Even as we enter another hurricane season many residents in Bellaire and the Houston area continue to suffer from the damage and the costs of Hurricane Harvey. Numerous homes have yet to be repaired with the owners living in them as best they can, some living on upper floors; others have moved out and are living with relatives or in rented quarters. After three devastating floods in our area in three years (May 2015, April 2016, August 2017), only one of which was hurricane related, let’s first focus on the need for flood insurance.
Flood Insurance – Who, What, Where, How?
FEMA, the Federal Emergency Management Agency, which serves the public during and after disasters, also supports the National Flood Insurance Program (NFIP). The NFIP is the only entity that offers guaranteed flood insurance. Harris County and the incorporated cities within the county are participants in the NFIP.
As a renter, homeowner, or business owner located in an NFIP-participating community you can purchase a policy and every eligible owner is encouraged to carry flood insurance. Contact your insurance agent to get more information. Policies must be in effect for at least 30 days before coverage takes effect.
Residential coverage is available for up to $250,000/100,000 structure/contents. Commercial coverage is available for up to $500,000/500,000 for the structure/contents. Included in the policy is Increased Cost of Compliance (ICC) coverage, which provides up to $30,000 in costs to rebuild after a flood to a higher standard than the standard to which the original building was constructed.
When flood map changes occur, the NFIP provides a lower cost flood insurance option known as “grandfathering.” Grandfathering is available for property owners who:
- have a flood insurance policy in effect when a new flood map becomes effective and then maintain continuous coverage, or
- had built in compliance with the Flood Insurance Rate Map (FIRM) in effect at the time of construction.
Unless your BFE has improved this may help with your flood insurance premiums. Check with your insurance agent to see if your property qualifies for this option.
Another option from the NFIP is the Community Rating System (CRS), implemented as a voluntary incentive program that recognizes and encourages community floodplain management activities that exceed the minimum NFIP requirements, and the City of Bellaire participates in the CRS program.
There are regulations in participating CRS communities to reduce the risk of current and future flooding. Questions about the program in Bellaire can be directed to the Bellaire Development Services Department. The Department’s director, ChaVonne Sampson, is Bellaire’s Flood Plain Administrator. Because the City chooses to participate in the NFIP Community Rating System Bellaire residents are entitled to a 15% discount on flood insurance premiums.
According to ChaVonne Sampson, flood insurance loss payments on a property are not cumulative. However if a property is flooded several times the substantial damage estimate may increase each time since the current damage and prior flood damage may be cumulative.
Ms. Sampson explained that over 60 houses in Bellaire were deemed substantially damaged after the Harvey flood, all based on damage caused by that flood, not previous floods. If residents still have questions or concerns they can check with Development Services. At this time there is no limit on the number of times a property may be insured and receive loss payments under the NFIP.
Compliance And The Floodplain
To be in compliance in a floodplain the NFIP requires that a structure must be at an elevation at least 12 inches above Base Flood Elevation (BFE). The BFE can be found on a FIRM or through an insurance agent. At a minimum, flood insurance rate maps show flood risk zones and their boundaries, and usually show floodways and BFE. When a property is not in compliance lenders may require flood insurance. An elevation certificate, often tied to a recent property survey, may help to lower the premiums.
The 50% Rule For Substantial Improvement And Substantial Damage
If a structure is in in the flood plain and not in compliance with current NFIP requirements, repairs or renovations that require City permits cannot exceed a certain amount due to the “50% rule”, also known as the Substantial Improvement and Substantial Damage (SI/SD) rule.
Any building located in the flood plain, not in compliance, and requiring a City permit must be considered, not just properties that suffered flood damage. NFIP regulations and Chapter 9 of the Bellaire City Ordinances address this requirement.
Due to artificially low valuations by the Harris County Appraisal District for some structures, Bellaire has been authorized by FEMA to utilize the Market Value Estimator (MVE), a complicated formula available on the City website, to determine an alternate value for a structure damaged by flooding. The MVE is an important factor in a Building official’s substantial damage determination and the owner’s ability to repair their property.
If a City building official determines that substantial damage to the structure is in excess of 50% of the adjusted value of the structure, City permits will not be issued even if the owner is willing to make repairs costing less than the substantial damage amount. An insured homeowner can receive a loss payment for flood damage as determined by an insurance adjuster but will be limited in their choices for their future use of the property.
What If A Structure Cannot Be Repaired?
