Hurricane Sandy impacted the Southern Ocean County area at the end of October 2012 and forever changed the landscape of areas like Long Beach Island, Beach Haven West, Barnegat and other shore area towns. Hurricane Sandy also brought to the forefront concern about flood insurance and the impact the new rates would have on the local real estate market and the ability to own a home in Beach Haven West, LBI or elsewhere. Most believe that Hurricane Sandy was responsible for the changes to flood insurance however in fact, the changes that will impact flood insurance rates were approved by Congress in September 2012: a full month before Hurricane Sandy made landfall.
The cost of flood insurance is determined by four major areas. They are:
Elevation is perhaps the most widely known (and least understood) area of the new flood insurance laws. The common misconception that, "all homes need to be raised" could not be further from the truth. Flood insurance looks at the first floor elevation above sea level and this elevation is determined by combining the natural ground elevation with the elevation of the foundation. Most of Beach Haven West is rated to be an A8 zone meaning the first flood elevation should be 8 feet above sea level. If the ground elevation is already 2-4 feet above sea level, then the foundation needs to be only 4-6 feet and the new Base Flood Elevation is met. There are many homes in Beach Haven West that already meet or exceed this requirement and therefore do not need to be raised. If a house is not at 8 feet, there is no rule that states the property must be raised. Insurance will be higher for these properties however it should, in most cases, still be affordable (and far less than the cost of raising the house). A VERY general rule of thumb is an insurance premium will be about $2,000 more per year for every foot below Base Flood Elevation (BFE). There is a benefit for building above the Base Flood Elevation as the insurance premium will decrease the higher you build (up to 4 feet above).
The height of the crawlspace grade is another area that impacts flood insurance rates. A flood elevation certificate will note the height of both the grade of the crawlspace and the grade of the property. If the grade is lower in the crawlspace than the rest of the property, flood insurance will cost more money. The grade of the crawlspace can be raised and this will produce a savings in flood insurance.
Flood vents too have an influence on the rates of flood insurance in Beach Haven West and the rest of Southern Ocean County. To conform with currently flood codes, there should be 1 sq. inch of flood vent for every 1 sq. foot of enclosure. There are additional discounts for "smart vents" which are designed to open or close with the water pressure.
Lastly, the property's flood zone has an impact on the insurance rates. Beach Haven West generally falls into an A zone and a V zone. An A flood zone allows for lower flood insurance rates and more freedom in design and construction. A V flood zone is considered to be of a greater risk (to qualify to be in a V zone a house must be at risk to sustain direct impacts of a 3 foot wave). V zones must be built on a foundation system that allows for breakaway walls and will see an increase in premium if more than 300 sq. feet of the area below the house is enclosed.
The real estate market in Beach Haven West is directly impacted by the cost of flood insurance. For homes that are at or above base flood elevation, little to no work is required and they will sell for a premium. Homes that lay below base flood elevation may need to be raised and therefore will need to be discounted when selling. Some homes may be below the base flood elevation but thanks to improvements such as extra flood vents and a higher grade, the flood insurance may still be affordable and therefore these homes will be worth more in the market.
If you are looking to buy or sell in the Beach Haven West NJ real estate market, or anywhere else that is at risk for flooding in Southern Ocean County, it is important to understand how the costs of flood insurance will impact your investment. Every property is different with different factors that play into the premium and therefore every house must be investigated before buying or selling in the Beach Haven West real estate market. The best way to determine a property's rate is with a flood elevation certificate which can provide the general information needed to generate an informed decision.