Flood insurance - it just never goes away
Take a look out your window or walk to the end of the street or take a very short ride to the beach, no matter where you go on Anna Maria Island you're looking at water. And what happens when the beautiful water you're looking at gets too high or starts to overflow your pool or starts seeping under the front door. Well, folks, that's called a flood.
Thanks to the Flood Disaster Protection Act, everyone who lives in a flood zone can purchase flood insurance, and the majority of those people are mandated to purchase flood insurance by their mortgage lenders. The Flood Protection Disaster Act is a government subsidized program and as we know, the premiums for this insurance has been going up consistently for several years now and will continue to increase.
Rates are going up because The Homeowners Flood Insurance Affordability Act of 2014 was passed in order to phase out government discounts to homeowners by gradually increasing their rates until they achieve their full risk level and actuarial rates. Annual flood insurance rates in our area are increasing from 5 percent to 18 percent for primary residences and more for non-primary residences.
Further, The Flood Disaster Protection Act requires all federally regulated lenders that service home loans or lines of credit to inform customers about their obligation to purchase flood insurance. If you live in a special flood hazard area, per flood maps produced by the Federal Emergency Management Agency (FEMA), you will be required to insure your property with flood insurance.
At a minimum, you will be required to maintain flood insurance that is at least equal to the lesser of: the combined outstanding balance of all loans and maximum line of credit limit, 100 percent of the estimated replacement cost value of the buildings as determined by your insurance provided or the maximum amount of coverage available under the National Flood Insurance Program.
If you fail to provide proof to your lender of a valid flood insurance policy, they will purchase the insurance on your behalf to protect their asset and bill you. If you're property is part of a condominium association, your association may have flood insurance that will satisfy the lenders requirement.
Per a piece that appeared in this publication several weeks ago, FEMA is now advising homeowners to procure an elevation certificate for their property. According to FEMA the definition of an elevation certificate is "an administrative tool of the National Flood Insurance Program which is to be used to provide elevation information necessary to ensure compliance with community floodplain management ordinances, to determine the proper insurance premium rate." An elevation certificate can be provided by a licensed surveyor, engineer or architect and is well worth the price, since it can be very valuable in helping to lower your flood insurance premiums or at least maintaining the existing rate.
Property owners who do not have an outstanding mortgage on their property are not required to purchase federal flood insurance, however, living within feet of a large body of water or a river without insurance is really taking a risk. In addition, if you have insurance that was not required by a lender and allow it to lapse when you attempt to reinsurance, you could lose the discounted rate and will be billed the full risk premium.
That's the latest update on flood insurance FEMA is being nice enough to advise you to get an elevation certificate, and the advantage of having a mortgage on your property is that you can't go without insurance. Meanwhile, enjoy the view from your window, and be proactive in protecting your property.