Heading to Miami for the Miami REALTORS® Inauguration, I want to share the 3 emerging types of flood insurance quotes that are trending 100 days into FEMA’s Risk Rating 2.o launch.
A quick review of FEMA Risk Rating 2.o:
By contrast, private flood insurers like National General, an A-minus rated insurance company owned by Allstate, have used extensive data to price individual property for flood insurance for decades. FEMA’s Risk Rating 2.o places the public - private flood insurance market on equal terms.
Note: These 3 emerging types are solely based on my daily review of hundreds of CartoFront quotes. At CartoFront, our team lead by Edna Hernandez (Customer Success Manager) and Henry McDonald (Full Stack Developer), are analyzing data from over 9,500 quotes and will publish a full report in February.
For properties that are on known flood zones (AE, AH, VE Flood Zones) - this is straight forward. Flood Insurance is required by a lender for financing, and will need to be secured by the homebuyer.
In this example, FEMA rates this AE Flood Zone as high risk, yet prices it aggressively to allow potential homebuyers to secure standard coverage for $250,000 for building and $100,000 for personal property.
Note that FEMA pricing is $600/ per year lower than the private flood insurance option from National General Insurance.
FEMA will continue to be the viable flood insurance option on known Flood Zones -- AE, VE, AH
When a Miami REALTOR® gets a X Zone, directionally it confirms that it is NOT on a known FEMA flood zone and normally indicates low to medium risk. I purposely italicized directionally, because 30% of all flood insurance claims come from X Zones and further research is always recommended.
In this example, the X Zone designation is validated in the fact that both FEMA and National General view the flood insurance pricing nearly equal – with about $19/per month price difference for standard coverage of 250/100.
Generally, these ‘Peace of Mind’ X Zone properties will be competitively priced by the private insurers.
With this property valued at over $600k, $707 per year is a reasonable insurance premium to protect the homebuyer’s investment.
I call Type 3 ‘The Double Take’ because FEMA is viewing the risk completely differently than the private insurance market.
I would estimate that 40-50% of all X Zone quotes are falling into this Double Take category.
In this example, FEMA’s price is 3x the cost of National General ($1,500 vs. $500, which is $85 per month!). What is concerning is that one party sees risk, and prices it as such, and the other does not.
Double Take Rule of Thumb: For any X Zone flood quotes with greater than $20/month discrepancy, it is HIGHLY recommended that further research is required including a call to Marcio Pepe at GetAQuote.com, a foremost authority on South Florida flood insurance.
CartoFront is a tech company that simplifies flood insurance for REALTORS®, their clients, and insurance agents. With a click of the ‘CartoFront Raindrop’ from within a MLS listing, CartoFront offers estimated, comparative flood insurance quotes from FEMA and National General Insurance. CartoFront is currently integrated with Miami MLS, Maine Listings, and Intermountain MLS. CartoFront was a National Association of REALTORS® 2020 REACH Participant. If you are interested in learning how CartoFront can integrate with your MLS, please contact Jason Harris, CartoFront CEO, at firstname.lastname@example.org.
CartoFront is a Bronze Member Affiliate of the Miami REALTORS®