If you are in escrow and the property you’re buying requires flood insurance, you might want to speed things along. The vast majority of flood insurance is provided through the National Flood Insurance Program, a government program that is about to expire (again) on September 30, 2024. If it doesn’t get renewed in a timely manner, which sometimes happens, it could derail your escrow.
Insurance coverage for flood damage is not included in standard homeowners’ policies, so if your property is in a flood zone and you’re financing the purchase of the property through a federal lender (like most people do), you’ll be required to buy flood insurance. In our valley, most homes are not in flood plains, but if your property falls within the flood zone designated by the Federal Emergency Management Agency map, good luck getting a loan without flood insurance.
Frequently, the FEMA map doesn’t tell the whole tale. For example, while part of a property may fall within the flood zone, the improvements (built structures like your house) may be out of the danger zone. Some people bring in dirt to raise the earth and get their building site out of the flood plain. This is perfectly legal, and sometimes you can demonstrate to a lender that the structure is not at risk, obviating the need for flood insurance.
Be aware that you cannot raise the earth in a flood way (interrupting the flow of water), because you may be sending water into the house next door. Neighbors (and the law) frown on this.
In Ukiah, a few residential areas are in flood plains, including much of the Oak Manor subdivision and areas along South State Street. If you have a property adjacent to seasonal creek, it’s likely that a portion of your property is in a flood zone. Gibson Creek, Orr Creek, and other little tributaries from the western hills to the Russian River overflow periodically. So, even if you aren’t getting a loan that requires flood insurance, if the property you’re buying is, in fact, in a flood zone, then flood insurance is a wise choice.
While flood insurance is useful, it doesn’t cover everything. Generally speaking, it doesn’t cover damage to personal property and other items stored in a basement. And for insurance purposes, any room below ground level, like a sunken living room, is considered a basement. So, if you need to store stuff there, use waterproof containers.
It’s amazing how much damage just a little water can do. An inch of water can easily cause $25,000 worth of damage, even without adding in personal property. It doesn’t take much water to ruin carpet and other flooring. Once water hits sheetrock, the wicking effect can pull the water up the walls. Appliances and electronics of any kind don’t mix well with water. And any furniture touching the floor (presumably all of your furniture touches the floor) can be ruined.
Years ago, a storm threatened to flood a rental property I owned. We put sandbags around entrances, which slowed but did not stop the water. We put plastic bags around the legs of furniture and held the bags in place with zip ties. We put the antique dining table and chairs up on canned food or heavy plastic jars. We put other things up on pots and pans, anything to raise them off the floor.
If you are hit with a flood and choose to submit a claim, you’ll need to provide the insurance company with details about your belongings, such as the model, make, and serial number of your appliances–washer and dryer, furnace and air conditioner, freezer, sump pump, dumbwaiter, etc. Of course, it’s also good to note this information for warranty and recall purposes. As with all insurance policies, the large print giveth and the small print taketh away. Read the small print.
While it’s likely that the federal government will renew the National Flood Insurance Program, it has lapsed briefly three times since its inception in 1968. Originally, it was put in place for about 50 years, expiring in 2017. Since then, it has been extended 30 times. I have no idea why they don’t make it permanent, or at least renew it for ten-year stretches.
The long and short of it is that if you have something in escrow (a purchase or a refinance), close it now. Existing policy holders should be shielded by a lapsed NFIP; policies should remain in force. If your NFIP policy renewal date is September 30, try to renew early.
If you have questions about property management or real estate, please contact me at rselzer@selzerrealty.com or call (707) 462-4000. If you have an idea for a future column, share it with me and if I use it, I’ll send you a $25 gift certificate to Schat’s Bakery.