Whether it is your first time purchasing home or business flood insurance, or your renewal just came in the mail, you’re sure to have sticker shock. How can one policy covering one peril be so expensive?
There are a few reasons why, and there are some things you can do about it.
Location, Location, Location
If you own property in a flood-prone area, your rates will be higher than in areas not prone to flooding. This can mean you are located near a water source such as a lake or river, or it could mean that you live in an area susceptible to run off or dam failure.
Your flood zone is the largest determining factor in your premium. The Federal Emergency Management Agency (FEMA) defines flood zones as Special Hazard Flood Area (SFHA – zones starting with A or V), moderate hazard flood area (zones starting with B and X zones that appear shaded on the FEMA map), and minimal flood hazard areas (zone C or unshaded zone X).
What can you do? Short of moving, you can check your flood zone to be sure what is on your policy is correct. FEMA is constantly revising maps in all areas. You can check your flood zone in the FEMA Flood Map Service Center.
Bear in mind that the flood map link above won’t be enough to change your policy – you will need either a Letter of Map Revision (LOMR) from FEMA or have your elevation certificate updated by a licensed surveyor. The rate change most likely won’t be retroactive, but it would affect your upcoming flood policy renewal.
How High Are You? Elevation Is Key
Besides your location, the other major factor in your rate is the elevation of your building. Every mapped location has a Base Flood Elevation (BFE). This is the calculated area to which water would rise during a base flood.
Homes and buildings should ideally be built at or above the base flood elevation. Those buildings that are at BFE pay a higher rate than those with a positive elevation difference (above BFE). Buildings below BFE (negative elevation difference) pay an even higher rate.
What can you do? This is another case where a LOMR would come in handy. If the BFE in your area has been revised, then your current elevation might be sufficient to warrant a change in rate. The only other options are to move, or build up your home or building elevation, though both of these are pricey options.
The easiest way to control your premium charge for flood is in your deductible selection. FEMA offers a wide range of deductibles on flood insurance policies for both homes and commercial buildings. To control costs it is best to choose the highest deductible you can reasonably afford in the event of a flood.
What can you do? Contact your broker to find out the cost savings to increase your current deductible.
One More Thing
The National Flood Insurance Program (NFIP) used to be the only game in town for flood insurance, but times have changed. There are a number of carriers willing to offer private flood insurance or Difference in Conditions (DIC) policies to meet the needs of your home or business.
Contact Hayes Brokers today to find out more about how you can save money on your flood insurance policy. And if you don’t have flood insurance? We can help you get it.