The NFIP has been operating at a loss for years and has been subsidized by taxpayers; the intent of the changes is to make it self-sustaining and free up some taxpayer money.
There are three kinds of properties that are covered under the NFIP: 1. Subsidized – these are houses that were built before the flood maps were drawn and are below the base flood line. In Charleston, that means homes built pre-1975. You may hear these referred to as PRE-FIRM which means pre-flood insurance rate map. 2. Grandfathered – when these houses were built, they were built above the base flood line but have since been remapped to be in a flood zone. These houses were built after 1975. 3. Everyone else – these are houses built after 1975 and have not had a change in the flood map.
Each group can expect the change in the NFIP to affect them differently. For subsidized homes, the rates will move to the full rate when the property sells if it is a primary residence. This can be back dated to sales since July 6, 2012, even if you have assumed a policy. Second homes, commercial properties and properties with repetitive losses will have the rates move to a full rate over a 4 year period, with an increase of about 25% per year.
Currently new flood maps are being drawn up and it is expected that the SC maps will be completed in late 2014 or 2015. When these are finalized the rates on grandfathered properties will be phased out and brought to the new rates over a 4 to 5 year period. This will be for all grandfathered properties, not just ones that have sold recently.
Everyone else that has insurance through the NFIP can expect an increase this year of about 5% but could have an increase of as much as 20% overall. What this means for people thinking of buying in Charleston, SC or buying in Mt. Pleasant, SC is that they should try and get a flood elevation certificate and talk to at least one insurance agent for a quote before buying a property.
At Charleston Dwellings, we recommend that buyers write a contingency clause which allows the buyer time to find adequate insurance coverage. And if you’re thinking of selling your home, know where you stand in these changes. If you want to help your transaction get to the closing table, try and obtain your elevation certificate before you list your property. The flood plain manager in Mt. Pleasant has most of the elevation certificates on file and can provide them to you at no charge.
We hope this information isn’t scary or hard to digest, our intent was to help shed some light on what can be an ominous subject. Each region comes with its own nuances and this is ours. For detailed information on the changes in NFIP you can click here. If you have any questions about buying in Charleston, SC or buying in Mt. Pleasant, SC please contact us, Charleston Dwellings is here to provide the service you deserve.
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