Insurance Q&A with C.T. Lowndes & Company
Our so-efficient federal government is at it again. In an era of rising sea levels, FEMA is moving many properties into lower risk flood zones. Makes sense, does it not?
Here are the facts: Probably the first quarter of 2019 — exact date unknown at this time — new flood maps will be in use for Charleston County. The remapping will move many homes from the highest risk “V” zone into the moderate risk “A” zone. Many properties currently in an A zone will actually move to the low risk “X” zone. Some homes will remain in the same flood zone.
In addition to zone changes, the Base Flood Elevation (BFE) will be being lowered. The BFE is a very important factor is determining the premium on your flood insurance policy. The greater the positive difference between the BFE and the actual first floor elevation of your home, the lower your premium will be. The other important factor in rating a flood insurance policy is the flood zone. Premiums in the “X” zone are low and premiums in the “V” zones are very high.
If your home moves to the “X” zone, you become eligible for the Preferred Risk Policy (PRP). This is a low cost flood policy. Rates for one-to-four family residential dwellings are less than $500 annually for $250,000 coverage on the dwelling and $100,000 on contents. The PRP policy has a $1,250 deductible. There will be a rate increase in January 2019.
You can buy a contents-only PRP policy for only about $250 annually — what a deal for renters! The PRP policy is also available for other residential properties and non-residential (business) properties.
One important thing to know is this: Your mortgage company does not require that you have a flood insurance policy if your home is located in an X flood zone. Does that mean you should not have a flood policy? Does that mean you home will not flood? No, it certainly does not.
FEMA says that over 20 percent of flood claims occur in low-risk flood areas. Moreover, most homeowners with such a claim did not have flood insurance.
In the last three years, our area has experienced the 25-inch 1,000-year rain and two major hurricanes, Matthew and Irma. We have seen how construction, development and over building has caused flooding in areas never before flooded (think Shadowmoss). We have seen flooding when dams have broken (think Columbia).
Even if your home did not experience flooding in those events, that does not tell you much. What this area has not experienced in recent times is the major hurricane with a 10-to-15 foot storm surge that hits just south of Charleston with the storm surge rolling over Folly Beach, James Island, Charleston peninsula and Mt. Pleasant.
The point is this – for less than $500 a year, you might want the peace of mind coming from having a flood insurance policy.
We will be back next month with more information about the flood map changes and how you may be affected.