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Tag: flood insurance

Castles in the Sand

Condominium insurance and assessments

Written by Monica Simpson on . Posted in Business, Castles in the Sand.

Does the talk of insurance make your eyes glaze over? If it does, join the club. Insurance of all types is complex and difficult to understand but in the case of homeowner’s insurance, condominium insurance and flood insurance, it’s getting worse.

I recently learned that condominium insurance in coastal areas is skyrocketing by as much as double over last year’s renewal. This is primarily because 2022’s busy hurricane and storm season left the southwest coast of Florida with unimaginable damage. Insurance companies have left the state leaving very few options for coastal communities. This has compounded the existing problem of fraudulent lawsuits being brought against insurance companies that would not reimburse for overinflated home repairs.

Now we’re also facing increases in flood insurance based on a 2021 FEMA decision calculating policy costs. FEMA’s new method is to equitably distribute premiums across all policyholders based on the value of their properties in addition to their location. The increases will give sticker shock to everyone in both single-family homes and condos. The good news is that readjustments will be phased in over a period of 10-15 years.

The challenge specifically to condominium associations is to come up with the unexpected premium payment. Most associations will need to special assess their owners which creates a potential problem for owners who are considering selling.

The Florida condominium rider requires a seller of a condominium to make the following representation: “Seller represents that seller is not aware of any special or other assessment that has been levied by the association or that has been an item on the agenda or reported in the minutes of the association within 12 months prior to the effective date of a contract for sale.” This is a mouthful, but it’s pretty clear language. The problem is when does a “potential” assessment need to be disclosed?

Like any other disclosure when selling property, always err on the side of caution and disclose everything. For instance, possible disclosures could include if an improvement that could lead to a future assessment is in the minutes from a previous meeting or on an agenda for an upcoming meeting, if there is any indication that an improvement could lead to a future assessment included in any mailing to any unit owner or even if a conversation with a board member indicates the possibility of an assessment.

Anything that even has a hint of a special assessment needs to be disclosed to a potential buyer to protect the seller from future liability. On the other hand, if a seller truly had no knowledge of the possibility of an assessment and it was never discussed at a meeting or was never an agenda item, the seller is likely protected from post-closing liability.

As far as insurance increases, there is a glimmer of hope. The lawsuits against insurers have been somewhat addressed by the Florida Legislature putting in place tort reform starting next year. Hopefully, this will encourage insurers to return to Florida’s enormous marketplace, creating some competition with the benefit of leveling premium costs.

We live in litigious times in a state surrounded by water and prone to hurricanes. Sure, it’s the price we pay for living in what most of us feel is a little bit of paradise. Nevertheless, stay on top of all the insurance issues and what your obligation is for disclosure with a clear eye.

Castles in the Sand

Bigger waterfront homes, bigger insurance

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Have you forgotten the collapse of the condo in Surfside, Florida yet? Those of us who live on the water in Florida may never get over it, it will just keep coming back like a bad dream. The good thing is the unfortunate collapse of the building and the death of so many residents appears to be more unique to the building’s construction and maintenance than many first thought. Nevertheless, living on barrier islands with direct ocean and Gulf exposures leaves you vulnerable in many other ways.

Last week I talked about the changes being made by the Federal Emergency Management Agency (FEMA) to the federal National Flood Insurance Program they manage. The program went into effect on Oct. 1 and will start to impact homeowners who have flood insurance through the government’s National Flood Insurance Program as their renewals come due. But there are a lot of moving parts to flood insurance, especially for high-end waterfront homes.

First of all, if you are part of FEMA’s National Flood Insurance Program, your coverage is a maximum of $250,000 in damages. FEMA does make additional funds available if a disaster is declared, which is one reason why governors of states quickly declare disasters after significant storms in order to help individual property owners as well as make states eligible for funds in a declared disaster situation.

Of course, $250,000 is not a lot of money to repair damage from a storm in a property worth over $1 million, which almost all waterfront properties in Florida are valued at. The answer is to purchase excess flood insurance coverage. As waterfront property values increase, there is a growing sector of private insurers who are filling the gap with a variety of policies. These policies could be a supplement to homeowner’s policies or could stand alone. They could be combined with the National Flood Insurance Program policy, which also offers excess flood insurance coverage. However you structure the insurance you need to meet your lender’s flood insurance requirements as well as protecting your home and investment should be reviewed with a flood insurance professional.

In addition, private flood insurance policies can go beyond what’s covered under the National Flood Insurance Program’s coverage. This might include reimbursing you for loss of income, additional living expenses coverage and even the costs of flood prevention, such as sandbags. All of the coverages available vary by the insurer, as do the rates, so purchasing excess flood insurance coverage is an important part of waterfront living and needs to be addressed with a competent insurance broker who is a specialist in flood insurance, particularly on expensive barrier islands and other waterfront regions.

