About Flood Insurance
WHAT'S ALL THIS ABOUT FLOOD INSURANCE?
by Steven R. Greenberg, Esquire
This article is intended to be a brief overview of flood insurance, the National Flood Insurance
Program ("NFIP"), and elevation certificates.
What is NFIP? NFIP is the primary source of flood insurance in the United States and is managed
by the Federal Emergency Management Agency (“FEMA”). NFIP was created in 1968 to offer
federally-backed flood insurance to property owners.
What is a Flood? A flood is defined by NFIP as, "A general and temporary condition of partial or
complete inundation of two or more acres of normally dry land area or of two or more properties
from:
- Overflow of inland or tidal waters; or
- Unusual and rapid accumulation or runoff of surface waters from any source; or
- Mudflow; or Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.”
Floods often occur as the result of overflow of water bodies from excessive rain or thawing snow.
Since 1978, NFIP has paid $33.2 billion for flood insurance claims and related costs and the average
paid claim for the last ten years was $46,168.00. It is surprising to note that a home has a 26%
chance of being damaged by a flood during the course of a 30-year mortgage, compared to a 9%
chance of fire during that same period. Furthermore, almost 30% of all flood claims paid last year
by NFIP were for policies where the property was located in low risk communities.
A Flood Insurance Rate Map (FIRM) has been created by NFIP. FIRMs will generally show a
community's base flood elevation. Flood zones are land areas identified by FEMA and each flood
zone is determined by that land area’s risk of flooding. These maps assist in the determination of the
zone in which the property is located. Lands located in areas that are at high risk for flooding are
called Special Flood Hazard Areas. Flood zones are determined as:
- Moderate to Low Risk Areas - “B, C, and X” Zones
- In communities that participate in the NFIP, flood insurance is available to all
- property owners and renters with moderate to low risk.
- High Risk Areas - “A” Zones
- In communities that participate in the NFIP, mandatory flood insurance purchase
- requirements apply to all A zones.
- High Risk - Coastal Areas - “V” Zones
- In communities that participate in the NFIP, mandatory flood insurance purchase requirements apply to all V zones.
What is an Elevation Certificate?
An elevation certificate measures the elevation of the property relative to the ground level and compares it to the Base Flood Elevation on FEMA's flood maps. An elevation certificate can be obtained from a surveyor and is critical in determining whether a property is conforming or non-conforming.
What are a property owner’s Flood Options?
- Do nothing and hope for the best.
- Buy flood insurance to provide reimbursement for all covered losses; or
- Keep their fingers crossed that they will qualify for federal disaster assistance if a flood hits.
If the property is in a low to moderate risk area and it is eligible for the Preferred Risk Policy, the
flood insurance premium may be as low as $112 a year, including coverage for the property's
contents. Properties are eligible to purchase flood insurance as long as the community participates
in the National Flood Insurance Program. Remember, it takes 30 days after purchase for a policy
to take effect, so it's important to buy insurance before the floodwaters start to rise.
Realtors should confirm with their buyers that flood insurance is available and should be considered
with the buyer's insurance agent. Also, Realtors should make certain that an elevation certificate is
timely obtained when the property is in a V zone or in any A zone so that the buyer can confirm that
the improvements on the property are conforming.
Steve Greenberg has practiced real estate law since 1982 and is a Shareholder of Icard, Merrill, Cullis, Timm, Furen & Ginsburg, P.A. in Sarasota, Florida.
He received his undergraduate degree in 1979 with high honors from the University of Florida, and his law degree from the University of Florida in 1982. He is Board Certified by the Florida Bar as a specialist in real estate law. Mr. Greenberg serves as a member of the Real Property and Probate Sections of the American Bar Association and the Florida Bar Association. He is also a member of the Sarasota County Bar Association and is an affiliate member of the Sarasota Board of Realtors and the Women's Council of Realtors.
Mr. Greenberg's past experience includes serving as President of Steven R. Greenberg, P.A., a general practice firm with an emphasis on real estate transactions. He is an agent for most title underwriters, including Ticor Title Insurance Company, Lawyer's Title Insurance Corp., Old Republic National Title Insurance Company, Attorneys' Title Insurance Fund, Chicago Title Insurance Company, and Stewart Title and Guaranty.
Mr. Greenberg practices primarily in the area of residential real estate transactions. He currently handles approximately 800 real estate transactions per year. He is a frequent lecturer on real estate issues. Mr. Greenberg is approved to close loans for most national and local lenders. He has served as general counsel to several real estate companies and advises clients in all aspects of real estate law.
Copyright 2006, Steven R, Greenberg, All Rights Reserved Worldwide. For More Information, Contact Us. or call 941-586-4412