LBI Real Estate Flood Insurance

Flood insurance is a federal program, and therefore, has to adhere to federal guidelines when seeking to increase flood insurance rates. Flood insurance rates will be increasing, however, these increases were actually approved in September BEFORE Hurricane Sandy had even formed in the Atlantic. These approved changes call for an annual increase in flood insurance based on the risk associated with the property until the new rate is met.

Prior to recent changes, flood insurance was based on two sets of rates: Pre-FIRM and Post-FIRM (FIRM stands for Flood Insurance Rate Map). Pre-FIRM homes, which were homes built on Long Beach Island before the mid 1970's, were based on an established Pre-FIRM rate. Post-FIRM homes were rated on their actual flood elevation above sea level. Under the new law, all homes will be rated based on their actual elevation and level of risk. For some homeowners, this will lead to an increase in flood insurance rates on Long Beach Island. For others, rates will actually DECREASE because the elevation of their house will provide a more favorable rate than the Pre-FIRM rate they were paying.

Post-Firm Homes:

• These homes were built after 1972 on Long Beach Island

• Most of these homes should be compliant with the new base flood elevation requirements, however they may have sustained damage from Hurricane Sandy

• FEMA flood map changes generally will not impact the post-firm building, since these homes were built to code at the time of their construction

• A flood insurance policy on a post-firm home can be transferred upon closing

Pre-Firm Homes:

• These homes were built before 1972 on Long Beach Island

• Pre-Firm homes, which may have sustained substantial damage, must be raised to the current base flood elevation requirements

• It is extremely important that a flood elevation certificate be obtained for any pre-firm home

• A flood insurance policy can be transferred upon closing on the pre-firm home

• The flood insurance rate will increase 18% per year for a primary home and 25% each year for a second home or investment property until the actual rate is no longer subsidized

The actual elevation of the property, as used for rating purposes, is an equation comprised of the natural elevation of the land above sea level and the elevation of the structure. For rating purposes, these two numbers together determine the property’s elevation. To use an example, if a property is located in an “A8” flood zone, FEMA recommends the property be elevated 8 feet above sea level. If the natural elevation of the ground is 5 feet (much of LBI is between 3 and 6 feet above sea level), then the house need only be elevated 3 feet to meet FEMA’s guideline.

Long Beach Island New Jersey Real Estate and FIRM Dates

FIRM stands for flood insurance rate map. Essentially, FIRM maps help to determine the areas that are at greater risk for flooding and building requirements in accordance with these maps. A good example of this can be seen in the oceanfront areas of Long Beach Island, which are generally located in a V zone. These areas are perceived to be at a higher risk of damage, and therefore have more stringent building requirements. It is very important to understand FIRM dates, as this can significantly impact the value of a home in the LBI NJ real estate market. FIRM maps make up one segment of flood insurance as it pertains to the LBI real estate market.

REAL ESTATE TIP: Be sure to consult with an insurance expert BEFORE making any purchase on Long Beach Island. Understanding the location of your home and the flood risk associated with it cannot be over emphasized.