When you are purchasing a home in the Florida Keys, one of the lender requirements is to obtain Flood Insurance. The big question is how much does Flood Insurance Cost? Well, there is no straight forward answer to this question as each house is unique.
I will go over a little background information on flood insurance and talk to you about some of the experiences I have had recently. However, I am by no means an insurance agent, so please always consult with a local insurance agent.
FEMA 2.0 – FEMA’s – NEW Risk Rating Methodology
What is FEMA 2.0? FEMA 2.0 is FEMA’s new risk rating Methodology.
Straight from the FEMA Website, FEMA States:
“FEMA is updating the National Flood Insurance Program‘s (NFIP) risk rating methodology through the implementation of a new pricing methodology called Risk Rating 2.0. The methodology leverages industry best practices and cutting-edge technology to enable FEMA to deliver rates that are actuarily sound, equitable, easier to understand and better reflect a property’s flood risk.”
FEMA 2.0 is in full effect.
Now I can tell you from personal experience, FEMA 2.0 is not fair or equitable here in the Florida Keys. FEMA 2.0 has caused Flood insurance to increase in almost every home.
FEMA 2.0 and NEW Construction
On a new construction home that is elevated above flood, not just inches but several feet, new insurance policy premiums have been quoted between $4,000 – $5,000 dollars a year. Before FEMA 2.0, an owner would get a benefit to building a home above flood. Flood Quotes would be much more reasonable around $800.00 to $900.00 a year. FEMA 2.0 has changed that. There seems to be no rhyme or reason as to how FEMA is coming up with these premiums.
FEMA 2.0 – OWNERS that have Insurance Already
If you are an owner and you already have insurance, did you take a closer look at your insurance premium? Most homeowners experienced an increase of either 18 percent or 25 percent. If your home is a primary residence then you would see an increase of 18 percent. If the property is a 2nd home, then you would have experienced an increase of 25 percent.
FEMA 2.0 – My Flood Insurance is CRAZY
With the implantation of FEMA 2.0 – the Florida Keys are fighting back. Our local organization, FIRM -Fair Insurance Rates in Monroe County, are working hard to help ensure fair rates. If you have a crazy insurance premium and would like to share, FIRM is building a database to see how premiums are affecting owners and will share the database with Members of Congress. This is a fantastic organization to sponsor and follow for updated info on insurance. Follow the link for more info on FIRM.
Do Get an Elevation Certificate
When getting a Flood Insurance quote, the insurance agent will often ask for an elevation certificate. An elevation certificate will show you the lowest point of elevation on a home. Local survey companies can provide you with an elevation certificate for a cost. Insurance agents use the certificate to help with the calculation of your premium. In most instances, having an elevation will lower your flood premium.
Differences in Rates
If you are going to use your home as your primary residence, your insurance premium will be lowered compared to if you use the home as an investment or second home.
Flood Insurance Tip for Seller’s in the Florida Keys
If you have flood insurance KEEP IT. Often in the Florida Keys, we have owners that like to self-insure. These are owners who do not have a mortgage and own the home out right. A lot of owners feel as if they are paying the insurance company too much for what they will ever get out of it. I understand this philosophy and in some instance that could be the best option for someone. However, when you elect to self-insure and not carry any flood insurance, when you go to sell, the new buyer will have to obtain a brand new flood policy if they are seeking a mortgage. The cost of a new policy can be very high and result in the buyer being unable to afford the home. Overall, it can decreases your buyer pool.
Flood Insurance Tip for Buyers in the Florida Keys
As a buyer, one of the easiest ways to save money on flood insurance is to assume the Seller’s policy. Flood insurance is the only insurance that can be assumed. Wind and Homeowners cannot be assumed. The buyer saves money by assuming the flood insurance because often the cost of a new policy is greater than the current sellers rate. The process for assuming the flood is easy but can take a little bit of time, so don’t wait until the last minute before closing to get the essential paperwork completed.
Although, I can’t exactly tell you how much your Flood insurance will be, hopefully you have a better understanding of flood insurance in the Flood Keys and always call your insurance agent.
Also remember, the new flood maps are coming out sometime soon!
Local Insurance Agents:
