The traditional way to accomplish this is by purchasing the NFIP maximum and adding excess flood policy on top to get the total coverage amount. The Excess flood policy works on top of the primary flood policy. If this property were to have a flood loss (God forbid), the primary flood policy would activate. If the damages were more substantial than $250,000, the excess policy would cover the balance up to its coverage limit of $430,000. We are going to look at the coverage for this property in a few different ways. First, we will look at the NFIP + Excess; however, we suspect this idea will not be a cost-effective solution. Second, we will shop around to our many private flood insurance options looking to get one policy for the total amount needed. There are around 40+ different private flood insurance options for us to look at. They all have slight variations in underwriting and premiums.
This fantastic client came to us because he was sick and tired of seeing his ever-increasing government flood insurance premiums. He bought it in 1988 and flood insurance at the same time. Luckily, he's never had to make a claim. He shared his story with us. His job is very stressful. Emotionally and mentally taxing, and when he gets to his waterfront house, all the tension from work dissolves.
This home is not his primary home. The government policy is more expensive because the NFIP uses a different rating table for a second home. They also penalize you with extra fees. As if that were not enough, the NFIP flood insurance payout for a second home is on ACV (Actual Cash Value). ACV means the payout for your claim is deprecated, which translates that you get less. As an insurance professional and someone who has to buy my own insurance policies, I find it really unfair. I am distressed that the government policy will cost you more and pay you less on a claim just because you have a second home – it’s unfair. Some of the private flood insurance policies do not punish you for having a second home. And this type of policy will be the one we will look for first with our shopping for this property. Also, some of these policies payout on (RCV) Replacement Cost Value, which means that if you have damage and it cost $1,000 to replace, you get that amount without depreciation. I say “some private flood policies” because there are quite a few options on the private flood insurance market, and not all are equal. You should always review your insurance coverage to make sure you understand it. Use your agent to help translate the language because it can be tricky. Sadly, some insurance professionals don’t even understand what they are selling or how to explain it to their client, and some frankly don’t care. For this client, we found a policy that pays out on RCV.
Hamptons Beach Front, NY. We have helped so many properties along the coast. Most beach houses fall into two main categories: elevated or not. Other factors were when the home was built either before or after the community entered the flood insurance program. NFIP uses pre-firm or post-firm to designate these properties. The private flood insurance premiums for any VE will be fairly stable. The slight variations come in local taxes and fees. We are willing to look at any property for flood insurance.
Holden Beach, NC. This beach home is a typical case for us. Constructed in 2008 and was built in compliance with the current flood zone and base flood elevation (BFE). However, FEMA introduced a new map in 2018, which raised the BFE up three feet. We could have done some things with the NFIP policy to control the flood insurance cost. However, We knew that we would get a much more favorable premium with the private market, so we shopped this home into that. We are delighted with the savings we got our client.