Another caveat is to determine the true replacement cost for your property. Costly high-end finishes may be difficult to put a value on after a storm. Homeowners should document every detail of the home that could be in dispute if it became a total loss. Pictures and videos created before an event will become valuable when the insurance adjuster shows up.

Just to add to your stress a little more, the First Street Foundation, a nonprofit that advocates for more transparency in flood risk and climate change, predicts the following: In the next 30 years, economic damage due to changing environmental conditions is estimated to jump to 7.5 times the current average insurance payout, up from 4.5 times.

You can’t dwell on things you can’t change, like a once-in-a-lifetime building collapse, but you can prepare for your own individual circumstance. Know what you need and get the best possible advice to protect your home and family because no one wants to move inland.

Castles in the Sand

Get ready for sticker shock with flood insurance 2.0

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

It’s October, and the Federal Emergency Management Agency’s (FEMA) new program, called Risk Rating 2.0 Equity in Action, went into effect on Oct. 1. For many homeowners, this may be the annual October surprise, even though it was well-publicized by FEMA.

This overview of flood insurance premium rate increases was delayed from last year after the agency received pressure from Congress to delay the increases because of COVID-19 and other financial considerations. Remember that Florida is in the crosshairs of FEMA, which always runs a deficit, since approximately 35% of their policies are in the state of Florida.

FEMA is responsible for the National Flood Insurance Program, which is sold through individual insurance brokers. Generally, properties with mortgages – especially federally backed mortgages – are required to carry flood insurance based on the home’s flood zone.

FEMA’s new pricing methodology is intended to create a more equitable way to share the risk. Since the 1970s, a home’s flood insurance cost was based on its elevation and zone within a FEMA Flood Insurance Rate Map. FEMA says a one-size-fits-all rate policy means that policyholders with higher-valued homes are paying less than their share of the risk. Conversely, policyholders with lower-valued homes are paying more than their share of the risk. FEMA says that Risk Rating 2.0 will work similar to existing property insurance policies in which every homeowner receives an individualized price quote. In addition to elevation and flood zone, FEMA says a 2.0 coverage quote will also consider flood frequency, multiple flood types and distance to a water source along with other property characteristics such as the cost to rebuild.

Although when first announced FEMA did not provide specifics relative to rates, they have given an overview of the changes to Florida residents. One out of five Florida homeowners (19.8%) should see a decrease in their yearly insurance cost. One out of 25 (4.2%), however, should see a yearly rate increase greater than $240. Also, FEMA says homebuyers don’t have to suffer sticker shock after closing since the new system will be more transparent. And the National Flood Insurance Program premium can still be transferred, including discounts from a seller to a buyer when the home sells.

Southwest Florida has some of the highest numbers of homes in the 100-year flood zones in the state. Monroe County leads the state with 89.1%, Sarasota has 26.3% and Manatee has 15.7%. Sarasota and Manatee numbers don’t, however, segregate the barrier islands. In addition, Pinellas, Miami-Dade, Charlotte, Lee, Brevard and Sarasota counties also appear in the top 10 nationally for the total value of real estate at risk.

What FEMA is trying to do is put more responsibility on those choosing to live in flood zones and then continuing to do so as the ramifications from global warming intensify. Their goal is to compensate for five decades of mispriced insurance. The way FEMA calculates flood insurance premiums is historic in its concept, going back to 1968.

There are also new FEMA flood maps that took effect in August. This could potentially change flood insurance premiums further in addition to the FEMA 2.0 changes. The bottom line is there are a lot of flood insurance changes going on, and it’s important that homeowners who live in a flood zone be aware of how it will affect your insurance premium at renewal time. At least we’re almost done with hurricane season.

Castles in the Sand

Examine your condo flood insurance

Written by Louise Bolger on . Posted in Business, Castles in the Sand.

Last week, I reviewed a fairly new nonprofit called First Street Foundation, established to help homeowners understand FEMA flood zones and potential flood zones not yet recognized by FEMA. I also pointed out what I feel is a valuable addition to realtor.com for potential homeowners called the Flood Factor, which provides valuable information to all homeowners and potential homeowners about the flood risk of a particular property.

But what if you live in a condominium complex or are considering purchasing a condo that is in an established flood zone?

Condominium flood insurance is a different animal than flood insurance for a single-family home. The principals are the same, but the requirements and responsibility for condo flood insurance are completely different.

Recognized condominium associations – the corporate entity responsible for the management and operation of a condominium – is eligible to purchase flood insurance for all common property located in a special flood hazard area. The boards of directors of condominium associations typically are responsible under their bylaws for maintaining all forms of property insurance necessary to protect the common property of the association against all hazards, including flooding.

The cost to cover the condo association’s flood insurance is included in each individual homeowner’s fees and is something that condo owners who live in a flood zone should be proactive in understanding. If the association does not carry adequate insurance or is negligent in allowing it to lapse, the owners will be responsible for the damage in the event of a flood.