If the structure does not qualify for repairs the choices for the owners are:
- elevate the home
- demolish and rebuild
- sell the home; or
- lock and secure the property, maintain the yard, don’t violate any City codes
Several elevation techniques are available. In general, they involve (1) lifting the house and building a new foundation or extending the existing foundation below it or (2) leaving the house in place and either building an elevated floor within the house or adding a new upper story. FEMA brochure: Elevating Your House
Substantial Improvements to a structure not in compliance in a flood plain area are also limited to 50% of the adjusted value. In the case of improvements the value may be determined by a City Building official or by an independent appraiser. Prospective buyers who hope to renovate an older property are encouraged to check with Bellaire Development Services to ascertain whether or not the structure in in compliance, and if not to discuss an approximate allowable amount for the planned renovations.
If a structure is in compliance or located outside the flood plain there are no restrictions on repairs or renovations, even if the property suffered flooding.
The 50% rule does not bode well for our older housing stock, since both square footage and depreciation tied the age of a structure are factors in the SI/SD rule and a substantial portion of the City of Bellaire is in the 100 year floodplain.
Some older Bellaire homes that were renovated or updated and in great shape but suffered flood damage from Harvey are not eligible for repairs unless they are brought into compliance with the new rule. And folks who want to buy and renovate an older home may find the cost to renovate the structure to their expectations will exceed the 50% rule unless they elevate it.
More information on flood insurance and City of Bellaire regulations can be found under the Floods menu link this website and on the City of Bellaire website.
https://www.fema.gov/national-flood-insurance-program – Main link to FEMA Flood Insurance
http://www.eng.hctx.net/Consultants/Floodplain-Management/ – Harris County Floodplain Management
Facts About Flood Insurance – FEMA.gov
MYTH: “My standard home owners’ insurance will cover me if my house is damaged or destroyed in a flood.” FACT: Homeowners’ insurance does not cover flood damage. Federal flood insurance, purchased through your insurance agent or company, is the only guaranteed flood insurance coverage available for your home.
MYTH: “Federal disaster aid, available during and after a flood, will reimburse me for losses. Therefore, I don’t need to buy flood insurance for my home and belongings.” FACT: Federal Emergency Management Agency disaster aid is only available during Presidentially declared disasters. Federal aid may often be in the form of a loan that you must pay back with interest. Flood insurance policies pay claims whether or not a disaster is declared.
MYTH: “I live outside the floodplain, so I don’t need to buy flood insurance.” FACT: More than 25 percent of the National Flood Insurance Program’s (NFIP) flood insurance claims are for structures outside identified flood plains. Floods can occur anywhere. An area that is near a levee or a dam is at risk of levee or dam breakage. People who face even moderate flood risks should get insurance, which can be purchased for as little as $80 per year.
MYTH: “I can’t buy flood insurance because my home has been flooded previously.” FACT: If your community is participating in the NFIP, it doesn’t matter that your home has been flooded before. You may still buy flood insurance.
MYTH: “If people don’t want to purchase flood insurance, it’s their own business. It doesn’t really affect me.” FACT: When people do not buy flood insurance, you pay more for federal and state disaster relief. Flood insurance is one of the best ways to keep disaster relief costs down for all taxpayers.
MYTH: “Flood insurance is only available for homeowners.” FACT: Flood insurance is available to protect homes, condominiums and nonresidential buildings including farm and commercial structures in participating communities. Contents coverage also is available, so coverage is available to renters as well.
MYTH: “If they predict a flood in the near future, it’s too late for me to purchase insurance.” FACT: You can purchase flood insurance anytime in a participating community. However, there is a 30-day waiting period after you have applied and paid the premium before the policy is in effect. The policy will not, however, cover a loss in progress.
MYTH: “I can only buy federal flood insurance through the federal government.” FACT: You can buy federal flood insurance through most major private insurance companies and licensed property insurance agents who sell homeowners’ or property insurance.
MYTH: “The NFIP does not offer any type of basement coverage.” FACT: Yes it does. The NFIP defines a basement as any area of a building with a floor that is subgrade below ground level on all sides. Basement coverage under an NFIP policy includes clean up expenses and items used to service homes and buildings. These can include elevators, furniture, water heaters, air conditioners, freezers, utility connections, circuit breaker boxes, pumps, and tanks used in solar energy systems. Flood insurance will not cover the contents of a finished basement and basement improvement such as finished walls, floors and ceilings.