The Flood Insurance New Mexico Plan to Save Money | Santa Fe | Albuquerque
Flood Insurance New Mexico
Does my New Mexico homeowner insurance cover flooding?
A typical New Mexico homeowners’ policy is written through Farmers, State Farm, Allstate, and Progressive; for instance, it excludes flooding that will be covered under their homeowner’s policy.
In most cases, the only way to get flood coverage is by purchasing a stand-alone flood insurance policy. However, you should ask your homeowners agent if you can add an endorsement to your homeowner’s policy to cover flooding. Yet, don’t be too surprised if the answer is NO.
Do I need flood insurance in New Mexico?
It is important to have flood insurance coverage in New Mexico because our beloved Cowboy State has seen a fair share of flooding, and there is likely more coming.
We believe most homeowners think about Flood insurance in New Mexico at some point, maybe before buying a home or during the closing process. However, many of us only think about it when a big storm is looming, or we have heard on the news that there is flooding forecasted or happening too close to our home.
If your home or business is in a flood zone, that is considered a low flood-risk area. Sadly, many homeowners decide to forgo purchasing coverage because they believe they are safe from flooding. Some real estate and insurance agents may even say you don’t need it.
I ask you to consider the facts: 20 percent of all flooding events across our nation come in areas that are considered low risk. After our last few major storms (Hurricane Harvey), we saw flooding in these low-risk areas. Eighty percent of these individuals had water in their homes or buildings and didn’t have flood insurance coverage.
In Harris County, nearly 135,000 homes were damaged. Three-fourths of these properties were considered low to moderate risk.
We often hear that people believe that the government will help, which is true. However, a few things must align for you to get government assistance.
- The president of the United States must declare the flooding event a state of emergency. If this doesn’t happen, then there won’t be assistance.
- The average amount of assistance homeowners get after a flood when they do not have flood coverage is $5,000. The average cost of damage to one’s property after a flood is $38,000+. That $5K you get from the government? It comes as a loan, and you will need to pay it back. Are you willing to gamble your financial future by forgoing flood insurance coverage?
One more note on these low-risk flood zone maps. Many of these maps are over 40 years old. If the area has been developed, then there is likely more concrete, creating a barrier for land that, previously, might have absorbed the massive downpour.
Because of all these factors, it is difficult for property owners to know their true risk of flooding. FEMA admits that their flood maps only give an idea of part of the risk. Our recent storms are facts that it can rain anywhere within New Mexico, and you should consider getting flood coverage so you are not uninsured when you need it most.
FEMA flood zone maps often take years to go into effect after the terrain was studied; this gives the impression that the area is “more up to date” than it is.
The average cost for New Mexico flood insurance in these Low-risk areas is $595 per year.
FEMA’s National Flood Insurance Program (NFIP) and all federally backed lenders rely on these New Mexico flood insurance maps to assess risk, set premiums and determine who is required to purchase flood insurance. Bad information about an area’s flood risk can leave property owners under or uninsured.
How much is flood insurance in New Mexico?
New Mexico NFIP flood insurance.
There are many options available in New Mexico regarding flood insurance, but they fall into two main categories.
- The National Flood Insurance Program (NFIP), also known as FEMA, is the government option for flood insurance. The NFIP has enjoyed a 50-state monopoly on the flood insurance market.
- Not “private flood insurance” but NFIP Resellers
If you have Nationwide Flood Insurance, State Farm Flood Insurance, Progressive Flood Insurance, or any of the of the logos below, then you are buying the NFIP flood policy that is just being resold through a government program. These companies are private companies, but their flood insurance is not. Here is a list of the 70 companies that resell the NFIP policy.
New Mexico private flood insurance market
There are alternatives to the NFIP or government insurance. It is called Private flood insurance, most notably Lloyd’s of London Flood insurance. However, there are other options available in New Mexico. We shop all the options for your property in your region to ensure you are getting the best premium. Please click here if you are ready to have us do the work for you.
Our shopping includes the NFIP because sometimes we find that you can get a much better premium with government subsidies.
How to get flood insurance in New Mexico
Lloyd’s of London Flood Insurance New Mexico Market
New Mexico is fortunate to have many Lloyd’s of London flood insurance options. Although many Lloyd’s flood insurance companies will have you assume that there is only one option, nothing could be further from the truth.
Lloyd’s of London has a rich history attributed to having invented the first modern insurance model. Unlike most of its competition, Lloyd’s of London is not a company but a corporate body. This structure works well since it has been around for over 330 years. Lloyd’s operates under multiple financial backers pooling their capital to spread the risk.
I have two blog posts that deeply dive into Lloyd’s of London and what they mean to New Mexico’s flood insurance market. If you are interested, the links are below.
Lloyd’s of London Flood Insurance
Private Flood Insurance vs NFIP
Lloyds also insures the world for flood insurance, meaning they cover flooding events in India, Australia, and much of Europe. The “game” of insurance is to spread your risk since Lloyds is worldwide.
My joke here is that Lloyds is banking on God’s promise that he won’t flood the entire world again, …..so they won’t have to pay out the whole worlds flood claim.
How much does flood insurance cost in New Mexico?
Many factors go into getting the cost of flood insurance for New Mexico. If your home is in what is considered a low-to-moderate risk, you can get a heavily subsidized policy through the government.
New Mexico flood insurance low-to Moderate Risk rate and cost.
This is Flood Zone X, which is not lender required flood zone.
This is usually identified as an X-flood zone. Then we would suggest the government Preferred Risk Policy (PRP) which is a subsidized policy and has set flood insurance coverage limits (see grid below):
The average cost for flood insurance in New Mexico with the maximum set limits in these Low-risk flood zone areas is $405 – $700 per year.
