More on Flood Zones…

First, let me thank Bob Mehrez for becoming an author on peasespoint.com and giving us such a great first post on the new flood maps (see: New FEMA Flood Map Drafts at Town Hall).

I ended up studying all of this in great detail in 2006 when we were planning our new house.

Here’s a few additional comments:

1. Mandatory Flood Insurance: No one will be required to buy flood insurance unless they refinance. It’s actually unconstitutional for the federal government to require anyone to purchase anything (this is the Achilles Heel in Obamacare). However, if someone is refinancing or buying a home with a mortgage in the VE zone, most lenders will require flood insurance. If anyone cares to read the 140 page federal guidelines on this click HERE.

That said, if your home has been reclassified into the VE zone (or any higher risk area), the cost of taking out a flood insurance policy may be the least of your problems; read on…

2. The VE Zone: We were required to build a special foundation because we chose to locate our house near the water. Since the old VE line went through our lot, we had the option of building near Point Road and conforming to just the AE codes, but we figured that 50′ would not really give us much hurricane protection, so we bit the bullet, built in the VE zone, and built to the much tougher VE codes. Since we’re the first and only Peases Point home built to these standards, I thought I’d share the gory details.

The cost implications of the VE zone are substantial. In the AE zone, one can elevate their house using standard poured concrete walls; not so in the VE zone. Our foundation is a highly engineered structure made up of extensive steel rods and concrete (see photos to the right).

In fact, the engineering that goes into a VE foundation is so complicated that the town inspectors cannot inspect it. The homeowner must hire a second engineering firm to inspect the foundation!

There are additional requirements that go beyond the cost and complexity of conforming to a VE zone code versus the AE zone. In the AE zone, the only major requirement is that the first floor be 14 foot feet above sea level and that the first floor walls be attached with “breakaway bolts.” Other than that, it’s pretty much standard home construction.

VE is quite different. First of all, nothing can be built below the 18 feet above sea level elevation that is not designed to wash away in a flood. This means that the floor can’t be at 18 feet, because things like floor joist, plumbing, and HVAC duct work must all be above the 18 foot elevation. In the case of our house, our first floor ended up being 21 feet above sea level.

This also meant that things like a hot water heater, furnace, and AC units must also be above the 18 foot elevation.

3. Flood Insurance Value: After spending big bucks to build a foundation that conformed with FEMA regulations, we were shocked to find out how worthless a federal insurance the flood policy was.

• The policy does not cover any damage that occurs below the 18 feet above sea level elevation.
• The policy only covers the first $250,000 in damages.
• The new policy cost $8,000/year (versus $1,200 on the old house).

To me, this policy makes no economic sense. I believe that the 1938 hurricane was more than 100 year flood; I think it was more like a 500-1,000 year flood. I say this because there is no record of any storm like it going back to 1620 when the Pilgrims hit Plymouth Rock! When I think about a 100-year flood on Peases Point, I think it’s more like 1954 or Bob.

The point is, how much flood damage would likely be done to our house above the 18 foot sea level mark in another Bob or 1954? Our homeowners policy covers wind and rain damage, so all were talking about is tsunami sized waves. If tsunami sized waves hit Peases Point, we’d be declared a federal disaster area and they be doing TV specials to help us out!

4. VE Flood Zone Insurance Pricing: At first it seemed absurd that the flood insurance policy on the new house would cost 6 times as much as the old house. Both policies cover homes 40 feet from the water, both have a $250,000 face value maximum benefit, but the policy on the new house covered a home that was constructed to meet the current FEMA standards while the old house sat on a 45 year-old foundation that Clyde designed on the back of a napkin, and it was only 14 feet above sea level.

Then I figured it out, there is a massive premium jump between flood zones! FEMA charges way more for homes in the VE than they do for homes in the AE, even though common sense tells us that the actuarial risk for the old home was far greater.

Summary: The True Cost of the New Mapping

• You may not be required to purchase flood insurance if you home falls in the VE zone, but you will if you try to refinance and more importantly, if you sell your house, the new buyers will most likely be required to purchase one of these costly policies.
• If you now find your home in the VE zone and you’re considering rebuilding, be prepared to pay for a foundation that looks like Freeway Overpass. I think we got a good deal on our job, but it was still $50,000 to $75,000 more than poured concrete.
• If you have flood insurance now and you’re going to be reclassified from the AE zone to VE zone, plan on a huge premium jump. Our policy was “grandfathered” before the reclassification and the premium still jumped 600%.

If anyone wants to learn more about our experience, just ask your question as a comment on this post and I’ll be happy to share what I know with all.

Dave