Flood Insurance FAQs for Southern New Jersey – Part 1 of 2
by: Jeff Quintin, on February 18, 2013 - Uncategorized
Today I have a very special guest that’s joined us. This is Bill McMahon from the McMahon Agency here in Ocean City. They are the leading insurance agency in town, doing a majority of the insurance in Ocean City and along the coast here at South Jersey.
Bill is here today to share with us some of the concerns, thoughts, and questions that are being asked with regards to all this information…all these things happening here at the Shore regarding Flood Insurance, Homeowners Insurance, and everything else as far as how it’s affected all of us here.
If you have any questions, thoughts, or comments, please e-mail me at the bottom of this blog. We’ll get the answers right back to you. We may not cover everything today, as this is a frequently asked questions overview.
The Biggert-Waters Flood Insurance Reform Act of 2012
Jeff – Bill, go ahead and give our viewers your contact information. If anyone has any questions directly with you.
Bill – I may be contacted at the McMahon Agency, phone number 1-800-448-6340. We’ll be happy to answer all your questions. We have three departments in our agency: Commercial Lines, a very good Condominium department, and Personal Lines department.
There are a lot of things going on at the Shore…there are a couple of things that have happened. There was a new law enacted by Congress. The Biggert-Waters Act was signed. The good news is that the law included a five year extension of the National Flood Program. There are a lot of changes. The problem with the program is that it’s broke. It was broke after Katrina. Superstorm Sandy put it further in debt. What we’re seeing in that lull was to get some Rate One properties because the program is so far in debt. They need to make up the money.
Advisory Based Flood Maps
The second thing happening in New Jersey after Sandy is that we were in a remapping for all of New Jersey for the flood maps. The flood maps were dated. We were told they were about thirty years old, and they needed to be updated. They were 90% completed in updating those maps when the storm hit. They wanted to get these maps out as quickly as possible to help the people rebuild.
Jeff – We’re talking about these new flood maps. Is that what they are talking about when they say “Advisory Based Flood Maps?”
Bill – Yes, they are Advisory Maps. On January 24th the Governor said to use those maps as law for rebuilding and elevating. In Ocean City we were very lucky. As much of the damage we see here in our town, we were spared the worst. If you go up in Monmouth County, Long Beach Island…they really got nailed. There are complete islands gone. They need to be completely rebuilt.
The Governor acted and said to use these maps as a basis. They’re going to be the future. If you’re building now, use them. There are some properties in Ocean City that need to come down because the damage was too great from the storm. We’re being told they need to use these maps. The rest of us…they’re Advisory Flood Based Maps which are not complete.
They rushed these maps out at 90% complete. One of the things in the maps they did not take into consideration yet, is a study on the Wave Action and how it hits the island with intervening structures, meaning dune systems and on the bulkheads on the bays. These are raw maps. The V Zones that you see on the maps now can be changed later.
V Zone and A Zone
Jeff – What does V Zone and A Zone mean?
Bill – V Zone stands for Velocity Zone. To be in a V Zone, a house on that area of the island can take a greater than 3’ wave. That wave can be created by water or created by the wind, making the water higher. If you only have 16” and the wind gets that up to over 36”…it can happen…then that’s how you get a greater than 3’ wave. The National Flood Program said a wave at 18” can cause substantial damage to a property.
In the A Zone, they’re going to take less than a 1’ wave. The A Zone is basically rising water, and it’s more prone than their V Zones and there on the mainland or areas that are not likely to flood. The A Zone is more likely to take rising water.
Jeff – Would every bay front home or every beach front home on all the islands be considered a V Zone? Or, is it true that some zones, you could be on the beach, and you have a big dune, but not be in a V Zone?
Bill – A lot of Ocean City, in the new Advisory Flood Maps, are in the A Zone because the last street to flood in Ocean City was Central Avenue. That’s the exit out of town and is close to the beach. It did not look like there was a lot of damage driving down Central Avenue right after the storm. The front part of Ocean City is actually a very high part of this island, so it is in an A Zone.
