New FEMA risk ratings impact on future flood insurance rates is being felt, and some home buyers are astounded. We’ve been pouring through the numbers looking at the areas most impacted.
Most Impacted Zip Codes
New FEMA risk ratings impact will depend on which zip code you live in. Of the zips listed in this chart, 33901 will see most impact at an average rise of 365.58% Next in line looks to be 33921 which is in the Boca Grande area with a 361.99% rise. The third highest is 33920 which is in the Alva area coming in at 318.05%
We have a complete database of each zip code in the United States that shows the average risk rating versus the current average cost of flood insurance.
This does not mean that every policy in the zip code will cost the amount stated. This is an average for the entire zip code. It does, however, give us an across-the-board estimate of how much some policies will rise. What we fear is that some policies in a zip may be more extreme than others. The extreme policies might be the policies raising the average versus an across-the-board rise.
33919 will rise on average 259.63% and 33907 will rise an average of 235.68% Zip 33908 which saw heavy flooding will go up 270.10%
Don’t Give Up That Policy
If you have an existing NFIP policy it can only go up 18% per year, so it would take 15 plus years or so to reach some of these levels. If you did not have flood insurance, you cannot go back and get it at the grandfathered rates.
We also tell people when shopping around to be careful about selecting private flood insurance. When you give up the national policy, you give up that protected rate. The danger is a private policy might not renew your policy any given year. Or zones could be reclassified. You might be in flood zone X today and not be required to get flood insurance. Future maps could change that, and you might be required.
If you are required to purchase flood insurance for your mortgage when you previously didn’t have to, you do not get the old rate. Worse yet, you also lose the 18% protection. New policy holders who do not renew or assume an existing policy pay the 100% full rate for the property. We do not see a way around this.
We are not insurance agents, so we cannot give insurance advice. As consumers, we are watching what is happening. As real estate professionals, we always ask home sellers if they have current flood insurance and a copy of the policy. Having an affordable policy that can be assumed can increase their property value compared to a neighbor who has nothing to offer.
Cost Versus Benefit
Many buyers have begun to shy away from high insurance properties unless they can absolutely afford it and are willing to pay the price for paradise.
Any time you add a high cost to something over and above the purchase price, buyers must decide if the amenity is worth it. For instance, some golf communities have high fees, but they offer golf. Other communities offer a marina, etc. The amenity benefit has to exceed the cost in the buyer’s mind. While flood insurance isn’t exactly an amenity, it is a cost associated with living in a particular area and will be evaluated on a cost-reward basis by buyers.
Have Questions?
If you are thinking of selling your SW Florida home, always call Sande or Brett Ellis at 239-310-6500. We can walk you through all the intricacies of a home sale, because we know what to look for upfront.
Many agents list a property without studying all the factors only to be surprised by a cancelled sale later. There is nothing more discouraging than thinking your home is sold only to find out the buyer is backing out over something that could have been known upfront. Flood insurance is one of many factors.
Good luck, and happy home selling. For questions, give us a call.