Outer Banks Oceanfront Flood Insurance

When there is a mortgage involved, the lender will require an ocean front home owner to have a flood insurance policy and a wind policy in addition to the home owner policy. Owning an oceanfront home means managing a very unique risk, which translates to specialized insurance requirements. While all oceanfront homes are required to obtain flood insurance, you will actually need two separate policies to adequately protect your investment:

1. Flood Insurance (NFIP or Private): Standard home owner's insurance never covers flood damage (storm surge, tidal overflow). Federally backed mortgages require coverage through the National Flood Insurance Program (NFIP), which often has a coverage cap of for the structure. FEMA Flood Insurance Guideines

2. Wind and Hail Insurance: Because the OBX is prone to hurricanes and severe weather, wind and hail damage is often excluded from standard home owner's policies and must be purchased separately. These wind policies are provided by the state of North Carolina.

The Elevation Certificate (EC): There was a time when you could find different FEMA Flood Zones, and even homes perched on dunes where flood insurance wasn't required. Now, all oceanfront homes require coverage, except those with no debt. The EC is a critical document that measures the home's lowest floor height compared to the Base Flood Elevation (BFE). A higher elevation translates directly into a lower annual insurance premium. Always request this certificate before purchasing to determine your true ownership cost.

COBRA Zone - in an effort to restrict development on the Outer Banks the Federal Government has created a number of parks. These parks carry the CBRA or CBRS (cobra zone) designation which basically means FEMA Flood insurance is not available. Unfortunately, when they were drawing up the boundaries for the COBRA Zones they inadvertently overlapped some adjoining residential neighborhoods. Properties in the overlapped zones cannot get federally backed flood insurance and will require private flood insurance from companies like Lloyds of London and AIG. This private flood insurance can get very pricey.

Oceanfront houses are the same as any other houses on the Outer Banks in that they will typically require three insurances, all administered by the owner's chosen insurance agency-- home owner's coverage (fire, theft, hazard and liability underwritten by the owner's insurance agency), separate wind hail coverage (subsidized by the NCJUA), and flood insurance (subsidized by the National Flood Insurance Program/NFIP).

Oceanfront properties differ in that lenders of financed oceanfront homes require flood insurance no matter how high the elevation or Flood Zone of the oceanfront lot. .

Lenders of federally backed/insured mortgages require a home owner to carry flood insurance on beachfront houses. If you buy with cash or own outright there is no entity dictating what insurances you carry, no matter how low or how wet. Regardless, our advice is to have flood coverage no matter what. An Elevation Certificate shot by a certified surveyor will determine what the base elevation of the lot is, and what the various levels of the dwelling are above base flood elevation (BFE) from the ground up. A current Elevation Certificate is necessary for the insurance agency to quote and arrange flood coverage.

Every Outer Banks property must be taken case-by-case; there are no two properties the same. Some lots are part X and part AE, or part AE and part VE. X-Zone is the highest elevation, and is the only flood zone in our overall area in which most lenders will not require the buyer to get flood coverage (except on oceanfront lots!). Flood insurance is required on an X Zone lot if any portion of the dwelling lies in a different flood zone.

VE and VO Zones basically mean a property is not only under threat of 100-year flooding but also has a threat of wave velocity hazard (storm surge and battering from wave-borne objects).

Another factor to consider when purchasing oceanfront property is that $250,000 is the lifetime total allowed amount (as of 12/25) of flood claims available for any dwelling. This runs with the property so it’s a good idea to ask the seller to obtain and provide a C.L.U.E. report (from the Claims Loss Underwriters Exchange) from their insurance agency so that you can know how many flood claims have ever been made against the property, if any. Or click the link and find out for yourself. FEMA can deem a property NFIP-ineligible if too many repetitive flood claims have been made.