Your property is in a higher-risk flood zone, usually identified with a Flood Zone AE. Your lender will require you to have flood insurance. The cost of flood insurance in New Mexico depends on many factors that are unique to the structure. We will try to give you an idea of the most common homes we see in New Mexico with a slab-on-grade foundation.
We will look at the New Mexico cost of flood insurance for the NFIP maximum of $250,000 for the (building only) with NO CONTENTS and our recommended deductible of $5,000.
We will be rating this example on the NFIP and on a few of our private flood insurance policies, specifically Lloyd’s flood insurance options in New Mexico.
Cost of Flood Insurance in NEW MEXICO in high-risk flood zone AE
Our example is in Alamogordo, NM, but the premiums will be the same if in Santa Fe, Albuquerque, Bernalillo County, NM, Las Cruces, Hobbs, and many other New Mexico flood zones.
In our example, the Base Flood Elevation (BFE is 4870) and is a home that is built before 1973
NFIP option in New Mexico Flood Zone AE
NFIP – Coverage of $250,000 building coverage (no Contents coverage) and $5,000 deductible
NFIP Annual premium in High-Risk flood zone is $2,866.00
This option is what we see if the property has had a flood loss before and either doesn’t have an Elevation Certificate applied, or the Elevation certificate shows that the lowest floor is 4 feet under the BFE for the area. You can use 10% of your coverage to cover other structures on your property
New Mexico Private flood insurance – Lloyd’s of London Flood Insurance (option 1)
Coverage of $250,000 building coverage (no Contents coverage) and $5,000 deductible
Lloyd’s of London (option 1) Annual premium in High-Risk flood zone is $912
This option is great, and we are very happy when we can get this option. They can be a bit choosey about what risk they will accept and will not take anything that has had a flood loss. They offer basements coverage, about $2,000 for loss of use, and $2,000 for other structures, but they can’t increase this coverage. They do not require an Elevation Certificate to rate.
New Mexico Private flood insurance – Lloyds of London Flood Insurance (option 2)
Coverage of $250,000 building coverage (no Contents coverage) and $5,000 deductible
Lloyds of London (option 2) Annual premium in High-Risk flood zone is $1002.48
This option is great, and we are very happy when we can get this option for our clients. They seem to be writing almost all risks; however, they do not write any property in a designated floodway or have a depth of -4 under the BFE. In our example, with our BFE being 4870, they will not accept this risk if the lowest floor is 4866. They will not take anything that has had a flood loss. They offer limited coverage for basements and do not require an Elevation Certificate to rate as a percentage of coverage for loss of use. If you want coverage for other structures, that will need to be added.
Private Flood insurance option (option 3)
Coverage of $250,000 building coverage (no Contents coverage) and $5,000 deductible
Private flood insurance (option 3) Not Lloyds,
The annual premium in a High-Risk flood zone is $2,208.32
This option will take properties that have had one flood loss for more than five years and the payout was under $100,000 on the claim. Their coverage matches the NFIP. They will write practically all risks, don’t need an elevation certificate to rate, and are a bit lower in premium than the NFIP.
Private Flood Insurance – Lloyd’s of London (option 4)
This option must be written on the building’s Replacement Cost Value (RCV). Otherwise, there is a co-insurance penalty that kicks in. So, $250,000 might be a bit low in California, but to keep this going, let’s just use that for this option
Coverage of $250,000 (RCV) building coverage, No Contents, and $5,000 deductible
The annual premium in a High-Risk flood zone is $819.20 (great price).
This options rating system is all over the board. Sometimes we get a crazy great price, but other times the premium is way higher than the NFIP will consider taking a property that has had one flood loss before as long as it has been more than ten years and the payout was under $50,000 on the claim. Their preferred coverage is at replacement cost, slightly different from some of our other Lloyd’s flood options. We usually reserve this one if the property doesn’t fit the above options. We can adjust coverages to control premiums. As mentioned before, these underwriters’ rates are all over the board. It is worth shopping through to ensure we are getting you the best premium possible. They don’t need an elevation certificate to rate.
Private Flood Insurance – Lloyd’s of London (option 5)
Coverage of $250,000 (RCV) building coverage, No Contents, and $5,000 deductible.
The annual premium in High-Risk flood zone is $1015.00
This option came from the company that used to run the NFIP program, so the coverage matches the NFIP coverage with two differences. They offer living expenses which will cover your cost when you are displaced from your home during repairs (most Lloyds flood policies offer this). They also offer a unique swimming pool clean-out, so ask for this coverage if you have a pool.
Private Flood Insurance – Lloyd’s of London (option 6)
Coverage of $250,000 (RCV) building coverage. No Contents and $5,000 deductible.
The annual premium in a High-Risk flood zone is $731.52
This options rating system is also all over the board. Sometimes we get a crazy low price; other times, the premium is way higher than the NFIP. They will consider taking a property that has had one flood loss before as long as it has been more than ten years and the payout was under $25,000 on the claim. They have been rumored to give a low price the first year and then non renew following years, or sometimes they jack the price way up so we will watch them. They have a slick system, and their underwriting is managed by a 3rd party, which also sometimes seems to be a glitch.
More options are coming online every day, and we are working to be looking into every viable option.
Flood Insurance Rate Map New Mexico
Currently, Flood Insurance New Mexico has 12,405 NFIP policies in force to date, with a total cost of $10,462,171. That would make the average for New Mexico $843. Of course, some will pay more, and some will pay less.
Click here to have us shop and save you money.