Sunday, February 24, 2008

Flood Insurance in Carova Beach

It is well known that the 4WD area of Carova Beach and the rest of the off road area is located in a CBRS ('COBRA") zone. As such, the area is not covered under the National Flood Insurance Program (NFIP) and homeowners have to seek out private flood insurance which can be costly. There are three primary flood zones classes, VE, AE or A, and Shaded X. Lenders of any federally-backed loan are required to maintain flood insurance in zones considered within the 100-year floodplain; said another way, zones that have a greater than 1% chance of flooding in any given year in a century. Both the AE and the VE zones are considered in this 100-year floodplain and thus lenders require the insurance. The Shaded X flood zone has less than a 1% and lenders (though at there discretion) typically do not make purchasing the flood insurance mandatory. Annual premiums and deductibles can vary based on elevations of the house and the flood zone. VE is the highest assigned risk and thus comes with th highest premiums.
To get a handle on the current private flood market, I emailed Gayle Drummond with Ocean Insurance Services, who quotes a lot of flood policies for my clients in the 4WD area. She responded with the following:

Cobra Primary Flood Coverage can be obtained through the proper channels in today’s insurance market. Because Cobra Flood Zones are not supported by the National Flood Insurance Program, premiums for this coverage can be expensive. Insurance Markets who have quoted Primary Flood Coverage in recent months have charged between $10,000 and $10,500 base premium with $25,000 to $50,000 deductibles for $250,000 of primary flood coverage on the dwelling in VE flood zones. Rates are slightly lower in areas other than V Zones.
Negative Elevations have been big issues for insured’s trying to find primary flood coverage. We find that many of the homes in the 4x4 area have a game room or other similar structure enclosed on the bottom floor. This enclosure drastically changes the hazard elevation for the home. Rather than considering the bottom of the second floor to be the lowest hazardous point, insurers must consider the bottom of the first floor as the lowest point. In most cases, this issue causes the homes to have a negative elevation. Many Insurers in today’s market seem very anxious about insuring Coastal Barrier Island homes that rest below the base flood elevation. But don’t lose heart! We have access to insurers who will consider writing these risks as well.

It should be noted that the private flood market has come along way in the past few years. Premiums used to be north of $25K in a VE zone with a $50K deductible only. Luckily, insurance agents like Gayle have hammered the flood coverage companies to lower their rates to a 'reasonable' level to keep homeownership feasible.
For more on this topic, or how to potentially be removed from the 100 year floodplain so as not to be required to carry the flood insurance, email me, and I would be happy to discuss on an individual basis.

All the best.