genuinely don't have any knowledge about an item in question.
Is it Buyer Beware?
Since Arizona doesn't really require the seller or an owner of a property that's being sold in the real estate market to know it all, the caveat emptor or buyer beware somewhat still applies here.
As a buyer, you still need to be cautious and do your due diligence to have the property checked. At best, sellers are only required to disclose the flood hazard and flood zone of the property — assuming they are aware of it. However, it's a different story if you're a real estate professional who's helping someone sell a property.
If you're doing a real estate transaction with a real estate agent, you will be able to get more out of that disclosure law. These agents are expected to really be able to know things about the property.
Despite having no standard form required, Arizona encourages sellers to use the Residential Seller's Property Disclosure Statement form (some would call this "spuds").
This is the part where if you're a buyer, you want to check on the flood data of the property. This can be done by asking the right questions to the current owner.
This includes reviewing previous flood claims, flood history, and flood risks. Generally, this information is only accessible to the current property owner. This can be gathered with a help of a good flood insurance agent.
Knowing flood data on a property has a direct benefit for you once you close on a deal on that property since you also know where your flood insurance will lie.
Home Sweet Home
Buying a new home can mean the world to anyone. This is a place where our children will also build their families. A lot of memories come here and it would really be sad if the start of it is not a good memory.
This is why it's important to understand your risks when moving to a new home and how disclosure laws can help you make a final decision. This also impacts your insurance especially when it comes to flood insurance.
Right now, the federal flood insurance through the National Flood Insurance Program (NFIP) assesses these flood data to determine the premium rates. This is one of the results of federal flood insurance moving into the new Risk Rating 2.0 program.
You can see our coverage for the Risk Rating 2.0 impacts on Phoenix, Arizona below:
This has been something that the private flood market in Arizona has been doing as well. If you want to know how these two options are different, feel free to watch our video where we do a rematch between the NFIP and private flood:
If you've got questions understanding how to utilize your due diligence to understand the flood risks for a home that you're looking to buy, the flood risks in Arizona, or anything related to flood insurance, click below to go to our Flood Learning Center:
You can also call us by clicking the link below:
Remember, we have an educational background in flood mitigation and we want to use this to help you avoid getting blindsided by flood risks, understanding your flood insurance, and protecting the value of your property long-term.
As the snow starts to melt, welcoming the blooming season of Spring, damages to homes are also getting welcomed by this change of seasons.
This is why it's important to be smart when it comes to buying a property, especially in the state of Alaska.
Alaska is no longer following the rule of "caveat emptor" better known as "buyer beware". What does this mean for Alaska and how can this help your property and flood insurance purchase? Let's find that out in today's blog.
The Last Frontier State
Alaska is one of the states that are really known for cold weather and beautiful mountains. You can't really blame it being that it's located in the far northern areas of the country.
However, despite it almost being a "winter wonderland" for some, this type of colder climate in Alaska also presents some concerns when it comes to the structural integrity of properties. You have to be cautious of ice melting and creating water damage to your home, spring runoff, and hail damage.
When buying a property, you want to be sure that you're getting the most of what you're paying for. For most of us, that's a lifetime mortgage we're talking about and you don't want to get frostbite with all the property damage that you didn't see.
This is why it's a good thing for buyers in Alaska to know that you can make a good decision when buying a property since it's not a buyer beware state anymore. This simply means that since the caveat emptor rule no longer applies, sellers and real estate agents will have to meet disclosure requirements before selling a house.
It's important to note however that in Alaska, disclosure statements can be waived under the condition that both seller and buyer agreed to do so.
Alaska's disclosure law, as aforementioned, states that sellers are required to disclose or share any and all details about the history of the property that's in the market. We're talking about a disclosure form here that needs to be completed.
For sellers — failing to do this will be met with legal liabilities which can really hurt your chances of selling a home to anyone. This property disclosure expects sellers to be honest to a prospective buyer when it comes to multiple things about the property.
From the materials used in the construction, exposure or history of hazardous materials, toxic materials like the lead-based paint of the house to its relative environmental risks, these are some of the things that you need to disclose.
Some of the flood-related things that this mandatory form will ask you are as follows:
- Are you aware if the property has flooded?
- What is the flood zone of the property?
- Are you aware of environmental damages to the property due to floods, earthquakes, high winds, and other natural causes?
As you can see here, this is just a glimpse of what you will be required to share. This can be very helpful to see whether or not your buyer is really motivated to buy the property even after knowing its unlikable traits of it.
For buyers — this can really help you understand the risks that you might be facing. If there is an issue with the property, you will be able to see through the disclosure form. This helps you understand how to be safe in that property and also look at the actions you would need to fight these risks.
It's important to note that this process is also helpful when buying flood insurance especially now that we're gearing towards implementing 100% of the Risk Rating 2.0.
The National Flood Insurance Program (NFIP) updated its flood insurance rating system in which the main focus of your premium rates is concerned with the flood risks you are facing. This includes flood history, flood data, and the type of floods that your property experiences.
Asking the Right Questions
Although you're going to get everything you need to know about the property you're buying, it's still important to ask the right questions.
Alaska will be requiring sellers to disclose everything they know about the property they're selling. This could be through the fact that they need that information for the mandatory disclosure form, but also for the length of their stay on the property.
However, as a buyer, you should still do your part or what's called due diligence. This is why it's best to speak with a real estate attorney for legal advice on buying a new home — not just in Alaska.
This way, you get the most out of your purchase agreement. One of the important things that you might not see in that disclosure form is the flood claim history on the property.
Flood claims have shifted to become one of the biggest factors when it comes to the rating system, especially with the NFIP. The catch is only the property owner can only have a copy of these documents, so you want to make sure that you will be able to get an insight into the claims history for the property.
As a seller, making sure to answer all the buyer's questions with your own set of legal advice as well can protect you from unwanted legal liability.
It's important to note that in states like Alaska where the caveat emptor is no longer applicable, not honestly answering the buyer's question or omitting information from them during the purchase process may be considered an act of fraud.
Buying a Property in Alaska
One of the best decisions you could make during this process is doing your part so that you avoid any issues with the purchase.
This applies to both buyers, making the most of your diligence period and maximizing the opportunity to ask the right questions, and sellers to protect themselves and simply ensure a smooth real estate sale. When it comes to the legal side, we can only discuss much...
However, if you have questions about understanding your flood risk, how to reduce it, or different flood insurance options in Alaska then we can help you.
You can check out our learning center here
You can also give us a call
Remember, we've got an educational background in flood mitigation and we want to use it to help you understand flood risks and flood insurance, so you won't have to worry about them.