Bubil: About that flood insurance increase


The National Flood Insurance Program wants to raise premiums, but much of our Gulf-front property market probably won’t miss a beat.

As for those of us who live in an “A” flood zone, or the few affordable neighborhoods in a “V” zone, and are required by our mortgage lenders to carry flood insurance, we likely are in for a beat-down.

For wealthy beach-dwellers, federal flood insurance doesn’t mean as much as it does to the rest of us. For starters, NFIP flood coverage is capped at $250,000, enough to replace the Persian rugs and some warped floorboards. Waterfront mansion owners rely on private policies for coverage in excess of that, but with a $250,000 deductible if an NFIP policy is not in place on the property.

And, if their house is of fairly recent vintage, it is already elevated so the main living level is at the FEMA-required height. Anything below that is noninsurable, and walls are built to break away in the event of a storm surge.

Many of those houses are owned free and clear, with no mortgage, so the owners don’t have to buy flood insurance if they don’t want to.

As for resale, if a potential buyer of a $10 million house balks at high insurance premiums, perhaps he is not the right buyer.

The “V” stands for “velocity,” indicating a 1 percent risk of flood in a given year and the risk of storm-driven waves.

“When the building at the current code, it is absolutely not an issue,” said Kim Ogilvie of Michael Saunders & Co., whose clients include waterfront buyers and sellers. “Most of my buyers are cash buyers — many of them self insure.”

“But we still have plenty of homes built below the current flood level. They have had rolling permits in order to have additions and be remodeled in keeping with the 50-percent rule. We lost out on a sale earlier in the year based on the buyer’s anticipation of higher flood rates.”

What really concerns the real estate industry about higher premiums is that Joe Lunchbucket, who lives in a Federal Emergency Management Agency (FEMA) “A” zone, can barely afford his flood policy as it is, and can ill afford an increase. (In an “A” zone, the risk of flood is 1 percent in any given year without the moving waves of the V-zone.)

He could, (a) get a higher-paying job; (b) pay off his mortgage and “go bare” of coverage; (c) spend $20,000 to have his house raised a foot or two, thus slashing his premium.

If he can’t pull off any of those things, then yes, his house could prove difficult to sell. That could be devastating for the market.

But out on the beach, no worries for most residents.


Harold Bubil

Recipient of the 2015 Bob Graham Architectural Awareness Award from the American Institute of Architects/Florida-Caribbean, Harold Bubil is real estate editor of the Herald-Tribune Media Group. Born in Newport, R.I., his family moved to Sarasota in 1958. Harold graduated from Sarasota High School in 1970 and the University of Florida in 1974 with a degree in journalism. For the Herald-Tribune, he writes and edits stories about residential real estate, architecture, green building and local development history. He also is a photographer and public speaker. Contact him via email, or at (941) 361-4805.
Last modified: September 14, 2013
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