Flood Insurance – What You Need to Know

Long Beach Island is one of the most desirable locations for those looking to purchase a home at the Jersey Shore. Like most barrier islands in the Garden State, LBI is considered a flood zone. Before purchasing a home on LBI, there are a few things you should know regarding flood zones and flood insurance.

Flood Insurance Basics

While all LBI homeowners should have flood insurance, if you plan to carry a mortgage on your new home, you will be legally required to have it. Flood insurance is a separate policy from regular homeowners insurance. There are two types of flood insurance coverage: building and contents. It is a common misconception that a single flood insurance policy will cover everything in your home. Building coverage, also referred to as standard coverage, will only cover the walls, floors, insulation, furnace, and other items permanently attached to the structure. Contents coverage can be purchased in addition to building coverage would cover furnishings and personal belongings.  

After Hurricane Sandy hit the Jersey Shore in 2012, the lack of contents coverage was a common complaint among homeowners. Many had assumed that their standard flood insurance policy included the contents of their home. Building coverage is all that is necessary to meet a mortgage lender’s requirements. However, without contents coverage, replacing your personal property can be a costly expense that could even impact your financial security.

National flood insurance is administered by the federal government and sold only through licensed insurance agents. Because of this, flood insurance policy rates for identical coverage will not vary between insurers. Rates will increase or decrease accordingly, depending on which type of flood zone the property is in. The higher the risk, the more expensive flood insurance will be.

The Flood Zones on LBI

The Federal Emergency Management Agency (FEMA) and the National Flood Insurance Program (NFIP) establish flood zones to help understand the risks associated with those areas of the United States which were subject to flooding. There are multiple types of flood zones, each differentiated by their level of risk.

The flood zones on LBI fall into to main categories: “A” flood zones and “V” flood zones. “A” flood zones are defined by FEMA as “areas with a 1% annual chance of flooding and a 26% chance of flooding over the life of a 30‐year mortgage”. “V” flood zones are defined as “coastal areas with a 1% or greater chance of flooding and an additional hazard associated with storm waves. These areas have a 26% chance of flooding over the life of a 30‐year mortgage”. While both types of flood zones fall into the higher risk category, “A” zones are a slightly lower risk than “V” zones.

With the “V” flood zones, the “V” stands for velocity. Properties in these zones may be more likely to experience extreme winds and direct wave impact. Not only are properties in “V” zones subject to high flood insurance rates, but they must also adhere to more stringent building codes.  These codes are meant to ensure the safety of the home and those surrounding it. In the Township of Long Beach which participates in the NFIP, mandatory flood insurance purchase requirements apply to all “A” and “V” zones and their subcategories.

Flood Insurance on Long Beach Island

Naturally, the next question is how much does flood insurance cost on LBI real estate. The simple answer is it depends on the property you are considering. Flood insurance rates are based on the property’s elevation above Base Flood Elevation or BFE. The higher the elevation, the lower the insurance rates might be.

There are also other factors that can impact flood insurance rates such as the existence of a basement, the presence of flood vents in the foundation, if the crawl space is below the grade of the property, as well as the flood zone the property is located in. All of these factors make estimating actual flood insurance costs extremely difficult. Getting a flood elevation certificate is the best way to get the information necessary to calculate flood insurance costs. This certificate will include the ground elevation and any other factors that will impact the insurance rates and can be obtained through a survey company.

LBI Real Estate Professionals

When purchasing LBI real estate, it’s best to work with an agency that has experience and is knowledgeable about the area. We can help you navigate through all the flood zone information and recommend reputable survey companies and licensed insurance agents to calculate the cost of flood insurance for your new home.

The Freeman Group has over 24 years of experience working with a wide variety of clients from individual homeowners to developers and investors. They trust us to guide them the entire process of their most important transactions and lucrative investment.  We don’t take this trust lightly and provide every client with the highest level of professionalism and personalized service. Contact us for all your LBI real estate needs.