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