Summer 2018, nearly 7 million homes are at risk of hurricane storm surge, and Flooding
Below is a breakdown of the top 10 cities areas most at risk. Based on Flood Insurance Rate Maps.
Flood Insurance; private flood insurance; Lloyds of London; other options how do you save money on your flood insurance and other questions around flood insurance rate maps (FIRM) answered
The 2017 Hurricanes: The final tally for hurricane season last year still remains incomplete.
However, it is going to be costly.
Do you need Flood Insurance, NFIP or the Private flood options? Let us do the shopping for you.
The National Flood Insurance Program (NFIP) is set to expire in the middle of hurricane season (July 31, 2018). And if Congress doesn’t take action before. They have already extended the program twice since its original expiration date of (September 31 2017)
Luckily there is still a small yet growing private flood market. However, you need to know what you are buying so do your research or work with a flood insurance expert to find the policy that is right for your property.
Often the private flood insurance policies are saving homeowners and business money on their flood insurance. We are talking about 20 – 50% over the NFIP policies.
Affordability is the major issue why our policymakers are dragging their feet in regards to the NFIP reauthorization.
The issue they are wrestling with is if the premiums are set too low with their Flood Insurance Rate Maps; the program will face insolvency or repeated raids on the federal budget. Currently, the program is $30 Billion in debt and has been since 2005 — add the 2017 hurricane season and it likely will drive the debt to $40 or $50 billion.
Additionally, if they set the NFIP Rate Maps too high; businesses and homeowners might abandon coastal areas and other communities that are prone to flooding because they can’t afford the high cost of flood insurance premium. This would leave once thriving urban communities desolate. Think of what Miami would be without the coastal communities, this is why realtors are lobbying across the nation and at the federal level to influence how the program will use the flood insurance rates to control the cost of flood insurance.
Flood Nerds believe that the private flood insurance market, can and will help control the cost of flood insurance.
We have seen that the private flood policies are coming in 20 – 50% lower than the current NFIP flood insurance rate maps.
Saving homeowner and business 100’s even $1,000’s on their flood insurance.
Private flood insurance does make sense for some properties, however, and sometimes the NFIP policies make more sense this is (due to our government subsidizing rates) The flood nerds goal is to look at the properties and shop flood policies to get the best coverage available at an affordable price.
So Congress has two vastly conflicting agenda’s when it comes to flood insurance, stop the raid on the federal budget and keep the premiums affordable so homeowners and business can continue to live in desirable areas.
Sen.Kennedy (LA; R) said the main sticking point he has been the role of private flood insurers. If they are allowed by selling their own private flood insurance policies, “They can’t just come in and take the very best risks and leave the high-risk properties for the national program and the American taxpayer to pick up.”
We have found that some properties pay more than their fair share of flood premium and others are not paying enough due to the risk.
Flood nerds look at both options for a property.
In our opinion, the private flood options rate maps are more accurate at assessing the “true risk” and associating a premium with it.
If the government was to remove the subsidies they are giving to some communities.
We believe that the government policy (NFIP) is already doing what Mr. Kennedy fears that is paying for those properties that are most at risk.
While the government program insures more than five million homeowners. About 10% of claims every year are coming from properties that have flooded more than once.
Here is a public report that explains how the NFIP Flood insurance rates floodplains.
To Sum it up the program is not using the detailed property data it has though claims it has paid out over its 50-year monopoly or even using the Elevation Certificates that it requires the homeowner to purchase at their own cost- (whole other “can of worms”) to create it flood insurance rate maps. But rather the political pressures and agendas to rate flood insurance.
The NFIP is following the legal mandate of “Congress” to work with communities, not individual households to create both flood zone maps as well as set flood insurance rates for local floodplains.
Flood insurance is not market-regulated but rather it is skewed by government intervention through federal and state subsidies.
So our opinion is that the federal government should do a few things to help fix the problem.
- Use the data that its collected on floods over its 50-year monopoly and use this to rate the individual properties without community involvement.
- Stop subsidizing flood insurance – this will help the “market” regulate the cost of insurance.
- Do a data share with the private flood insurance companies a) the NFIP should release its data it has on floods to the private market and in exchange, they should leverage the private markets access to the latest technology to more accurately map the flood risk of all areas. Private flood market uses Satellite and other technologies to assess risk.
- Focus on Mitigation rather and let the private flood industry focus on the short-term goal of getting people back to their home after a flood loss, after all this is what the industry is good at and why people insure property in the first place.
Look for next weeks post on