What I Learned About Flood Insurance and Elevation Certificates

I recently sold a property that was in a flood zone, which turned out to be more headache than we anticipated. Here is what I learned.

The official Flood Zones are determined by FEMA and there are lots of them around. FEMA also underwrites the flood insurance… which, to me, seems wrong. How can they get away with deciding who has to pay AND deciding the cost of the premiums? Regardless, that’s the system we have.

Here, for example, is a map of Danville, that shows the flood zone near downtown. Properties within the blue lines would, in theory, be required by their lender to carry flood insurance.

 What I Learned About Flood Insurance and Elevation Certificates

Here’s a map of an area in Pleasanton where there are clearly homes within FEMA’s flood zone.

 What I Learned About Flood Insurance and Elevation Certificates

FEMA’s website is clunky to say the least. But you can click HERE to search through the maps to determine if your property is in a flood zone.

Elevation Certificates

Our first insurance salesman advised my clients (the buyers) to obtain an “Elevation Certificate” in order to get the flood insurance. After googling around, talking with the listing agent, other agents who had recently sold in the area, and the city building department, it was clear that the property in question didn’t have one of these certificates. So, I called a surveyor to find out more.

The surveyor told me that my client didn’t need the Elevation Certificate to get insurance. They only needed the certificate to protest FEMA’s assertion that they are even in a flood zone and not have to get the insurance at all. He also shared his thoughts that flood insurance, at least here in the Bay Area, is a complete scam and that our premiums go to pay for homes in the Midwest that get flooded all the time.

For what it’s worth, he was going to charge between $1,000 and $1,500 for the certificate – which may or may not prove that flood insurance is even needed.

Here’s where things get weird.

After talking with several insurance guys, one was adamant that, as of January 2012, all new FEMA flood insurance policies had to include elevation certificates, whether the owners wanted to protest the need for insurance or not. I’ve researched a little further and can’t find any hard proof that this is correct or not.

I do know that of the other homes recently sold in the area, they did get flood insurance without elevation certificates. But this insurance guy felt that those policies would be cancelled by FEMA once they got around to actually looking at them.

And the policies seem pretty pricey. A $200,000 mortgage was going to cost around $1,400 per year – with most of that premium going to FEMA.

I’d be curious to know if anyone out there has any more information about this. It definitely seems wrong that FEMA decides who needs policies, sets the prices, and then is now demanding homeowners spend money for Elevation Certificates.

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About Greg Fielding

I am a longtime real estate agent who has pretty much seen it all during the housing boom as bust. With experience in selling high-end property and low-end foreclosures, raw land, short sales, development work, apartment buildings, and working with investors, I bring a well-rounded perspective to my work.I also have started to do some paid real estate consulting. If you have questions or just need some good real estate advice, book an appointment at http://whattodorealestate.com/In addition to selling real estate, my insights have been featured in The New York Times, The Big Picture, and regularly on Patrick.net. I have also done consulting work with ForeclosureRadar.Starting my career, in 2003, I have sold homes throughout Alameda and Contra Costa counties, specializing in Danville, Alamo, Blackhawk, San Ramon, Dublin, Pleasanton, Walnut Creek, Lafayette, and Orinda. I live in Danville with my three kids.

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10 thoughts on “What I Learned About Flood Insurance and Elevation Certificates

  1. Tom Stone

    Greg, it does seem like a scam. And that insurance pays out on Russian River homes quite often. It isn’t unusual to see several foundations on riverside lots, these days FEMA will help pay for raising the homes which is cheaper than replacing them when those 50 year floods show up, once a decade.

  2. Jay Wiedwald

    Several years ago the City of Oakland passed and started enforcing a strong Creeks Ordinance to protect them. Good idea on the surface, but, Mannn! It is tough!

    I replaced my sewer lateral a couple of years ago and had to pay $500 for a Creeks permit as there is a “creek” running through my back yard. (Technically, any digging within 250 feet of a creek requires a permit.)

    There are four levels of permit (depending on potential impact) running from an exterior paint job (pretty minimal, but still $$$) up to requiring a EIR.

    BTW – per the Army Corps of Engineers definition of a creek (which the City uses in this ordinance), I don’t even have a creek, as it is completely enclosed and runs underground. Many homeowners in my neighborhood are affected by this.

  3. Clayton Emery

    We were hit with the same deal in Portsmouth, NH. Wells Fargo bought our mortgage and immediately ordered flood insurance “in our name” even though we had a FEMA form “Structure is NOT in a flood zone”. I asked TD Bank, and a customer rep and a branch manager said, “It’s a scam. Don’t pay them a penny.” But they’re forcing it on mortgage payment. Stay tuned.

  4. trudy

    I am with you Wells Fargo has forced an Flood Insurance Policy on us as well. I have had this house over 7yrs and never needed Flood insurance. Also i have pics that shw on he worse flood day in my area my house never had any standing water but my neghbors had a pond around there house and they are not required to have flood insurance. I tried several companies to get inurance with and all wanted and elevation certificate. I found out that the copany Wells fargo uses write policies without elevation certificates or even sending an agent out. Any suggestions out there FEMA is not even trying to help with this nor my city hall folks.

  5. Lance Conway

    I dont know what to do! I cant pay $1500.00 for an elevation certificate but my mortgage lender & insurance company are telling me FEMA is forcing me to obtain the cert. I had flood insurance now FEMA cancelled it saying I have to start over and pay them more and it will quadrupal over the next four years. What do I do?

  6. Deborah Da Valle Ryman

    i am very interested in this conversation, as i live on a creek and my annual flood insurance is due (which is an outrageous amount). i got a call from my agent yesterday saying i now need an elevation certificate from a surveyor. this is a scam. i have two mortgages, so i have to have flood insurance. i read online that you should ask your agent if your house is “pre” or “post” “firm.” and if your community participates in “crs” – if so “local officials may have a copy of the certificate.” in other words, the city or county knows which areas are in a flood zone and have mapped it. there is no reason to have to get a certificate, only that they are making you do so. HELP.

  7. CVD

    I too am in this dilemma and working with a surveyor who is researching whether or not the request is valid and if in fact I need flood insurance. The ironic thing is that the property is in San Rafael where in the last ten years they did major upgrades to the creek to bay drainage and levee system, yet no major flooding has occurred since the 1970′s. It is discouraging to have FEMA dictate and create the policies and costs. I understand why people sell rather than obtain a flood policy, it’s a nightmare.

  8. Tom StoneTom Stone

    I can can reach out to a contact at JCP Disclosures to find out if a property is in a flood zone ( North Bay Area) and they will send me an email confirming the status of the property. If anyone in the NBay needs this, email me. No charge and no obligation. These new rules are a gift to the insurance companies.

  9. MJ

    Tom Stone, how can I email you to get those disclosures? I live in Menlo Park next to Facebook and Dumbarton Bridge and our buyer is requesting a elev. cert. Thanks

  10. Tom StoneTom Stone

    MJ, My email address is in my profile. Or send it to “StoneForHomes@Gmail.com”. or call my cell # (707) 364-2477. I’m in the hills, so reception is sometimes spotty, but I do promptly return calls, Tom.

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