Flood Insurance - Taos, New Mexico

[Zachary Moore]

I'm closing on a duplex in Taos, New Mexico and found out the property was on the edge of a flood plain.  The loan is requiring flood insurance.  I was using State Farm for my homeowners insurance, but the quotes they are giving me for flood are astronomical.  Any suggestions on getting a bare bones policy?

[Robert Carmody]

Do you have an elevation certificate? Or does the seller of the duplex have one? An elevation certificate will help lower the premiums or eliminate the requirement for flood insurance if the structure is built outside of, or higher than the ground level if within, the designated flood plain. Click here for FEMA Elevation Certificate info. You can contact the Flood Manager for the Town of Taos or Taos County to find out if an elevation certificate is on file. If the structure is naturally elevated or elevated with "earthen fill", above the base flood level, you can use the certificate to submit a Letter of Request for Map Change (LOMC) to FEMA, and they will review the request and respond within about 60 days. If approved, you'll get a Letter of Map Amendment (LOMA) or Letter of Map Revision based on Fill (LOMR-F). Your mortgage company will need to approve your request also, which they will most likely do with either the change or amendment from FEMA.

If you are required to have a flood insurance policy and structure is not elevated or outside the flood plain, you can look into a Lloyds of London Flood Policy, or some of the private flood insurance providers. Here is a list that I copied:

Company	Market share
Assurant	39%
AIG	26%
Swiss Re	18%
Chubb	4%
Liberty Mutual	4%
Munich Re	2%
United Surety	2%
ASI	1%

You can also try for a reduced premium or grandfathered-in lower rate if: 1) the seller or current owner has a flood policy in place from a previous Flood Insurance Rate Map (FIRM), and there isn't a lapse in coverage or changes to the exterior of the property since that FIRM was complete. 2) you agree to a higher deductible in exchange for lower premium.  3) Lower your risk by retrofitting property to be more floodproof 4) you have the Elevation Certificate & recent Survey so that your premium is based on your specific risk level. 

In 2012, the flood maps were expanded and large areas within NM were added to the high risk zones, without a history of flooding, and where water shortages are  usually the concern. The flood insurance premiums in the national program are largely based on community participation, or how many other homes in the community and in that state have flood coverage. It's a little alarming when you see that NM's flood premiums, on average, are nearly double the average in Texas and Florida, but only 2% of the properties in NM have flood insurance, compared to over 40% in FL and 12.5% in TX. Most of the State of NM is rural, and agricultural along the Rio Grande River, where many properties fall into a high risk flood plain. While flood insurance can be required by mortgage lenders, and on all federally insured home loans, there is no requirement to carry flood coverage on property owned free & clear, or sold via owner financing. Compared to urban or suburban homes, those that are in rural areas are less likely to be mortgaged, often due to the characteristics of the property, or source and reliability of the owner/buyer's income, or because the property was acquired with seller financing. And, without a mortgage lender requiring flood insurance, property owners will be less likely to purchase costly flood coverage when they question the need for it to begin with. Good luck with it and with the investment property.