Reducing Flood Insurance Costs

[Tom Brooks]

Flood insurance is a major issue given the weather conditions the eastern seaboard has seen in the last few years. Many expect it will continue to be an issue with climate change. I am sure many of you are seeing rate increases that are hurting your bottom line.

What can be done to reduce premiums and protect our investments? Several mitigation techniques can often significantly impact your costs. Lower premiums mean more cash flow and often a more valuable property.

There are Wet and Dry flood mitigation techniques that applicable in different settings. This can mean something as simple as having foundation flood vents installed for a crawl space or garage. This can also be as complex as a dry flood proofing system preventing water from going through building entrances.

More and more we are seeing entire buildings raised to reduce premiums and protect structures. Properties can also have some of their crawl spaces or basements filled in to reduce premiums. 

Beyond that work with Flood Insurance maps themselves can reduce premiums with a Letter of Map Amendment. 

My point is that "the price" isn't always "the price" if there is something you can do to change it. You can use this to get better returns from your current properties and as a competitive advantage with value add investing in new ones. Additionally mitigation techniques might help reduce vacancy in the event of a flood or hurricane by reducing the amount of damage a structure receives and thus reducing the time needed for repairs.

So at this point you are probably wondering well how much can I save and how much will this cost? Well that depends on what is going on with your elevation certificate and what your current premiums are. You can potentially save thousands annually but varies from case to case.

[Bob B.]

I hate to say it, but there is a lot of misinformation in this thread.  I own multiple properties on the west coast of Florida in flood zones.  There are so many variables that go into flood quotes.  I have three houses directly on the beach.  All are in a VE zone.  House A is in a BFE (Base Flood Elevation) of 15 and is elevated 17 feet.  House B & C are in BFEs of 13.  House B is elevated to 14 feet, house C is on the ground 10 feet below the BFE.

With the same amount of coverage, $250K, tell me which premium is for which house?

$2,300

$6,900

$6,700

If you guessed the house on the ground (House C) is the cheapest, you are right!  Next cheapest is the house only 1 foot above BFE (House B) and the most expensive is the house 2 feet above BFE (House A).

Grandfathering impacts rates more than anything.  Flood vents, break-away walls and such have such a little effect on rates.

FEMA and private flood companies are ridiculous when they are not grandfathered in and you can't really get around it.

Just trying to figure out how they really rate the buildings with different features, I had my agent go through each building type in the same location, with the same elevation.  This would take an hour to give you insight on how it impacted rates, but nominally.  With flood vents, without, with break-away walls, without.  It always came to BFE and an assumable policy (grandfathering).

http://premierflood.com/e-comm/building-diagrams.p...

What I had come to find out, diagram 5 which allows flood waters to flow without restriction were still very high (Building B).  

(Building A) which is diagram 6 due to an elevator that is on the outside of the main structure.

Finally, Building C is a diagram 1B which actually lifts the house on stem walls which makes it perfect that a house is 16" off the ground so it can more easily float away.

All that said, the most important thing is to not let grandfathering expire.

If it does, you are not going to significantly impact your rates with breakaway walls (diagram 6) or flood vents.

Also, I would love if it was true that FEMA would pay 75% to raise my house that is on the ground in the flood zone. It would save me the $85K I am about to spend raising it (there is some limited grant monies available, but it is not easy to get and you have to wait over a year to see if you might get some of it as the process is pretty drawn out). If that was the case, why is not every ground level house on the beach being raised? Simply FEMA does not pay for houses that have not been flooded and you can only get a grant if you have been flooded and there are is a series of criteria you have to meet to get a partial payment, if any. If FEMA really did that, why would anyone be stupid enough to buy flood insurance if FEMA is just going to give it to you anyway?

There is more I can go into on this, I am just pressed for time tonight and I stumbled across this thread.