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Flood Insurance in St Petersburg and Pinellas County Florida

Saint Petersburg waterfront

St Petersburg waterfront


Many clients have been asking for an update on flood insurance here in St Petersburg and Pinellas County. Here’s what we know:

In Washington:  on Monday the US Senate voted 86-13 TO BEGIN DEBATE on delaying flood insurance rate increases for 4 years. Both the White House and House Speaker John Boehner have expressed opposition.

In St Petersburg: in one waterfront neighborhood, Broadwater, there were 3 waterfront home sales between October 1st, when the flood insurance rate increases began, and the end of 2013.  All three were cash, which means the buyers had the option of not buying flood insurance and “self-insuring”. The one waterfront sale this year in Broadwater, which we successfully marketed, closed with a conventional loan, which meant flood insurance was required. The premium for that house, built in 1973, was $914.00 (not through Citizens) – which was less than the Seller had been paying. We obtained a new quote on a Broadwater waterfront home built in 1981 and it was less than $1,000.

Call The Simms Team at (727) 898-2582 if you’d like more information on flood insurance (or email them at info@SimmsTeam.com  For representation in buying or selling a home, contact The Simms Team with Coastal Properties Group, affiliate for Christie’s International Real Estate.

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Flood insurance relief for St Petersburg and the beaches

Good news this morning for flood insurance in St Petersburg and Pinellas County! Implementation of rate increases is postponed for four years and is subject to required studies that were not completed as well as showing of affordability. Read the article on flood insurance relief.


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Progress on flood insurance in St Petersburg and surrounds

Two insurance companies plan to offer a flood insurance alternative to the National Flood Insurance Program for some homes in St Petersburg and surrounding area, according to the Tampa Bay Times.  This is progress since my report on flood insurance on Oct 15th.

One of these is Homeowners Choice Property & Casualty Insurance Co., which will offer flood insurance as an endorsement to its homeowners policies. This is the company that sent letters to some Broadwater waterfront home owners recently saying that it would take policies out of Citizens. This flood endorsement would be subject to approval by the Florida regulators.

The other company, The Flood Insurance Agency of Gainesville, is offering a program backed by Lloyd’s of London. Since it is a surplus-line carrier they do not need state approval. Here you can view Lloyd’s Private Flood.

We’ll see if the federal government or the state of Florida will be offering more alternatives.



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Citizens is transferring St Petersburg home insurance policies

Several people in our Broadwater waterfront neighborhood of St Petersburg have been calling to say that Citizens Property Insurance dropped them and wondered what to do. We, too,received a notice from a new insurance company saying they were taking over our policy. We're referring here to general homeowner's insurance, not flood insurance.

Some people don't realize that they still have an option. They can decline the switch and stay with Citizens. That's what we decided to do. To be safe, we notified the new company by both email and regular mail that we were opting to stay with Citizens. We had to sign a notice that we knew our premiums might be higher and that our coverage may be lower if we stayed with Citizens.

In the past, some of the companies taking policies from Citizens have not been financially sound. Admittedly, I didn't check out the financial stability of this particular company. I decided that the devil I know is better than the devilI don't.

If you received a notice that an insurance company is taking you out of Citizens for your home here in St Pete – I'm not telling you what to do, only what I did. The point is, you do have a choice!

p.s. I hope Florida will opt out of the National Flood Insurance and if private insurance companies don't come forward, that Florida will set up a Citizens-like flood insurance. Florida has paid in over $16 billion in premiums and received less than $4 billion in claims. To now face some premium jumps to ten times the amount of past annual premium is incredible. People who own their home free and clear can opt out of flood insurance and self insure. Those with a mortgage cannot. So you choose to buy in a non-flood zone? You have no guarantee that when the flood maps are redrawn that you will not then be in a flood zone.


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Will Florida help with rising flood insurance premiums?

Following my recent blog post on flood insurance, which mentioned that there is some consideration of Florida withdrawing from the national flood insurance program, an article discussed a proposal by Sen. David Simmons concerning Florida and flood insurance. Simmons thinks the problem calls for a solution from the state of Florida. He suggests having private insurance companies step in to write flood insurance as an alternative to the national program. If private companies don’t do that, then he feels the state needs to step in and provide a “last-resort” market. Simmons thinks that the prospect of withdrawing our billions of dollars in premiums from the National Flood Insurance Program (NFIP) could also be leverage to  prompt Congress to act.

Since 1978 Florida has paid $16 billion in premiums and has received less than $4 billion in claims. Yet the NFIP is now creating havoc with some premiums increasing by 1,000%. It isn’t fair that we’ve been subsidizing the rest of the country and it’s even less fair to significantly increase that subsidy!


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Flood insurance and St Petersburg home sales

Homes in flood zones

Homes in Flood Zones

What's happening with flood insurance? How is the new flood insurance affecting home prices in St Pete and on the Gulf beaches? What should I do about the new flood insurance rates? These are questions we get nearly every day.

Homes built before 12/31/74 will no longer have subsidized flood insurance rates. All flood insurance policy renewals after October 1, 2013 will need to have a flood elevation certificate in order to determine the rate for these properties. We've heard of premiums ranging from $4,000 to nearly $30,000 – and that's per year, and only provides $250,000 of coverage. Florida has more affected properties than any other state and Pinellas County has more affected properties than any other county in Florida. As you can see by the section of the Property Appraiser's map that is printed here, it's not just waterfront properties that are affected. Many homeowners paying cash or having no mortgage will opt to self insure.

