If you are looking to purchase property in Destin, FL or on Hwy 30A, it is very important that you understand how flood zones work. It is OK to own a property in a flood zone. In fact, all properties on the Emerald Coast are in a flood zone. The most common are Flood Zone X “no flood insurance required”, Flood Zone AE, and Flood Zone VE.
Below are some basic things you need to know about flood insurance.
1. Before you make an offer, call an insurance agent to get a quote on flood insurance for the specific property of interest. They will be able to tell you quickly if your home is in the infamous COBRA area and if you are in flood zone X, VE, or AE (your Realtor can advise you regarding the flood zone as well, but not COBRA). If you are not in the COBRA area and in a flood zone X, they can give you a quote pretty quickly. If you are in a flood zone other than flood zone X, they will need an elevation certificate for a quote. You can also request a copy of the current flood policy from the listing agent. The maps change and can be hard to understand.
2. THE INFAMOUS COBRA AREA. Cobra is a designated area that is not covered by the NFIP “National Flood Insurance Program”. This means you have to obtain private insurance and the rates are typically very high. Many owners in the Cobra Area elect to self-insure because the premiums are so high. You can have a flood Zone X, AE or VE in a cobra zone. If the home is in a COBRA area it will not be eligible for a VA, USDA or FHA loan. Oftentimes this is a deal breaker. Find out if the property is in a Cobra Area first.
Below is the FEMA Definition of COBRA:
“The Coastal Barrier Resources Act (COBRA) of 1982 and later amendments, removed the Federal government from financial involvement associated with building and development in undeveloped portions of designated coastal barriers (including the Great Lakes). These areas were mapped and designated as Coastal Barrier Resources System units or “otherwise” protected areas. They are colloquially called COBRA zones. COBRA banned the sale of NFIP flood insurance for structures built or substantially improved on or after a specified date. For the initial COBRA designation, this date is October 1, 1983. For all subsequent designations, this date is the date the COBRA zone was identified. COBRA zones and their identification dates are shown on Flood Insurance Rate Maps (FIRMs). Communities may permit development in these areas even though no Federal assistance is available, provided that the development meets NFIP requirements.”
3. Flood Zone X “No Flood Insurance Required” – Flood zone X is the best flood zone but understand, you can have a flood zone X that is in a COBRA. This means you can get a loan without purchasing flood insurance but if you really want a flood policy, you will have to purchase it from the private sector and the rates can be very high. I have seen quotes around $12,000 a year for 250K in coverage. If your property is in a Cobra and Flood Zone X, this is best case scenerio because flood insurance is not required by the lender and a borrower can purchase the property without having to purchase the super high insurance. If you require flood insurance for piece of mind, a flood zone X in a cobra may not be the best option for you.
4. Flood Zone Properties that are not in Cobra – If the property is in a flood zone like AE or VE but not in a COBRA area, you can get NFIP insurance if the elevation meets their criteria. Always check the insurance expenses prior to making an offer because this really can vary from house to house. If you are in a zone other than Flood Zone X, you will have to provide the insurance agency with an elevation certificate. In some cases you can get a copy of this from the county. It is very important that you do your due diligence! Call the insurance agent and give them the address and get a quote before making an offer or during the due diligence period.
5. LOMA Letter – A Letter of Map Amendment (LOMA) is an official amendment, by letter, to an effective National Flood Insurance Program (NFIP) map. A LOMA establishes a property’s location in relation to the Special Flood Hazard Area (SFHA). LOMAs are usually issued because a property has been inadvertently mapped as being in the floodplain, but is actually on natural high ground above the base flood elevation. Because a LOMA officially amends the effective NFIP map, it is a public record that the community must maintain. Any LOMA should be noted on the community’s master flood map and filed by panel number in an accessible location.
I work with some excellent insurance brokers and while we determine which homes are of interest to you, I will check with these sources to determine flood and COBRA zones so that there are no surprises after making an offer on a home.