Base Flood Elevation
Jeff – How do the new maps affect current insurance policies? We’re going to bring Brad into my office shortly. Brad has a single family home in The Gardens. It’s 60-70 year old home…built in the 40’s or 50’s. Great area, but his home is not elevated. He has a front porch like an old sea shore cottage. Let’s assume he’s in an A Zone. His area doesn’t really get a whole lot of water. His home is so low as far as the first floor elevation. What’s going to happen there?
Bill – They were using a 1929 datum on those maps. Now they’re moving to 1988 with the new maps. This will mean a negative 1’3” under elevation. If you have a 10 and ½ foot elevation…now you’re going to be at 9’3” elevation.
Jeff – Is the elevation you are referring to the lowest first floor habitable elevation?
Bill – The Base Flood Elevation in the areas where they want to see that lowest habitable floor. Some areas are 9’, which is where they say this is where it doesn’t flood. Some of The Gardens are in that area. You can start building that first floor at 9’.
Jeff – Everything starts from the Base Flood Elevation, meaning that’s the area…the land or the street area…the neighborhood?
Bill – Base Flood Elevation is where they project the 100-year storm will not flood. You’ll see houses on pilings or they’ll buildup the foundation a foot or two off of the ground because the ground is at 8’ to get to that 10’ or 11’. They’ll raise it up a little.
Jeff – They’re going to look at the Base Flood Elevation, then determine the lowest floor elevation? Is that what we’re talking about here?
Bill – The lowest floor elevation for rating your Flood Insurance is wherever equipment or that lowest piece of equipment is under the floor joists. That is where they’ll rate the insurance in an A Zone.
Jeff – If somebody is 1’ above, with the new maps and everything that’s going on, how is that going to affect rates? Is there going to be much affect at all?
Bill – The maps are still advisory…so they’re going to change. They didn’t complete a Wave Action in there. They rushed these out to help the state of New Jersey rebuild as best as they could. We’re supposed to get new map revision in August 2013. That’s when these maps were supposed to come out. And that will have additional detail. Houses that are showing on this new advisory map that are in the V zone now….those zones will change. FEMA has told us they usually come out with very conservative maps for us. They always want to give the worst possible news. They don’t want to come back and change it, saying that they have to make it worse than they originally thought. They want to move back and say it’s better than they thought. That makes sense…when you think of the fiscal cliff at the end of the year. We were all worried about what was going to happen, and it didn’t turn out to be as bad as we thought it was going to be.
Finding Your Base Flood Elevation
Jeff – Where does a homeowner start to find out what their current elevation is, and whether they are in the V zone or the A zone on the new advisory maps?
Bill – There are a couple of things you can do. You can look for your base flood elevation on your flood insurance certificate, if you have it. We try to keep as much of that information as possible in our office. There are a number of insurance agents in our office that will be happy to walk you through it and give it to you. They will show you where the base flood information is located on the certificate. You do not need to be our customer. We’ll gladly help you understand the information…that’s what we’re here for!
The other thing people want to look at right now is the Region 2 Coastal map which stands for FEMA 2’s Region (that’s the region we’re in) and the number 2 Coastal. You can find the new Advisory Flood Maps. It’s really neat! You can plug in your address and they will dial in and give you what information they have right now. Again, those maps are changing.
Increased Cost Compliance Coverage
Jeff – The link is provided in the blog. Please click on the link, enter your address, and it will tell you exactly which zone you’re in.
What are the options for somebody today that has a small single family home in a V zone? We’re being told that the federal government wants these homes raised up. What happens if these homeowners don’t raise their homes up? Are these flood insurance premiums going to be way through the roof?
