Antonio Mendoza November 5, 2020

Flood Insurance for Realtors

Hello to our friends at Intero Real Estate. It’s Mark Rafail again with the Rafail Insurance Agency. Except this time I got a haircut. I know it’s, COVID, it’s a little hard these days to go out and get your hair cut. My wife cut it and she did a good job. Flood insurance in Houston to me is one of the most important coverages to talk about. And it gets oftentimes swept under the rug. So I want to continue with another part of the flood insurnace saga. I’m going to go through this PowerPoint. I put together a picture of the team awards and a history on the flood insurance program. It’s been around for awhile, but the definition of flood, generally speaking, if two buildings next to each other flood it could be considered a flood and is oftentimes not just natural rising waters. It could be the the kid that hit the fire hydrant and water starts to rise from the outside coming in. It could be more than just natural, rising waters.

What kind of structures can get flood insurance? Oftentimes it needs to be finished construction, right? I can’t be in the middle of construction most of the time to get flood insurance. And we also have to consider the flood zones. To keep it simple we will discuss high-risk and low-risk flood zones. If you’re in a high-risk zone, it’s going to require an elevation certificate that determines exactly how high the structure is off the ground, which affects the rate. Believe it or not, in Bellaire homes next to each other can be completely different elevations so it’s not just based at the same rate per neighborhood.

It can be different when you’re in a high risk flood zone. Low risk flood zone means that FEMA hasn’t come in and made you get flood insurance yet. We are always keeping an eye on this factor. They are going to rezone. Eventually. They’re so far behind at FEMA to come in and really zone and map Houston. So while you can get flood insurance, especially, at a grandfathered rate of $516 a year generally for the primary home, GET IT!  Even if they come in a year later and say you’re in a high risk zone, you won’t have to get an elevation certificate. You’re grandfathered in, unlike some of the new neighbors coming in. The other thing I want to talk about is you always hear people say, Oh, I’m in the hundred year flood plane, the 500 year flood plane, the thousand year flood plain. Well, just so you guys know what that means. It doesn’t mean you’re going to flood maybe every hundred years. Right? All that means is you have a one out of 100 chance of flooding every time it rains or one out of 500, which is lower than 1%. Or one out of 1000 chance of flooding every time it rains. Well, the reality is we’re getting these one out of 100 year rainstorms a couple times a year.  The risk of you flooding is higher! Apartment complexes being built and freeways going to 24 lanes creating our concrete jungles and our unpredictable weather are all raising the risk. There’s really no telling when and where we can flood.

25 to 30% of flood claims happened in the low risk areas. The reality is half of people don’t get flood insurance. Sadly, we think that 70% of flooding occurs in the low-risk area, but 25 to 30% that have flood insurance report it. So we don’t actually know a lot of times if they’re not making a claim, who’s flooding, but generally speaking, most claims have happened in the low risk area.

You can see even a renter, somebody new to Houston, they have no idea about our exposures here to flooding. A lot of people in Katy would have loved to know the risks, and they could have got 50,000 in coverage for $265! If you’re a landlord, you’re going to notice they charge a little more, there’s a surcharge because it’s not your primary home. But if this is one of your biggest investments, a lot of people would’ve gladly spent the $700 instead of having to gut their house and spend up to 250,000. Although you may not have a hundred thousand in contents, you know, because you’re not living there, FEMA automatically includes it!

Lastly,  let’s take a look at your primary home rates. Remember, FEMA will give you the full value to replace and reconstruct your building. If you insure for the maximum value or the highest amount for your reconstruction, if you get partial coverage, like 30,000 for the building and 12,000 for content, and it runs $236 a year, they may give you depreciation when it comes to the reconstruction of your house. A lot of people like to avoid that, but if you’re getting 80% of what it takes to fix something or 90%, it’s better than taking a loan out. Like most people had to if they did not have flood insurnace.

If you have any questions, you can contact me. I have Megan Pence here on call Monday through Friday to check if your house has had any claims, what flood zone it’s in and quote you in minutes.