In addition, condo owners who have a mortgage on their unit will be required to give proof on an annual basis to their lender that the condo association does provide adequate insurance for the association’s property. If this proof cannot be provided, mortgage lenders could purchase a policy on the owner’s behalf to protect their investment.

Many condo owners have additional flood insurance for their individual units. This, in my opinion, is a gray area as to whether or not it’s necessary and what exactly it covers, especially if the property is well above typical flooding for the location. My personal experience is that obtaining personal flood insurance is not as easy as it sounds. I was asked to provide elevation certificates and pictures of the building I live in and one time after I had paid the premium, it was refunded, and the insurance turned down. However, per FEMA’s manual, this is a conversation you should have with a qualified insurance broker who sells flood insurance for FEMA if you want to add a flood policy to your condo.

Another confusing area of flood insurance is what it covers or doesn’t cover. Damage caused by moisture or mildew that could have been prevented by the homeowner is not covered; living expenses or temporary housing, damaged vehicles, business interruption and other fine print areas are not covered. Also, if water gets into your condo during a storm there could be an issue as to where the water came from and if the damage is covered by your homeowner’s insurance or your flood insurance policy.

Condo flood insurance is one of the most misunderstood areas of flood insurance in general. It’s important that you know and understand what your condominium association covers and that they are competent in their decisions on your behalf. If you think adding a personal flood policy is beneficial, this is something where you will need to get additional advice.

We seem to be making better progress in understanding flood insurance and since our hurricane season is just about over, it’s easy to put out of our minds, but something you need to stay on top of. Stay safe.

Flood insurance rates changing

Flood insurance rates changing

Written by Cindy Lane on . Posted in Business, Insurance.

ANNA MARIA ISLAND – Flood insurance premiums soon will be changing for better or worse for Island property owners, depending on where their property is located.

The Federal Emergency Management Agency (FEMA) has published new Flood Insurance Rate Maps (FIRMs), changing the base flood elevation for many properties in Manatee County, including the Island.

Check your address here.

Base flood elevation is an estimate of whether properties are in areas of high, moderate or low flood risk, and is the basis for elevation and flood insurance requirements – and for setting flood insurance premiums.

The old maps were based on studies done 30 to 40 years ago, before new technology improved data collection, FEMA’s Mark Vieira said.

The new, more accurate maps show elevations going up for some properties and down for others, with some staying the same, he said.

For example, the base flood elevation decreased from 11 to 9 feet at Bradenton Beach City Hall and from 9 to 8 feet at The Sun office in Anna Maria, and remained at 8 feet at the fire station in Holmes Beach.

Some flood zones also changed, from VE – the highest, most expensive flood rating – to AE, the second highest, less expensive rating, and vice versa.

New maps take into account wave action, not just the height of floodwaters, Manatee County floodplain manager Sandy Tudor said. VE flood zones could have waves of 3 feet or higher, while AE flood zone waves are likely to be less than 3 feet.

“They are both high risk,” she said.

Even if elevations decrease and flood zones improve on properties, Island property owners still should buy flood insurance, Vieira said.

“They’re on an island,” he said. “If you have a federally-backed mortgage, you have to have flood insurance, but even if you don’t, you still need insurance to be on the safe side.”

The new maps are subject to a public comment period and subsequent adjustment before they go into effect. Property owners can report anything from incorrect addresses to elevation certificates that differ from the map during the public comment period. The process already has begun, with FEMA representatives and county officials holding two meetings last week to answer questions about the maps.

When the comment period ends, local governments will decide whether to adopt the new maps. If they don’t adopt the maps, flood insurance will not available in the community, Vieira said.

Flooded street in Holmes Bea

Protecting Holmes Beach from rising tides

Written by SUN contributor on . Posted in Awards, Awards 2018, Community News, Holmes Beach, Second Place.

HOLMES BEACH – Stories of climate change and sea level rise may soon be more than just cautionary tales for Island property owners, but City Engineer Lynn Burnett has a plan to keep those stories from becoming nightmares.

“Our ultimate goal is net zero loss of properties that are buildable today,” Burnett said, opening a discussion with planning commissioners concerning the steps needed to keep rising tides out of local businesses and residences.

Second place
Environmental writing
2018

Burnett’s plan is to begin slowly raising city streets, seawalls and private properties, along with adding more stormwater drainage to lots, to help keep the water out over the next 20-40 years as sea levels continue to rise. With Anna Maria Island elevations so close to existing sea level, if the Island cities and property owners do nothing, Burnett said in Holmes Beach 20-30 percent of currently buildable lots could be underwater by 2060 with no hope of reclaiming them. Because of the way the Island is graded, with the higher side bordering the Gulf of Mexico, the loss of land would be concentrated on the opposite side bordering Tampa Bay, Anna Maria Sound and Palma Sola Bay. The flooding that islanders see during king tides, Burnett said, would become the norm.

