Required or not, get flood insurance

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This article was originally published in The Galveston County Daily News on 3/16 as part of my weekly 2019 column.

As I mentioned last Saturday, this week we are going to talk about flood insurance. My basic premise is this: if you live along the Gulf Coast of Texas, you need flood insurance. I don't care if it is required or not. If it isn't required by your lender, then you had better get it because it is so inexpensive. A couple of hundred dollars a year are far more palatable than having to rip out Sheetrock and wiring and dealing with the soggy aftermath of even the slightest flooding.

We have a couple of options with regard to flood insurance.
I am a huge advocate of the National Flood Insurance Program (NFIP), a program backed by the federal government. Using this coverage, you can insure your building to $250,000 and $100,000 for your contents. There are also insurance companies which will cover damages in higher amounts as well, provided you already have the NFIP policy in place. In order to insure through the NFIP program, and to get the best rates, you will need to provide an elevation certificate which documents your flood zone, your actual structure height above sea level, and the style of construction. If there is an existing flood insurance policy on the property, you may want to consider assuming the policy by buying the remainder of the coverage year before closing on your new home. That can make the most sense if your lender will allow it. There would be less delay in having the structure rated by the insurer.

Designated flood zones change. We are past due for new mapping by several years already. If you hold insurance at a current flood zone, your flood zone pricing will stay in effect if the actual flood zone elevation is remapped. That means simply, if insurance is at all affordable, Get It Now. What is $675 this year priced at “Zone X” could increase dramatically if it is remapped as AE 1. The same thing works if you are currently AE11. The new maps show much of that area becoming AE12. My house right now is 2 feet below the current mapped flood level. I would bet 3 feet lower will cost more. What do you think?

Post Ike, there have also been private flood insurance companies coming into the Texas marketplace. Many of these companies have seen the opportunity to make money and their actuarial tables show them that the risk is low enough until a major catastrophe happens again. I have several friends on Bolivar moving their flood insurance to a private company. No elevation certificate is required, the ground floor is fully insured and in some cases the coverage is said to be less expensive than the NFIP policies. I have tried comparing the online estimators to see what I can learn about the private rates. At the maximum allowed by NFIP coverage, my flood premium is roughly $1,400 a year. Using an online insurance underwriting program the range is substantially higher, but I am also required a higher insurance value by some of the companies. The ranges run between $2,500 and $6,000 annually.

My thought? If you are not required to get flood coverage, get it while it is affordable. As FEMA flood mapping changes, you will be allowed to keep your NFIP coverage under the original flood mapping and rates. Your Galveston Realtor will happily help you find an insurer who is experienced in Galveston County needs.