Can I get coverage for a hurricaneCoverage is available for wind damage which includes wind damage caused by a hurricane. There are two types of wind damage policies available on the Outer Banks. There are the standard homeowner's policies and there are policies offered under the beach plan. Standard policies today are generally only written on primary residences. They may have a higher decductible and cost slightly less than a beach plan policy.
Back to topWhat is the beach plan? The state of North Carolina organized a group of insurance companies that chose to write policies east of Interstate 95 to limit the exposure of each insurance company. This group contributes to the beach plan pool out of revenue generated from policy holders in this area. The insurance companies are able to use these funds to pay claims when a high level of wind damage has occurred in the beach plan area.
Back to topAre there any policies available specifically for vacation rental homes? Yes there are secondary/rental home policies available to owners of homes where the cottage rents for less than 25 weeks per year. Under this type of policy the owner has a separate wind/hail policy and it is slightly higher than the beach plan. However, the benefits are better than an investment policy because it includes replacement cost on contents, theft and liability.
Back to topCan I get coverage for a flood and erosion? Coverage is available for rising waters resulting from rain or other weather event. This coverage is separate from a standard homeowner's policy. Flood insurance is federally subsidized in most areas of the Outer Banks. There are a number of variables that affect the cost of flood insurance. Probably the biggest variable is in which flood zone the property is located. In the federally subsidized areas, flood insurance starts at around $300 per year for a small home in an "X" flood zone. As long as the home conforms to current flood zone regulations and is in an area eligible for the National Flood Insurance Policies, flood insurance is relatively inexpensive.
Back to topWhat is the National Flood Insurance Program? The National Flood Insurance Program was established by Congress to make flood insurance available nationwide to eligible properties. Policies issued under the National Flood Insurance Program include conditions and costs dictated by federal requirements. The federal government in turn guarantees to pitch in if losses occur-thus encouraging private companies to write affordable policies for areas that might normally be considered too risky. Large discounts on premiums often are available for buildings constructed above minimum standards. For example, discounts are available for buildings elevated on pilings higher than required to avoid storm-surge flooding.
There is a limit to single-family home coverage under the NFIP. Owners should inquire about these limits. If the owner wishes to purchase excess flood coverage, or if the property is not eligible for the NFIP, the owner may be able to procure flood insurance coverage from a private insurer. Private insurers regularly reassess whether or not to offer coverage.
Back to topIs flood insurance mandatory for Outer Banks real estate? No law requires that an owner buy or maintain flood insurance. However, federally insured lenders, including mortgage companies, banks and savings and loan associations require flood insurance for the life of their lien if the property is in an identified flood-prone area. Failure to maintain coverage may permit the lender to declare the balance of the loan due and payable.
Flood-prone areas are identified on Flood Insurance Rate Maps, which should be available at the local building official's office. If your building is not in a flood-prone area or you haven't secured a mortgage to purchase your property, flood insurance is optional. However, when building or buying near the ocean, flood insurance is always a good idea, even if it's not required.
Back to topWhat are the limitations of flood insurance? Federal flood insurance covers only structural damage-including damage from waves-caused by flooding. As a rule, damage caused by chronic, long-term erosion is not covered. However, since most erosion that causes structural damage is associated with coastal storms, coverage is often available.
Furthermore, a federally-backed flood insurance policy covers only damage to the insured structure. It does not cover damage to land caused by flood, wave or erosion. And, it does not cover damage from other events, such as hurricane-related winds. These same limitations may apply to privately underwritten insurance.
When a structure is so badly damaged that it cannot be repaired or rebuilt, an owner may receive all benefits under the flood insurance policy and discover the coverage is inadequate to cover the cost of removing the structure and/or repaying the loan. In addition, the value of any remaining land may decline significantly if the land is declared 'unbuildable.'
Back to topWhat questions should I ask when determining an insurance company? Insurance costs can vary widely depending upon the carrier. Therefore, it is important to determine the variables affecting the cost of the insurance first. These variables include replacement cost of improvements and contents and what deductible you are comfortable with. Your real estate agent can provide you with a rough replacement cost of property improvements. Using this information you can more effectively compare "apples to apples".
Back to topWhat can I do to reduce my premium? There are a number of things that can be done to reduce premium costs. Below is a list:
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