Important Changes To Flood Insurance

New Flood Insurance Guide Lines (effective October 1st), are complicated, and can cause potentially expensive increases in Flood Insurance Costs.  As part of your buying process, a full investigation of the flood insurance cost is a very important part of the process. It’s highly recommended that it be done at the beginning of the due diligence process. Do not wait to find out.
1. The rates are going up for many homes in our area. But not all homes will see rate increases.
2. It cannot be stressed enough to never let your flood insurance policy lapse‼
3. If you are buying a home, your agent should always ask the sellers (listing agent) if you could assume the sellers policy.  Sellers should be at ease with transferring their policy as long as you agree to transfer it at no cost to them. There is a possibility that a transfer fee might be encountered. Some policies can’t be transferred.
4. Flood zones are no longer a factor when calculating cost.
5. Your house will be rated on a house by house basis.
6. Lenders still needs to know the Flood zone to determine if your Flood insurance must be escrowed into the loan…for now.  X,B,C are not zones requiring mandatory escrow of flood insurance.
7. Property Disclosures require that a Flood Declaration page be attached. Very important, as it helps buyers/lenders calculate flood insurance costs that can affect the ability to qualify for loans.
8. If a for sale property does not have Flood insurance it will be the policy of Coldwell Banker TEC to obtain a quote and attach it to the MLS.  Unfortunately, higher quotes have a negative impact on home sales, and qualifications, but when writing offers this is crucial information.
9. If you currently have Flood Insurance you will possibly see an increase of up to 18% per year until it reaches the new rate. (whatever that may be). This will not be as expensive as it will be on a brand policy. And, not all policies will see a rate increase.
10. What the cost might look like for a new policy varies … one example, in an X Flood zone in St. Bernard Parish where a one would normally pay around $575 a year, the price is now coming in around $1200 a year. And remember, new policies are handled on a case by case basis.
11. Under new guide lines, f you make a claim against your flood insurance policy, that will trigger an investigation of your property that looks for claims made during the prior 20 years, and you will be surcharged due to those flood claims. When buying, if at all possible, find out if prior flood claims were made.
12. Renewals for April 1st or later is when the new rates will go into full effect. Lawmakers are trying to reduce the impact of these new guide lines.
13. Elevation certificates are no longer needed because FEMA has collected data (via GPS, among other things), that enables them to rate the house. HOWEVER get one anyway to make sure that FEMA says your rates are matching. This may change. If the flood elevation cert is better than what FEMA ” says” we may be able to revert to the Elevation Cert.
Need more information, call us: O’Malley & Associates  504-579-4717
Middleton & Wanda O’Malley
Coldwell Banker TEC, New Orleans