Flood insurance?

[OakLeaf]

even though this area is extremely unlikely to be hit by a hurricane

Yeah, so is our area. Everyone told us the way the Gulf Stream runs, hurricanes don't hit here. We got three in '04, the year after we bought the house.

We lost roof and carpet that needed to be replaced anyway, and the insurance got to pay for it (as well as new paint in the bedroom that I hated the color).

[Koronin]

OakLeaf, I totally get that part. It would so not surprise me to have something crazy happen here this summer since we're in the process of buying right now. Truthfully it's not the wind and hail coverage that actually is annoying me about the whole insurance thing in a coastal county, it's the extra deductable for a named storm on top of the high dedcutable that is required in a coastal county to start with.
Well at least you got new paint to repaint a room you didn't like the color of to begin with, but otherwise that is terrible that it happened within a year of buying the house.
For us the hurricane is unlikely due to the way the coast goes inward right here before going back out. We're in Jacksonville, NC, and if you look at a map there is an area of the NC coast that curves west before going back to the east and north. Everyone keeps telling me that if it's not a direct hit the only place that gets much other than some major rain and wind is the coast. It has to be a direct hit to do real damage away from the coast.

[Cataboo]

I think with climate change, a lot of predictions of when flooding or storms will happen won't be too accurate.

[Mr. Bloom]

Indy, the facts are in conflict with my understanding/experience on the issues.

On one hand, I believe the flood insurance requirement extends to federally insured institutions, not federally insured transactions. And, guessing who your originating lender was, I think this rule would have applied to them unless you were outside the flood plain. So, consistent with your experience and observation, I don't think you're in the 100 yr flood plain.

But, if this is true, then the premium seems awfully high. In the past, I lived on the edge of a flood plain (part of my very flat yard was in the plain) and there was a voluntary program...but the premium was no where near that high...but that was 10+ yrs ago.

So, two facts in conflict - it's likely you're not in the flood plain, but it seems you're being quoted a premium that is...

So, I'm wondering if the rate was quoted to you without a specific review of the flood maps??? Do you have a survey showing the structure is outside Zone A? What would the premium be if you were in the flood plain?

But, in any event, I'd still get it. Development changes storm water flows and municipal planning can't always keep up. You're in a developing area... And the flood maps arn't always current either. Being OK this year doesn't mean the same next year...you almost can't afford not to have it...

[indysteel]

Mr. B., I got that number from entering our specific address into FEMA's Floodsmart website. It indicates that our address is in a "high risk" area. Beyond that, I don't really have much information. There's also conflicting information as to when you will be required to get insurance. In one part, it says that it's required for any lender that is federally insured. Presumably, that means any FDIC-insured bank. In another part, it refers to federally insured transactions (I'm paraphrasing), which to me would mean FHA, VA and the like. I read both parts to the Judge yesterday, and he thought it was confusing. Certainly, if I'm eligible for what they call a preferred rate, then the premium would be considerably less, and would be a no brainer, but it would appear that if I'm eligible for the insurance, I would be required to pay the higher premium.

Obviously, I need to gather more information. I just wanted to get an initial read on whether the program is run efficiently. I realize I my have little "choice," and I've long understood that my homeowner's insurance would not cover it.

[indysteel]

Are you concerned about a claim being denied completely, or about delays/confusion as seems to happen (perhaps understandably at times) with FEMA?

I wonder if there's a way to find out something about how good the performance is.

I'm worried about a significant delay or so much red tape that it becomes a full-time job. When you can't live in your home becasue it's covered in mold and all systems have been fried, then a significant delay could prove problematic.

[Catrin]

Good luck with your research and your decision making process. I wish I could add something constructive, I've always rented, but I am sure you and Mr. IndySteel will make the right decision.

[Mr. Bloom]

Certainly, if I'm eligible for what they call a preferred rate, then the premium would be considerably less, and would be a no brainer.

Understood. The FEMA site deals with the topography of the land, not the elevation of the actual house as it sets on the land. That's where a survey (or the elevation certificate) may come in handy getting you a lower rate... But it's been years since I've dealt with this...and there's a lot of complexity in grey areas like this...

I don't think the program is any slower than any other insurer. If you do turn out to be a preferred risk, I think you can actually purchase it directly through your own insurer

[jessmarimba]

Indy, if you are in the 100-year flood plain, your address may well show up as being within the flood zone boundaries but the elevation of your property may remove you (with the elevation certificate someone mentioned earlier). There is a base flood elevation that defines that flood plain, and your specific property may be above that elevation but most FEMA maps are pretty generic and don't pay much attention to minor topographic changes. There are also letters of map change that are on file that exempt properties from the flood plain - people can petition to be removed if they are above the base flood elevation so that they are not forced to get insurance. A previous property owner may have done that.

I do this sort of research for commercial properties with federally- backed loans - let me know if I can do anything to help settle your mind on this.

[Biciclista]

if your house and contents are damaged by rising water (a flood), then your homeowner's insurance will not pay. You do not need a federally backed loan (va or fha) to buy flood insurance. Whoever told you that didn't know what they're talking about. Flood is based on your risk area. Unless you happen to live on the high bank and know your home really is out of the 100 year flood plain, then you should get it. Also depending on your risk area, it may not be that much, or it can be as high as your homeowner's policy (which is what i paid living at -3.5 ft in the new orleans area). Also 100-yr flood risk means that on average that bubbly creek will flood once every 100 years - but it could actually flood this year and the next year and the next year. Then not flood again for 200 years.

If you want to bear the complete recovery cost of a rising water / flood event, including loosing everything you own, then skip the insurance. Otherwise, buy flood insurance. it is a common misconception that homeowner's will cover flooding - it doesn't.

As to high-wind events, including those living in tornado alley - many homeowner's policies are requiring riders for high-wind or hail damage, an addition to your normal homeowner's policy. If you opt out of the rider, then have a high-wind event (tornado, hurricane), you may discover you're also out in the cold. Insurance companies exist to make money it seems.

read this one

[Biciclista]

I'm worried about a significant delay or so much red tape that it becomes a full-time job. When you can't live in your home because it's covered in mold and all systems have been fried, then a significant delay could prove problematic.

That's true but if you DON'T have that flood insurance it will be much worse.

[indysteel]

Indy, if you are in the 100-year flood plain, your address may well show up as being within the flood zone boundaries but the elevation of your property may remove you (with the elevation certificate someone mentioned earlier). There is a base flood elevation that defines that flood plain, and your specific property may be above that elevation but most FEMA maps are pretty generic and don't pay much attention to minor topographic changes. There are also letters of map change that are on file that exempt properties from the flood plain - people can petition to be removed if they are above the base flood elevation so that they are not forced to get insurance. A previous property owner may have done that.

I do this sort of research for commercial properties with federally- backed loans - let me know if I can do anything to help settle your mind on this.

Thanks, Jess. I've spent some time this morning trying to make sense of the maps available through FEMA. I can't say that I've spent enough time, however, to find anything that specifically addresses my property. It's hard to sort through, at least given the limited amount of time I've been able to devote to it thus far. I'm otherwise knee deep in an opinion I'm doing for work so trying to get my head around a mutual insurance company's demutualization on one hand and base elevation certificates on the other is giving me a headache!

I suppose this is too easy, but is there a definitive source of information or county office I can go to figure it out. One question I have is this: let's assume there is an exemption for my property in terms of being required to carry flood insurance. Does that mean I can't get any policy at all or that I could be elible for a policy at a "preferred" rate.

[Biciclista]

you won't find too many policies that are cheaper than what the feds are offering.

[indysteel]

read this one

Thanks, I did. To answer the points made in that post:

I do appreciate that my homeowner's insurance will not cover a flood. I've long known and understood that since first becoming a homeowner in 2002.

If my homeowner's insurer is requiring a rider for high wind or hail, I am unaware of it. We certainly haven't declined a request to carry such a rider.

As for the connection between flood insurance and FHA and VA loans, I'm merely trying to intepret FEMA's own website to the extent that it says that flood insurance is required for federally insured lenders. It was not clear from the website whether this meant that it was required on any loan issued by federally insured lender or whether it merely applied to federally backed loans. FEMA's own website offers conflicting statements in this regard. I was merely trying to understand why we were not required to get flood insurance when we took out or mortgage given that FEMA states that we live in a high risk area. It seemed to me that one of two things could explain that: either our loan was not subject to forced flood insurance or our property was not subject to the requirement.

I welcome you to look at FEMA's Floodsmart website. Perhaps youi'll better appreciate that they make all of this clear as mud. Maybe it is readily understandable, and I'm just stupid.

But I doubt it.

[PamNY]

I'm worried about a significant delay or so much red tape that it becomes a full-time job. When you can't live in your home becasue it's covered in mold and all systems have been fried, then a significant delay could prove problematic.

If your home is wiped out by a flood, "problematic" will describe your whole life. If you have flood insurance, at least you will get money at the end of the delay.

After 9/11, everything took time. The government didn't even acknowledge that the dust was toxic until months after the event. Insurance issues dragged on for years.

Even so, getting something eventually was better than getting nothing ever.