Beware Of Flood Insurance

Dated: February 13 2017

Views: 451

Here in Pinellas County Florida, home of the world famous Tampa Bay Gulf Beaches, we have more flood insured homes than most states.  So as you can imagine Flood Insurance is a big deal here!  The Tampa Bay times recently highlighted a major problem that many homeowners will face when or if they have a major claim on their flood insurance policy through NFIP, the National Flood Insurance Program, (The Federal Govt Flood Insurance program).  Most homeowners likely have a false sense of security about their coverage through this program.  A number of years ago, FEMA and the NFIP went to all of the counties across the country and forced the municipalities to change their building codes or no flood policies could be written in those communities,.  The changes forced these communities to implement building codes such that all living space had to be built above the mean flood stage AND, here is the kicker....., if the cost to rebuild a home in a flood zone is improved 50% or more of the value of the STRUCTURE, not the value of the entire property just the STRUCTURE itself, then the entire living space of the structure must be raised above the mean flood stage.  Here is the problem.  If you have an NFIP policy and say for example the municipality deems the value of the structure of your $600K waterfront property to be only $200k and say the cost to repair your Structure is $110K, the NFIP will give you $110K and that is all.  But wait, it is likely going to cost you an additional 100-150K to raise the structure.  Who pays for that??  Not your flood insurance policy through the Federal Government.  YOU DO!!  NFIP only pays for the ACTUAL damage.  Your normal homeowners insurance policy usually has a provision called "Ordinance of Law Coverage" whereby if the current codes force you to alter your property due to a loss and codes have changed since your home was built, they will cover that additional cost to bring your home into compliance.  There is NO such provision in the NFIP flood insurance policies.  This could leave you in a tough bind with your dream home and a major flood claim.  So what is the solution?  The NFIP says they are aware of the problem and are working on a solution.  We all know how fast the wheels of government I wouldn't hold my breath waiting if I were you.  What you can do is look into the private Flood Insurance market.  Florida, in the last few years has opened up the state to allow Private Flood Insurance policies.  I checked with my favorite insurance agent just this morning to verify if the private market did offer this "Ordinance of Law" coverage and what I found is that indeed they do.  The caveat he told me is that homeowners need to make sure that the face value of their policy is adequate because on your home valued at $200K and $120K in repairs plus another $150K to elevate the structure, that cost is $270K, if you only insured for $200k (The actual cash value of your structure) you only get $200K.  So if you purchase a private policy, make sure you sit down with your agent and properly insure, what is most likely your most prized asset, your home.  If your real estate agent is not up on these kinds of things and advising you as such,....maybe you should consider a new agent.  My self and my team of agents make sure we are up to date on issues that affect our clients and we are constantly training and educating ourselves to give our clients the best Service Possible.  Contact me at or direct at  To read the article by John Romano at the Tampa Bay Times, go to

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