Nathan Colmer | Van Dyk Group
C: 609.290.4293 | O: 609.492.1511
When buying a home in the LBI real estate market, flood insurance is a topic that comes up very frequently. Since Hurricane Sandy, flooding and the cost of flood insurance are in the forefront of nearly every buyer and seller’s mind on Long Beach Island. While it is extremely important to understand how a flood insurance policy is rated and what areas of Long Beach Island are more or less prone to flooding, it is also important to understand what is covered by flood insurance. Long Beach Island flood insurance coverage limits are an essential step to protecting your investment in the LBI real estate market.
Flooding is a somewhat common occurrence on any barrier island. It is important to remember that Long Beach Island is an island surrounded by the Atlantic Ocean and Barnegat Bay. Therefore, occasional flooding is a fact of life. While hurricanes, such as Hurricane Sandy, certainly captured national attention, flooding is far more likely to occur from a strong nor’easter or even a high tide and full moon combination. It is for this reason that understanding the different areas of Long Beach Island and where it is likely and where it is not likely to flood is an essential step to buying a home in the LBI real estate market. Flooding can happen anywhere on Long Beach Island, but there are some areas that are more prone to it than others. Generally speaking, the bayside areas are more at risk than their oceanside counterparts. This can further be broken down to individual sections of Long Beach Island which may have been built on natural marshes, and therefore retain their potential for flooding. This all comes into play when determining the cost of flood insurance. I have written many articles about flood insurance and what goes into writing a policy, but essentially a home’s first floor elevation in conjunction with the current building codes will determine the cost of flood insurance.
Generally, flood insurance policies will cover physical damage to the property and your personal belongings. It is important to speak with your flood insurance agent before, during, and after buying a home on Long Beach Island to ensure your coverage limits are appropriate. The flood insurance coverage is generally broken down as follows:
It is important to understand what is not covered under flood insurance on Long Beach Island. Generally speaking, damage caused by homeowner neglect will not be covered nor will living expenses. However, this can vary depending on the situation. Most importantly, homeowners must realize the items that are below base flood elevation are generally not covered. This is especially true of homes with garages on the ground floor where items may be stored. In most cases, the belongings stored in a ground level garage will not be covered if the garage is attached to the house. With that said, if there is a shed or detached garage these belongings may in fact be covered.
In order to obtain flood insurance in the Long Beach Island real estate market and be properly rated for a flood insurance policy, it is advisable to have an elevation certificate. An elevation certificate will provide key information such as:
Each of these points of consideration, and the compliance of a home as to any or all of them, will greatly impact the cost of flood insurance. While it is impossible to make a generalization as there are so many unique characteristics to each property, the majority of flood insurance policies in the Long Beach Island real estate market are approximately $1000 per year. In fact, most home owner’s insurance policies far exceed the cost of flood insurance. While exceptions do apply, protecting your Long Beach Island real estate investment with flood insurance is surprisingly affordable!
After Hurricane Sandy struck LBI, one of the first concerns LBI homeowners and those looking to buy or sell in the Long Beach Island NJ real estate market had was Who Will Pay More for Flood Insurance on Long Beach Island NJ!? Flood insurance is a national program so changes made to the National Flood Insurance Program are widespread and require Congressional Approval. Therefore, it is unfair to state that Hurricane Sandy is the cause for any increase in flood insurance on Long Beach Island. Regardless, changes are coming to the National Flood Insurance Program and these changes will impact Who Will Pay More for Flood Insurance on Long Beach Island NJ and the LBI real estate market in general.
The Biggert Waters Act was passed in September 2012 about a month BEFORE Hurricane Sandy made landfall. The act was designed to, in short, to make the National Flood Insurance Program more fiscally solvent and be able to weather (no pun intended) major disasters such as Hurricane Katrina and Hurricane Sandy. The program is far reaching in its reform however a surprising number of homeowners on Long Beach Island and elsewhere will not have the major increases that are widely publicized. According to the National Flood Insurance Program:
Obtaining a flood elevation certificate and consulting with an insurance agent is the only true way to understand the risk associated with a property and Who Will Pay More for Flood Insurance on Long Beach Island NJ. For some, flood insurance rates will decrease, for other it will stay the same and for some the rates will increase.
An elevation certificate is a legal document drafted by a licensed survey firm or engineering company which, in the simplest explanation, gives you the elevation of a specific property. There are several important points to consider on an Elevation Certificates on Long Beach Island New Jersey. They are:
This information, and more like it, help to determine the flood insurance premium. Flood insurance is based on the elevation of the first floor so this is the principal, however not the only, component. In order to obtain Elevation Certificates on Long Beach Island New Jersey a homeowner or prospective buyer must contact a survey firm, pay the required fee and schedule a time for the firm to perform their field work. The certificate itself consists of several pages and photos which note the elevations of the property and the house at different points as well as cover any other factors (for example the number and style of flood vents) which may impact the flood insurance rate.
While elevation will be the standard for determining flood insurance rates on LBI NJ, there are exceptions to the rule. If, for example, you own or are looking to purchase a 1950’s era Cape Cod style house on Long Beach Island that is at the original elevation, the house is most likely being quoted at a Pre-FIRM rate. FIRM is an acronym for Flood Insurance Rate Map and homes built prior to FIRM dating, which occurred in the 1970’s and created a singular rating system for this style of house. Now, once the entirety of the Biggert Waters act goes into effect, homes will be based on their actual elevation (which is why Elevation Certificates on Long Beach Island New Jersey are so important). Some homeowners will see a major increase in their insurance if their house is located in a V zone and is far below the base flood elevation however some homeowners will be pleasantly surprised to find that their rate may actually DECREASE as their current elevation is better than the FIRM rate.