You found your dream home near the water, but were snapped back to reality upon hearing the words - it is not FEMA compliant. Were you right to panic? Not necessarily, after all you were looking at homes by the water. You always can and should obtain flood insurance - it is just a matter of cost.
Typically the maximum coverage provided by the National Flood Insurance Program (NFIP) of $250,000 for your dwelling and $100,000 for your contents, can be obtained for about a thousand dollars a year. The same coverage on a non-compliant home can be three to four times greater. Private flood insurers can provide higher limits and may sometimes be less expensive. (A side note — our go-to agent and provider of much of the information in this article is Tom Ayers, from Daigle & Travers Insurance Agency (D & T).
When purchasing a home in a flood zone it is important to see if the current owner’s policy is assignable. This is beneficial because the existing policy history will transfer to you as well, meaning if the home’s flood zone has changed due to a redrawing of maps, the NFIP will not change your home’s flood zone since there has been continuous insurance coverage.
So if the insurance can be transferred on a non-compliant home, everything’s fine right? Maybe. Unless you plan to make substantial changes to the structure. While each town is slightly different, in general permitted work in excess of 50% of the dwelling value may trigger forced compliance with the current FEMA standards. No problem right? Well if you purchase a home near the water for two million dollars, chances are 50, 75 even 90% of that value is assigned to land. Suddenly, improvements totaling $100,000 trigger forced compliance, which could include raising the home.
“One of the most common myths about flooding is that if you don’t live near water, you’re not at risk. According to analysis by Corelogic, roughly 23% of American homes currently located outside of FEMA’s Special Flood Hazard Areas are at moderate to high risk for flooding.” Everyone Lives in a Flood Zone is an interesting read by D & T. As they point out, the boundaries on flood maps are mostly based on historical statistics. If you are curious, a new site, www.floodiq.com, makes flood predictions based on research from the National Oceanic and Atmospheric Agency. It incorporates the predicted effect of climate change and gives the ability to see various tidal flood and hurricane scenarios today and into the future.
Remember, insurance or planned improvements are just some of the costs to consider when purchasing a new home. Don’t let them detract from achieving your dream – just be sure to make informed decisions. We and Tom Ayers at D & T (203) 655-6974 are here to help answer any further questions you might have.