Flood Insurance Story

[Matt Mason]

I have a story with flood insurance that I wanted to share as I thought it may help someone out there.

A couple years ago I was in escrow on a 4-plex and the bank doing my loan said I needed flood insurance since my property was in a flood zone. This surprised me since the property was not near any creeks or mountains and is even in a little bit of a hilly area and it is not at the lowest elevation. I looked at the flood zone maps and indeed my side of the street was in the zone. For basic flood insurance that would satisfy the lender, I was quoted over $2,000. This is something I would have to pay year after year and would have probably torpedeod the deal in my eyes (this was a short sale and I going back to the bank for a big reduction for this would have been difficult at best)

Looking at the property, the map made no sense to me, since my neighbors property behind me was about 5 feet lower than this property. The only way this could flood is if a wall of water came rushing in, because it would pool in lower elevations. Also, the prop. had a raised foundation so if anything could get flooded it would be the crawl space. I asked if the seller was paying this flood insurance and yes they were paying over $2k per year. I was pretty upset as it is not easy to find properties here and I was potentially going to lose this over what I thought was a useless flood insurance requirement.

I called the insurance company and told them the facts and finally did get them to acknowledge if there were flood vents in the crawl space I could get a reduced rate since the crawl space was higher than the 2 foot flood zone listed on the map. The property didn't have flood vents, but it did have a lot of vents. I called back and asked about this and yes, they did grant the reduction if the total size of the vents met a certain requirement. I measured and was just short, but found out the rate would be reduced from over $2k to $250.

I ended up closing on the property and had the $2k sent in for the premium as part of escrow as the bank required, but had another vent installed a few days after close. Took pictures and sent all the measurements back to the insurance company and they granted me the refund and the overall reduction in rates a few days later.

Point is I never would have known if I didn't investigate and since the prior owner had no knowledge of this I am sure there are other owners out there with the same issue that could get quite a benefit. $2k a year is a big deal.