Flood insurance Hampton Roads Virginia

10 Replies

What’s everybody’s take on Flood insurance within Hampton Roads, Virginia. I’ve had a co-worker who lost her house before due to not having flood insurance. Thankfully, the military helped her with the relief Corp, but as an investor what is your take for Flood insurance here in Virginia Beach and surrounding areas. Are the rates too high? Are they manageable?

Part of the evaluation you will be making is how much will it cost. There are now multiple non FEMA options for flood insurance (refered to as Private Market flood policies). They can be less than the National Flood Insurance program (NFIP) that was the only option in the past. See if you agent can access those private markets. If not PM me and I will let you know who we use and you should be able to get local agent listings from their websites.

Like @John Mocker mentioned, there are a number of private market carriers that can offer flood insurance that can be competitive with the NFIP. Other item to consider are:

1) The properties location relatively the flood plane. A location outside of the flood plane (X zone) will typically be much less expensive than a location in a high hazard flood zone. 

2) Has an elevation certificate been completed. An elevation certificate will provide details on the finished floor elevation relative to the flood elevation. If the finished floor elevation is above the flood elevation then you can see reduced premiums as well. 

The more information available the better opportunity for a competitive rate. 

@Ian Shinnick

Thank you Ian, I've also heard if you do not provide flood insurance and you have a property on a mortgage, the bank will automatically provide flood insurance at the rates they receive which are much lower I've heard and they just charge it to you, but I am very skeptical as to using that method because I do not know everything of it and how it will effect the relationship with the Lender. I may just search providers that can provide me with the private market flood insurance y'all speak of.

Thank you so much!

@Michael Acevedo I am so saddened that your friend lost their home due to flood insrance it is one of the things that drives me crazy about the program expecially when there are other option out there that could save homeowner from foreclosure. I personally have helped a few of these people. @John Mocker is corrrect that there are other options out there if you search the terms "private flood insruance" or "lloyds of london flood insurance" you will see information about it.@Ian Shimmick There are things you can do with the NFIP policy to make it more resonable and in some instances you can do stuff to your property to make the premium go down. But you agent has to be really savvy in flood insurance. @Ali Croft thanks for sharing those resorces just so you know Allstate, Progressive, Geico, State Farm, Farmers, Assurant, USAA, exc. are all private compaies but when it comes to flood insurance they are only (re)selling the NFIP policy. There are really two differnt types the Government poicy NFIP or sometime refered to as FEMA and then the private flood insurance market. Neptune neptune is a private flood option (lloyds of London policy) and sometime can be very comptitive. It looks like Mccaskeyins and Lohman compaies are experts in other insurance and might have expertise in flood but their landing pages off the links don't say anything about flood insurance. So you know there are other Lloyds Synicates out there beyond Neptune selling flood like 30, there are also companies called Lexington, HIG, Zurich, Swiss RE, Trisura, Palamar. Some agents shop all for you. =)

Your flood nerd 

Mike! I just did a video with Janet McCaskey of McCaskey & Associates insurance talking all about Hampton Roads flood insurance! I'll send you the link in the messages!

My understanding is if home is already under a flood policy, those rates can transfer to new owner, although that may be only for owner-occupied. I know there is a $250 surcharge on investment property per policy, as that is why I do not purchase flood insurance for my units where it is not required. It would be a reasonable expense I would consider without adding $250 per property extra.  I caution my clients against purchasing in a flood zone unless they feel the purchase price makes it worth the risk, and that if buying with a loan, they are prepared if flood rates increase drastically as the flood insurance market is still in flux, and lenders can force-place insurance if it is required and you don't have it. 

@ Lynn M you are very savvy and studied in the art of flood.

And you are correct you sometimes can transfer a FEMA policy to the new owner (if the lender allows).

It will be a smoother process to ask an agent that is learned in Flood because this process can be tricky for a novice.

The private market flood insurance won't transfer a policy however you will have to have an agent rewrite the policy and you can usually get the significant savings that the previous owner had with the private market (google either "private flood insurance" or "Lloyds of london flood insurance" to make sure you are getting a true private flood policy not one from Geico, Allstate, ect that are reselling the Goernment policy (also know as FEMA or NFIP).

@ Lynn M yet again you are correct if the home is not your primary residence then there is a 250 (HIFAA surcharge) with the FEMA/NFIP (government policy).

The private flood insurance market doesn't typically charge different rates for second home or investment properties. Again I do what to stress every property is in a flood zone and some properties (A or V designation) require lenders to have borrowers get a flood policy.  It appears as if you hale from Virginia Beach, I have looked at risk models and some believe that Virginia Beach is/will experience the same devastation that New Orleans had with Katrina if/when the storm comes heading that way. Personally I would cover flood insurance on any property I own in Virginia Beach it is cheap in regards to the repairs that will have to be made after water (a consivertive estimate is about 1 inch of water = $30,000 of damage). 

You are correct once again that Lenders can do force-place flood insurance which is expensive if the borrower doesn't get their own policy. And just because a property is in a High-risk flood zone doesn't mean that it will flood (if it never has) it just means that the homeowner/property owner will have to get flood insurance. And the private market is growing (I think it is only getting better) but to use your words it is in flux which I belive will be good for consumers and much better than the monopoly that we had with the government policy being the only option for nearly 50 year.  

One last note properties are constantly being mapped in and out of the flood maps and many times if homeowners have been recently mapped in to a high-risk flood zone if they purchase the policy within a year of the map change they can lock in the X zone rates which are $500 primary home and $750 second home in this instance I would strongly recommend to all realtor to encourage their clients and communities to by the flood insurance because that savings can be passed on to a new owner if the property was to be sold in the near future. Food for thought.

NFIP = National Flood Insurance Program (Government insurance) 

FEMA = Federal Emergency Management Agency (managing entity of NFIP)

@Michael Acevedo we write for Neptune among other Private Flood options in VA. A major difference between NFIP and Private is the ability to add coverages for you vs. the mortgage co. If you would like to see the side by side please send me a DM. Can't post the PDF here