A common question I’m asked by people who are thinking about buying a beach house is “Can I get flood insurance on the Outer Banks?” Flood insurance is available on every property on the Outer Banks. In some cases, it can be more expensive than others but it is still available. This article is the first part of a two-part series on Outer Banks flood insurance. It will focus on the reasons for higher and lower premiums.
Preferred rate guidelines
The best priced flood insurance policies are for homes that meet the preferred rate guidelines. A common reason an Outer Banks home would not meet the preferred rate guidelines is if it had heated living area below or at the 100-year flood plain elevation (base flood). This is called a negative elevation. Another common reason is a storage area below the base flood elevation without flood vents. Jill Beatty from The Willey Agency said, “Installing flood vents in ground floor storage areas of homes in an AE zone can reduce the premium”. In my experience, just about all homes built after 2000 meet the preferred rate guidelines. This is because around this time Outer Banks municipalities became much more concerned about following national flood guidelines. So what’s a good rate for a home that meets the preferred rate guidelines? Unless it’s a really big house or on the water, then an owner can expect to pay $1,000 a year plus or minus a few hundred dollars. The size of the home, the flood zone and the elevation of the house will also make a difference. Preferred risk are not always the best price but does provide the best coverage. The enclosure does not affect the rate. The zone affects the rate. You can have an enclosure and still be in a x zone. They will not insure a structure built over water.
Pre-Firm and Post-Firm
If you own or considering a purchase of an older home then it is possible that this property is pre-firm. Pre-firm means prior to the municipality joining the National Flood Insurance Program. Most Outer Banks municipalities joined this program in the 1970’s. Prior to a town joining there were very few rules about how far above the base flood elevation a house could be built. As a result, many of these older homes don’t come close to meeting the preferred rate guidelines. Many of these pre-firm single-family homeowners’ policies are still subsidized. However, they’ll experience about a 25% increase in their premium each year until it reaches the actuarial rate. Therefore, it’s important to know the premium prior to making an offer. Most local insurance companies allow these policies to be assumed by a new owner. Assuming one of these policies could save you a bunch of money.
Flood insurance can be affordable on the Outer Banks. With a little knowledge and help from your agent you should be able to find a reasonable premium for your property. You can learn more about Outer Banks insurance here. We’ll address other aspects like elevation certificates, common flood zones and flood maps in a future blog entry.
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