After a major storm buyers can be reluctant to invest in coastal areas, which is a valid concern, especially after Hurricane Sandy. Steve Bonday with Banker's Insurance helped me in clarifying any concerns a future buyer may have, so THANK YOU Steve. Please see Steve's contact information for further questions or concerns. Steve is VanderMyde Real Estate's "go to professional" for all insurance needs.
Steve writes-
There may be some miscommunication out there after Hurricane Sandy – not really uncommon after a major storm.
One of my thoughts could be for folks that did not carry a flood policy in the past, and have now decided to carry one.
In this situation, we can write a flood policy for that homeowner, however, there will be a 30 day waiting period before the flood policy becomes effective.
This is also the case with anyone buying a home and paying cash.
I will add to Steve's comments above that I've recently found ways around the 30 day wait period with cash offers, thanks to my co worker at REMAX Ocean Realty Dick Thompson. Dick had this challenge with a buyer client,and had his client take out a small equity line, or loan on the property ,so the buyer would have flood insurance the day of closing. His buyer client then paid off the small loan and continued with flood insurance that was currently in place.
Also, especially for folks up north, most insurance agents around the country are really not that familiar with quoting and writing flood insurance.
It would not surprise me if clients are being misinformed by agents that do not have a lot of experience writing flood insurance.
There are many rules and regulations that are difficult to understand, especially if you are from a area that does not experience a lot of flood claims and have “special hazard flood zones” (AE, VE, etc) like we do.
I think there are many of our local agents, who have a hard time with flood insurance, as the government changes the underwriting guidelines from time to time.
Myself included, but I have put a lot of effort in trying to understand the policy as best as I can.
The most important take away for your clients is:
1) We can write flood insurance on the OBX.
2) We can write excess flood insurance here.
3) We can place homeowner policies here – including homes that will have weekly summer rentals.
4) We can place the wind policy that follow the “form” of the homeowner policy here.
5) We can place a dwelling policy, but I do not like these policies and highly recommend the homeowner policy form.
6) We can provide high liability limits as needed.
7) If a home is located in a CBRA flood zone (Carova for example) – we can place a flood policy.
8) We can often “grandfather” a flood policy if we have a copy of the original EC.
We can also grandfather – if we can find the old flood map that was in place at the time of construction.
This week, I had a client tell me they were no longer interested in an oceanfront listing in Corolla b/c they could not get flood insurance,so I reached out to Steve to give further explanation as you can get flood insurance in Corolla. This was his reply-
We can definitely write a flood policy thru the National Flood Insurance Program (NFIP) for Corolla.
In addition, we can place a excess flood policy on these homes.
I have been trying for several years to make clients aware of the excess flood policies, and how they can provide the extra flood coverage needed to properly insure the home.
In essence, the excess flood policy can “fill” the gap between the insured value of the home, and the maximum flood limit from the NFIP of $250,000.
For example:
If we want to insure a home for $500,000 for the homeowner policy.
The flood policy thru the NFIP can write a policy with a $250,000 maximum limit.
Most mortgage companies will only require the NFIP limit of $250,000, but that would not cover the cost to rebuild the home, if it was damaged/destroyed by the peril of flood.
A excess flood policy can be written for $250,000 – which would bring the total insured limit for the peril of flood up to $500,000.
In addition, the excess flood policy is on a replacement cost basis.
We cannot change the valuation basis of the NFIP policy, but if the home had damage that reached the excess flood limit, it would be on a replacement cost basis.
Note:
The NFIP policy valuation is replacement cost for a Primary home, and it is Actual Cash Value (ACV) for a second home.
ACV is depreciated cost, and most of the homes here are second homes.
Last, many of the homes in the Corolla area were built before the current flood map was placed.
Many of these homes have ground floor enclosures that include heated living space – game rooms, bedrooms, etc.
I have “grandfathered” many of these homes back to the old “C” flood zone that was in place at the time the homes were built.
By doing this, the flood policy coverage starts on the ground level floor.
Steve Bonday's contact information -
Steve Bonday CIC, CBIA, AIP
Insurance Sales Executive
4713 N. Croatan Hwy Kitty Hawk, NC 27949
PO Box 2589 Elizabeth City, NC 27906