We haven't had enough sales data to make any conclusions about the drop in value of homes with high flood insurance, but we do know that it means that the loan a buyer can qualify for will be reduced and that buyers are asking what the new flood policy rate will be and opting out of looking at or making offers on homes with high flood insurance rate increases. Some buyers are using the new Florida sales contract to put a maximum premium they'll pay – if the premium is higher, they can cancel the contract.

For homeowners living in their home as a primary residence, the full rates will be phased in, with premiums capped at an increase of “only” 25% per year. If your home was built before 1975, get an elevation certificate and discuss options with your insurance agent. Perhaps you can raise your deductible to lower the premium. By October 2014 homes that were built in 1975 and after that are “grandfathered” because they were built to code at the time of construction can expect to see major increases as well. FEMA is having new flood maps drawn again, so we'll have to wait and see what happens with “base flood elevation”.

Many people, including legislators, did not realize what effect the Bigger-Waters Reform Act of 2012 would have. The required affordability study has not yet been completed. Florida residents have paid in nearly 4 times as much in premiums than they have collected in claims. There is some consideration of Florida withdrawing from the federal program and setting up something for Florida alone.

As Confucius said, “May you live in interesting times.”


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Insuring your St Petersburg home

Several of our clients have had questions recently on insuring their St Petersburg home. Here’s what we learned from Wallace, Welch & Willingham:

Yes, if you cancel your Citizens (or any other company) homeowners insurance policy when you sell your St Pete home, you will get a refund for the unused portion. There is always a basic or minimum policy fee, so the refund won’t be a proration based only on the number of days insured.

If you sell your Florida home and you have a flood insurance policy, you will also get a refund on the flood insurance policy. Note that if you arbitrarily cancel your flood policy, there will not be a refund. This is to prevent people from paying for flood insurance only during the hurricane season. If you’re buying a home, you should check to see if the seller has a current flood policy. If so, you may be able to assume it. If not (some owners without a mortgage self-insure), there may be a 30 day wait after you buy the house before you are covered.

Based on the renewal date for your policies, you may need to renew your insurance while it’s under contract for sale. This is something to consider when you are agreeing to a closing date, since you  may have to renew for just 4 days but “pay for” two months of the insurance, considering the basic non-rebated fees.

It’s a good idea to review your home insurance coverage every year and discuss options with your insurance agent. What is covered can change, and companies come in and out of the market.

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St Petersburg real estate benefits from National Flood Insurance extension

A lot of St Petersburg real estate has flood insurance and if there’s any financing, lenders require the flood insurance, so lack of flood insurance means closings  with loans can’t take place (in flood zones). Over the past several years we’ve had periods when the National Flood Insurance program has not been in effect and any extensions were for short terms and we’d start all over again.

Yesterday Congress passed a bill that extends funding for the National Flood Insurance Program to September 30, 2017. It had been scheduled to expire at the end of July, in the middle of the hurricane season. It’s good to have some certainly for the next 5 years.

Read more in the Insurance Journal.


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Residential Property Insurance in Tampa Bay Florida

Can I get insurance in Florida? How much does it cost?

Yes, you CAN still get insurance in Florida. There are 3 types of property insurance that may be needed on a home in the St. Petersburg area:

  • property insurance (general hazard and liability insurance)
  • flood insurance
  • wind insurance 

Property Insurance: Many insurance companies no longer offer property insurance in Florida; other insurance companies have formed Florida subsidiaries to limit their exposure; still others are cancelling existing policies. There are still some private companies offering insurance, but the primary source of insurance is Citizens Property Insurance, which is subsidized by the State of Florida. It is difficult to estimate costs, because this varies with the specifics of the property, its location, and the credit and insurance history of the property owner. Florida has seen tremendous increases in the cost of this insurance, and our legislators are currently addressing potential solutions.

Flood Insurance: If your home is in a coastal area or a low-lying area, and you are in a flood zone, you will be required to have flood insurance if there is a lender involved. Even if there is no lender, it’s advisable to have flood insurance, even in a non-flood zone. Currently flood insurance in Pinellas County is subsidized by the U.S. Government , so rates have remained relatively low and stable, as long as the home was built and is maintained in compliance with zoning and codes.

Wind Insurance: In certain areas, particularly on the beaches and in areas with exposure to high winds, wind damage is excluded from the general property insurance and requires a separate policy.

Your real estate agent should be able to advise you on specific insurance agents to contact.

I just got a notice that my insurance company is not renewing my policy. What can I do?

All is not lost – you need to get a new insurance company and perhaps a new agent. We can give you some direction and recommendations.

Choosing a policy: The coverage amount may vary by insurance company, and may also be adjusted by a current appraisal. Discuss this with your insurance agent. The amount of your deductible will also affect the rate. Most of our clients are choosing a high deductible and using insurance for catastrophies rather than ordinary events. Discuss options and addendums with your agent: full replacement coverage vs depreciated coverage; Codes and Zoning coverage (you probably can’t build just to the standards of your existing home – this addendum provides for the additional costs to meet today’s building codes); Monitored security alarm system; Hurricane protection features, such as storm shutters and impact glass.

Choosing an insurance agent: Be sure to choose an agent who will take the time to Advise and Counsel – someone who will listen to you, answer your questions, and ask their own questions – someone who cares about keeping your premiums as low as possible while providing adequate coverage – someone who will give you options.

If you are in the process of buying a property, you should arrange for insurance as soon as possible after you have a contract to purchase. Ask if you will also need a flood elevation certificate as it is faster and less expensive to have that done the same time as the surveyor is out at the property doing the survey.

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