Kansas, Missouri, Oklahoma ice storms, Santa Ana winds, and the wild fires, floods, and hurricanes . . . all these events across the country this year have left us all with serious questions. Are we properly and adequately insured? Are our papers in order? Do we have all the papers in a safe place? Here on the Outer Bank, we need to know our flood insurance issues are in order.
A few weeks back, one of my longtime Consulting Clients sent me a copy of his flood insurance premium for the coming year. It was a wild intro email indicating "How can they raise my premium from $352 to $1526 . . . My home is in an X zone . . . What's Up with That?" . . . I understood why he was freaking out!
FEMA monitors (and administers) the National Flood Insurance Program and has independent business firms administer the backbone of their Flood Insurance Program. They, as many entities have, evolved into using GPS mapping systems in their business model. With FEMA, the identification system is used to locate property on a US Flood Mapping System administered by the Army Corp of Engineers. Mortgage Lenders, appraisers and insurance companies use independent firms as an outsourcing of flood certifications that are required as part of the mortgage lending and servicing business.
My client assumed an existing flood insurance policy from a prior owner when they bought the property back in 2003. It was not originally in a flood zone, and did not fall into a flood zone when the Army Corp of Engineers recently remapped the United States. Dare County's new flood maps took affect in September of 2006. In a random audit of insurance policies on various properties (according to the Insurance Agent who handles the policy), FEMA's GPS system indicated my client's property's flood zone changed and it was now in an "AE" flood zone. Hence the serious increase in premium. Well . . . the GPS was wrong! I assured my client, as I always do following a successful sale or purchase of a piece of real estate, I will help you handle this and "get it right".
Your property is "Grandfathered" based on the original elevation and building permit issuing date. This means that the house, unless the elevation or lowest level of living has changed since being built, is allowed to remain in the original "insurable flood zone status" as when originally built. This further means that FEMA cannot force the new flood zone on you, provided your home has had "Continuous Coverage" and you have evidence proving the home is as originally built. You will need an Elevation Certificate and verification of the original building permit date of record with the Town or County.
With so much change of ownership in real estate -- particularly in the Outer Banks real estate market -- many present owners were never given, or did not know to ask for, these documents when they bought their home. Many, like my client, assumed an existing flood insurance policy. Well everything is different now. With the losses experienced by the National Flood Insurance Program, these random audits are apparently being done. They have been occuring based on the remapping in Currituck and Dare County according to few local independent insurance agents.
When and if this happens, you will need to do your research fast! Normally, the notice comes just a few weeks before renewal. Sometimes, unless you can find a copy of the Elevation Certificate and the original permitting date for the building project, you will need someone to do the research. If your insurance agent is like mine, they are limited to just communication of information. You need to get the information they will need to communicate to your insurance carrier. In our case, the agent was a great help in understanding a strategy and what would be needed. He also went to bat with FEMA for a manual opinion beyond an impersonal computer decision.
Better yet, why not start today and get these items together. Keep copies readily accessible for when you need them. Documents can be saved in a PDF format or in a paper file, but the original should be kept in a safe fireproof and dry place. The difference in not having them and letting a new premium status be applied is just one bad part of this issue . . . it can contribute to a less salable property in the future! This could cost you far more than a premium increase annually.
Counties and Towns are destroying files from years back and many original files are no longer available. Being prepared is something I committed to years ago when I earned my Eagle Scout Rank. It is our motto! Ironically, it has become a staple in life! It is better to be prepared than to have to scramble at the last minute. Fortunately, for my client, they had me. I routinely help solve these issues for my clients and others.
As an Accredited Consultant in Real Estate, I am qualified to consult with you regarding your Outer Banks real estate needs. Many find it is a great help to have a Consultant assist them in their decisions in business. Why not consider the assistance of a Consultant in your Real Estate matters? It is a small investment in a good strategy; Should I sell? Should I buy? Should I remodel? What Improvements should I make before I sell or after I buy? Are my insurance policies in order?
Flood insurance is only one part of your Outer Banks real estate Insurance needs. Now is a good time to review all your needs for your property here. Your active involvement is critical to a successful ownership experience!
Do you need Qualified Professional Consulting?
Bill Holt, Accredited Consultant in Real Estate- ACRE
On The Outer Banks, NC ~~ www.obxmls.com
Bill@obxmls.com ~~ 252.619.7010 - Direct
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