FEMA, Homeowners Insurance, Citizens and Waterfront homes, low lying areas of Florida.

What home owners should know about FEMA, Homeowners Insurance, Citizens and Waterfront homes or homes in low lying areas of Florida.

October 25, 2022      By: Keith Robert Gordon

FEMA, Homeowners Insurance, Citizens and Waterfront homes, low lying areas of Florida

Florida has witnessed the loss of at least 6 major homeowners insurance carriers this past year partly due to fraudulent roof claims and a string of high-wind storms over the past few years.

I am a native Floridian, real estate broker since 1984, and I spent 17 years living on Miami Beach (1987-2003) watching Biscayne Bay slowly creep in the streets of South Beach, first submerging the lowest lying areas - especially the King Tides. Miami’s Little Haiti is now the hotspot because it’s at 11’ above sea level!

I now live in Kenwood, a popular and quite high spot in St. Petersburg, Florida reaching some 40 feet above sea level. I do not fear water or sea water surge in Kenwood, just the potential for high winds.

While climate change seems impossible to stop at this late point in time there are some measures homeowners can take to get in front of the high cost of insurance and the risk of being canceled by their insurance provider.

Whether selling a home, getting homeowners insurance for the first time, or reducing your chances of being dropped or surcharged, consider re-roofing at age 14 if a shingle roof. In Florida, most insurance underwriters require at least 5 years of useful life on a roof, and it is a rule of thumb in the real estate industry and home inspectors that a roof after age 14 is considered “dead.”

All home buyers want a new or like new roof. So, investing in a new roof might save on insurance costs down the road and fetch a higher sales price when you do put your home on the market. While you batten down the hatches, consider inspecting the hurricane clips that connect the roof trusses to the exterior bond beam. These clips ensure high winds won’t rip the roof off. Another thought is to have a general contractor or engineer look at the bracing or racking of the roof. At times, adding stiffing wood can prevent twisting of the roof and roof failure.

A most obvious danger is a tree falling on the home during a wind, rain, or storm event. The amount of weight added to a tree when drenched, along with saturated and soggy ground, is the main cause for a tree to fall. It may be time to create some firewood.

Everyone in Florida wants hurricane windows and doors for added protection but they are quite expensive. The benefits are lower energy bills, crime prevention and insurance costs. All these benefits should be considered before paying excessive insurance rates. Impact windows will prevent a window from being the source of failure.

Another expensive consideration for waterfront homes is raising the seawall cap. The ideal maneuver is to raise it at least 18” and widen the cap to be more people friendly. This could cost $20,000 to $50,000.

Is FEMA and Citizens a ticking time-bomb for waterfront values?

Scientists are predicting sea level changes based only the data they know. It is what they don’t yet know that concerns me. Will these scientists change their timeline about the speed at which sea levels will change? I believe this trend could accelerate, thus catching many by surprise and exacerbating the impact in low-lying flood prone areas.

Will FEMA Subsidies be on the chopping block (again)?

Currently, the flood Insurance program serves 5 million people, of which 20% receive FEMA subsidies. When private insurance companies fail, Citizens fills the gap but at who’s expense?

FEMA is criticized for encouraging development in areas that are prone to flooding while other homeowners outside these areas are sharing the cost by indirectly using their tax dollars to support possibly the wealthier homeowners living in coastal areas. This is what Citizens does.

Homeowners that buy flood insurance pay about 2-4% of “value” annually. The flood insurance rates if not subsidized by FEMA would be closer to 10-12% of value.

Biggert-Waters Flood Insurance Reform Act of 2012.

Biggert-Waters proposed a gradual 5-year increase in flood insurance rates until such time as rates find “market” levels without federal subsidies. The market instantly reacted and rates started climbing until the National Association of Realtors lobbied and others successfully stopped Biggert-Waters Flood Insurance Reform Act from advancing and replacing it with a new bill called “Flood Insurance Affordability Act of 2014” reversing the 2012 austerity bill and delaying the inevitable.