Holmes Beach planning flood lynn
City Engineer Lynn Burnett discusses her plan to help keep rising tide waters out of Holmes Beach through the year 2060 with planning commissioners. – Kristin Swain | Sun

“The do-nothing option does not exist,” she said.

To prevent property loss, Burnett wants to begin working with each Island city and private property owners to inspect individual properties and determine what can be done to keep the water out.

“It’s not a one size fits all solution,” she said. “We’re not going to be able to prevent 100 percent of flooding on this Island. That’s not an achievable goal. It’s better to have the water recede in hours rather than days.”

“We all know it’s coming,” Planning Commissioner Chuck Stealey said. His primary concern with the plan was how the proposed improvements will be funded. For people living on a fixed income or those who recently completed repairs to their seawalls expected to last for 20 years, he said the cost could be too much to bear. He also worried that some property owners can’t foot the bill for the improvements if it will endanger surrounding properties when the flood waters come.

Burnett said determining the cost and figuring out how to pay for it would be one of the things discussed with each individual property owner as the program progresses. If the property owner can’t afford the repairs or improvements, she said some grant funds or other monies may be available to help lessen the financial burden. She said savings to property owners also will be present in the lessening of flood insurance payments which would help cover the initial cost of improvements in savings spread out over several years of property ownership.

Planning Commissioner Scott Boyd said he feels the project will just raise the cost of homeownership on the Island and push out more permanent residents.

City Planner Bill Brisson said for new Island homeowners seeking to rebuild or remodel a home, several of the proposed improvements are already enforced during the site plan approval stage in the building department. Already property owners are required to raise new structures and those receiving more than a 50 percent remodel above the current flood level as determined by FEMA. New site plans and remodels also require stormwater drainage facilities to be placed on the property able to hold all the property’s stormwater runoff.

“The alternative is you won’t have a place to live,” Brisson said.

“Nobody’s going to buy our property if it’s underwater,” Planning Commissioner Barbara Hines said.

Burnett said the things city leaders are doing to keep the rising tides out are “nothing new,” but aren’t outlined specifically in the city’s comprehensive plan. City initiatives include the installation of WaStop valves at outflow pipes to prevent tidal water from backing up the city’s stormwater drainage system, repairing and slip-lining damaged pipes, incrementally raising roads as they’re resurfaced and putting a 12-inch cap on city-owned seawalls as they’re repaired or replaced. To keep the water from flooding Bayside properties, adequate stormwater infiltration and retention facilities must be installed upland on both public and private property.

“We don’t have a choice,” Hines said. “We are going to lose this Island if we do not take action now. I don’t know about you, but I can’t afford not to do it.”

Burnett said if the proposed ordinance outlining the plan is approved by city commissioners, private property owners could see implementation plans for their residences as soon as 2020. Before the ordinance goes to commissioners for approval, planning commissioners are holding a public hearing to determine if it’s consistent with the city’s comprehensive plan at their June 6 meeting.

Flooded street in Holmes Bea

Elevation certificate could drop insurance costs

Written by Cindy Lane on . Posted in Business, Insurance.

To slow rising flood insurance premiums, owners of residential, rental and business properties should consider getting elevation certificates, FEMA advises.

Letters are on their way to local mailboxes notifying property owners that hiring a licensed surveyor, engineer or architect to obtain an elevation certificate could lower premiums, said Janice Mitchell, a FEMA regional insurance specialist in Atlanta.

Even if the certificate does not result in lower premiums, it would not trigger an increase higher than the existing rate increase schedule, she said.

For some policyholders who own property in high-risk flood areas like Anna Maria Island, annual flood insurance premiums are increasing from 5 to 18 percent for primary residences and up to 25 percent for non-primary residences insured under the National Flood Insurance Program (NFIP).

Whether or not you get an elevation certificate, be careful not to let your flood insurance policy lapse.

The increases are mandated by the federal Homeowner Flood Insurance Affordability Act to phase out discounted rates on such properties, gradually increasing their premiums up to their full risk, or actuarial, rates.

Among the affected policyholders are owners of pre-FIRM properties, those built or substantially improved on or before Dec. 31, 1974, when Flood Insurance Rate Maps (FIRM) were adopted, or before the effective date of the initial Flood Insurance Rate Map for the community in which the property is located. Anna Maria’s flood insurance rate map is dated Feb. 1, 1984, while Bradenton Beach and Holmes Beach maps are both dated June 11, 1971, according to FEMA records.

Whether or not you get an elevation certificate, be careful not to let your flood insurance policy lapse, Mitchell said, because if it is discounted, it will be reissued at the full risk premium.

For more information, visit www.FEMA.gov/cost-of-flood.