Bill – The writing is unfortunately on the wall. They are going to raise the rates. The opportunity here if you had a small beach cottage in Ocean City that did receive substantial damage, your insurance policy does have up to $30,000 under Increased Cost Compliance Coverage. It’s built into the policy. If you had greater than 50% of the assessed value of the house destroyed, you can file a second claim. Go to the city first to get a letter saying you received more than 50% of substantial damage during the storm. Come into our office to show us your letter. We file a second claim. They’ll pay to help elevate. If you want to demo your property, they’ll pay the demo. They’ll pay for new pilings or stringers for the new property to help elevate the building and get it out of harm’s way.
Jeff – As far as a Condominium Policy for two-unit condos, whether they are in a V zone or A zone or whichever zone they may be, you have a Homeowners Policy and Flood Insurance Policy split between two owners. Will these premiums go up on condominiums as well? Does it all depend on the elevation?
Bill – In the program, unfortunately, all the premiums are going to be going up. It’s a matter of where they’re going up. Some are going to see more substantial increases than others. The program is out of money. It’s been out of money, so the premiums are going to be going up.
Jeff – Are there any other questions that you’re receiving right now that I haven’t asked, that the homeowners need some answers to?
Bill – One of the concerns is the Biggert-Waters Act. That’s the Act that’s signed to extend the Flood Insurance Program for five years. In there, if you’re a secondary homeowner, and you’re Pre-FIRM, meaning your house was built before 1974, and you’re not up to the flood codes, we’ve been told you’ve always been subsidized, believe it or not. Those premiums are over $2,000 – that’s a subsidized rate. Those numbers are going to be going up for those owners 25% a year until they get actuarial rates. They’re saying over the next five years they expect increases. Give us a call if you would like to get into more detail.
Jeff – I can tell there’s going to be a lot of different questions that come up specific to each homeowner and the property they have. I’m just trying to get some general information.
I’m going to bring in Brad from my team over here who’s a homeowner. We talked about his property in The Gardens. He had a couple of questions. Hopefully you will hear answers to your questions.
Where Can You Go For Help?
We’re here to help you. You can e-mail back and forth – we’re always answering. There’s myself and four other siblings right now in the business. We have a staff of over thirty, above and beyond the McMahons in the office. We’re all more than willing to help you with any of your questions.
You may call 609-399-0060 or e-mail me at email@example.com.
Jeff – Where does your agency service? Tell everybody which areas you cover.
Bill – We specialize in the coast. We can do anything on the coast. We know the coast. We have all the markets. Now more than ever it’s very important. Where we’re successful after the storm is that we have all the contacts with the insurance companies. The flood insurance company was in our office for three weeks. We had a guy in our office able to help us take in the claims…putting them in because we have buying power. Buying power is everything. Because we’re in Ocean City, we do a ton of Flood Insurance. We do it all the way down to Cape May County, we go all the way up into Monmouth County writing Flood Insurance. We had a huge book, and it really helps. We were able to get adjustors as quick as possible.
Jeff – Any questions? Give Bill a call or send an e-mail. Any questions for me or any comments, make them here at 609-398-5333 or firstname.lastname@example.org. We’ll respond back to you as soon as possible. And, as always, I appreciate your watching, and always look forward to our conversation being the best of your day. Have a great one!
* Find the elevation of your home. Most property owners in Ocean City should have a flood elevation certificate if they have flood insurance. Check to make sure it’s not expired.
* Find the elevation required for your home under the new FEMA flood map. Search for your Advisory Base Flood Elevation by address. http://www.region2coastal.com/sandy/table
* See how your advisory elevation compares to Hurricane Sandy flood levels. Read the left column (NAVD 1988 datum) on the attached PDF (click on the PDF icon above). Make sure the flood elevation on your certificate uses the same NAVD 1988 scale as the ABFE maps (or see how the scales compare). The center column (NGVD 1929 datum) is the scale that appears on most flood elevation certificates in Ocean City. (Check the current tide level on the NAVD 1988 scale in real time. http://waterdata.usgs.gov/nj/nwis/uv/?site_no=01411320
* What if your home remains below the required elevation? One thing appears certain: Your flood insurance premium will increase (because federal taxpayers will no longer subsidize the flood insurance program).