Sunday, July 27, 2008

COBRA Flood Insurance Premiums more attractive and accurate in 4WD area.

As previously stated, I have been working closely with a wholesale and a retail insurance outfit to formulate an flood insurance policy program that more accurately analyzes the risks associated with a dwelling and takes into account a number of factors when determining a policy premium.

The Problem: To date, nearly every policy written has only required an elevation certificate to determine the risk. Having visited Lloyd's of London and witnessed how the end user (insurer) determines the risk, this is very disadvantageous to the homeowner because there are a number of unknowns that the insurer must assume the worst.

The Solution: In addition to providing the elevation certificate data the insurers are used to seeing, help fill in the blanks or unknowns for them so that they do not assume the worst. In the meetings I attended, all of the insurers we spoke with were very open to being supplied more data and indicated they would treat the premiums with more careful consideration. They asked us to provide a premium model that distributed various weights to certain characteristics that would either increase or decrease the premium amount. Characteristics such as distance to the Ocean, primary dune height, total property value, and protection between dwelling and the Ocean, as well as construction style/standards were among a number to be considered.

Test Case 1: I decided to submit a house that is to be a model for what the insurers want to cover and see how low they would consider a home in the most hazardous flood zone, VE. A large Oceanfront home was coming up for renewal and was current paying $11,600 with a $50,000 deductible. They we set back very far from the Ocean, had NO groundfloor enclosure, and a very stable and high primary dune in front of their property. Since it was a renewal, the homeowners (and their bank) were fine with the same $50K deductible. After submitting topo surveys, elevation certificates, plans, photos during and after construction, as well as dune heights and distances to the Ocean, the premium model computed a figure of $5,600 and it was accepted! That was a $6,000 difference for the exact same coverage on the exact same property.

Test Case 2: The second house submitted was a 3rd row house that was under contract and the new owners had to purchase a flood policy. The house did have a ground floor enclosure but the elevation of the grade at the house was 20 ft, 8 ft above the base flood elevation. They too have a good distance from the Ocean even though the dune size is not as prevalent. Additionally, their deductible was $25,000 instead of $50,000. Their premium was placed at $6,800, significantly better than every other quote they received.

Premiums are getting better, or at least more accurate. With lot prices where they are and building code requiring smart construction, new homes will inevitably receive some of the very best rates available. Existing owners, feel free to email me if you want to try and get a better policy. Most existing policies can be refunded after 3 months without penalty.



Tuesday, July 22, 2008

Waterfront Owners in Carova should remain unaffected

I have gotten a number of questions from canalfront owners concerned that their setbacks will be impacted from the new Coastal Stormwater Rules recently approved in North Carolina. The current setback of 30ft from the water will remain UNCHANGED. Currituck County, encompassing all of the Carova area, does not have what is considered to be shellfish waters.

Thursday, July 10, 2008

Coastal Stormwater Rules are tweaked with new version passed through Senate Committee

Here's is a recent update from Willo Kelly, the extremely hard working Government Affairs Director for the Outer Banks Realtors and Home Builders, on the latest developments on the Coastal Stormwater Rules:

Special Legislative Alert

July 9, 2008

Stormwater Rules Update:

NC Senate Bill 1967, a bill that would disapprove the March 2008 EMC approved Coastal Stormwater Rules and that would super cede the current Coastal Stormwater Rules that have been in effect since 1995, was approved yesterday by the Senate Committee on Agriculture/Environment/Natural Resources. The bill now goes to the House committee for approval.

To clarify info included in the last Legislative Briefing:

The Coastal Stormwater permitting threshold for residential development is one acre of land disturbance (development which would require a Sedimentation and Erosion Control Plan or that requires a CAMA Major Permit).
If a permit is required, the low-density development thresholds are 12% built-upon area within 1/2 mile of SA Waters and 24% built-upon area outside 1/2 mile of SA Waters. If built-upon area exceeds that percentage, then a project would need to meet the requirements of a high density permit.
The non-residential(commercial, industrial, any development other than residential) permitting threshold for all twenty coastal counties is 10,000 square feet of built-upon area or development that requires a Sedimentation and Erosion Control Plan. There has not been language added to provide relief to those properties less than an acre and not contiguous to other commercial property outside of 1/2 mile of SA waters.
A 50 ft. vegetated buffer (defined in the rules) is required for new development and a maximum 30 ft. buffer is required for redevelopment. These buffer requirements only apply if you need to get a stormwater permit. It was anticipated that this would be changed back to the current 30 ft. requirement since a 50 ft. buffer is more restrictive than Phase II rules and a minimum requirement of a 30 ft. buffer is acceptable under the voluntary Universal Stormwater Management Program.
CAMA wetlands are now the only wetlands being excluded from built-upon area (impervious surface) calculations. The EMC rules excluded all wetlands - 404 and non-404 jurisdictional wetland from built-upon area calculations.
There is a provision [Section 2.(c)] that if you are not required to get a residential stormwater permit (over an acre of land disturbance as described above) but are within 1/2 mile of SA waters and will have residential development over 12% built-upon area and that built-upon area is over 10,000 sq. ft. impervious surface, then you will be required to obtain a special non-renewable, one time only permit which will be recorded with the deed or included with restrictive covenants. In calculating when this provision may apply - you would need a lot that is approx. 85,000 sq. ft for the minimum of 10,000 sq. ft built-upon area AND over the minimum 12 % threshold to kick in. With most towns/Counties allowing only 30% lot coverage - your lot would have to be approx. 33,000 sq. ft. to even be allowed to have 10,000 sq. ft of built-upon area.
Lots that are "platted" are not vested under the current rules. If you have a lot that is part of subdivision that has already been issued a stormwater permit, then you do not have to comply with these rules. Other exclusions to the rules are listed under Section 2.(d).
The effective date of the disapproval of the EMC rules is when the General Assembly adjourns. This is necessary so that the EMC rules do not become effective. The effective date of the implementation of these new rules will be October 1, 2008.
There are exclusions to the vegetative buffer requirement - they are listed under Section 2.(e).
There have been many questions about 15,000 sq. ft. lots in Colington and how would the rules apply to them - They would be exempt because you could not have 2/3 of the lot covered with impervious surfaces (10,000 sq. ft) and you would not have one acre of land disturbance.
A map of SA waters can be found at here. There are no SA waters in Currituck County and only in parts of Dare County.
Senate Bill 1967 is attached and a handy, easy to follow flow-chart outlining the permitting thresholds and requirements of the rules.

Updates will follow as soon as new information becomes available.

Willo Kelly
Government Affairs Director
Outer Banks Home Builders Association
Outer Banks Association of Realtors