Hey everyone, with Hurricanes Helene and Milton still fresh on everyone's minds, we're diving
into something super relevant today.
FEMA's 50% rule, this rule.
It's basically the fine print of flood insurance, and trust me, you do not want to be caught
off guard.
No, you don't.
Knowing how this rule works, it could save you a ton of heartache and money down the line.
Okay, so, let's unpack this 50% rule.
In a nutshell, if your home is in a flood zone, and the repairs from flood damage cost over
50% of what the entire structure is worth, you can't just like patch things up, you have
to rebuild the entire thing to current flood codes.
And a lot of times, those codes mean elevating your house.
Yeah, it's all part of this.
It's part of the national flood insurance program, the NFIP, and it's all about reducing the
chance of your home flooding again and again.
So, it's not just about fixing what's broken, it's about preventing damage in the future.
Exactly, and you know what, this is where it gets even more interesting.
So, this rule might seem pretty straightforward, but the way it's actually applied can be totally
different, like depending on what county you're in, what municipality you're in, even within
Florida.
Really?
So, what you're saying is, what flies in one county could get you in trouble in the next
county over?
Yeah, basically.
Wow.
So, what are some of these like local quirks that people should know about?
Well, let's just take for example, how they figure out your property's market value.
Some places might just go by what the county says it's worth, but then other places, they
might let you get an independent appraisal, and that could totally change that 50% number.
Oh, wow.
So, even figuring out your starting point can be tricky, depending on where you are.
Right.
I bet that's not the only thing that changes from place to place.
Oh, you know it.
Another big one is how they define substantial improvement over time.
So, this is about like adding up all those repair and renovation costs over a certain
amount of time.
So, like let's say you splurged on a $20,000 kitchen remodel this year, and then next year,
you get hit with a $30,000 flood repair bill some places.
They'll look at that as one big expense.
Oh, wow.
And that could push you over that 50% limit.
So, it's like they're playing catch-up with all your home improvement projects, like
what you did to your house years before a flood could actually come back to bite you?
Yeah, exactly.
And then, just to add another layer to it, there's also the whole world of exemptions.
So some areas, they might have special carve-outs.
Like if you're repairing a historic home, or if you're doing specific improvements to
prevent storm damage in the future.
Oh, wow.
Yeah.
It's not like a recipe for confusion.
You'd be following the rules in one place, and then be totally in the wrong somewhere
else.
That's the thing.
Navigating this rule, it requires a little bit of detective work.
And we can't forget about the people who try to work around the system.
Oh, you mean like trying to slip through those loopholes we were talking about?
What kind of things have you seen out there?
Like, yeah, like sometimes, you know, counties might actually undervalue properties on purpose,
just to try to help people avoid that 50% trigger, you know.
It might seem like they're doing homeowners a favor, but-
But the long run.
Right.
They can really backfire.
Oh, absolutely.
Imagine this.
Your home gets rebuilt, but it's rebuilt to a lower standard than what your insurance
actually covers.
And then another flood comes along, and suddenly you don't have enough money from the insurance
to cover the repairs.
Oh, man.
Talk about a financial nightmare.
So you know, this rule, it's not just about red tape.
It's about making sure you're covered when a disaster happens.
Yeah.
And I think it's important to remember that this rule, it's really trying to protect everyone
involved.
Like, if homes aren't built to code and they keep flooding, those rebuilding costs, they
often end up falling back on taxpayers.
Right.
So it's like, this rule is kind of like a financial safety net for everyone.
Exactly.
So with hurricanes, Helene and Milton so fresh on everyone's minds, what are some things
that homeowners should be thinking about to make sure that they're prepared?
Well, I always say, knowledge is power.
The more you understand about this rule, and especially how it applies to you, the better
off you'll be.
So where do you even begin?
Well, I would say the first thing is, you've got to know your flood zone.
FEMA has flood maps, and you can also reach out to your local floodplain manager.
But once you know your flood zone, then you'll understand what the base flood elevation is
for your property.
And that is the BFE.
The BFE.
Yes.
Got it.
So the BFE, that's like the minimum height your house needs to be at, to be considered
safe.
Yeah.
You can think of it as like the flood safe zone.
And keep in mind that BFE can change even within a neighborhood.
Really?
Yeah.
Wow.
Okay.
So let's say a homeowner has damage to their home.
Yes.
They can't document documentation, document everything.
So like photos and videos?
Photos, videos.
And you know, don't just focus on the obvious damage.
If you can get a shot of that water line, any signs of mold, cracks in the structure,
you want a clear record of that flood's impact.
Without getting repair estimates.
Oh yeah, that's a big one.
Get those in writing from licensed contractors, and make sure they break everything down,
line by line, so you can see exactly what's included.
That's especially important.
If you're anywhere near that 50% threshold cap.
So let's say a homeowner is looking at that estimate, and it's getting close to that 50%
mark.
What should they do?
Well, first of all, don't panic.
You've got options.
This is where being informed and proactive really pays off.
Talk to your local floodplain manager, your insurance agent, maybe even a contractor who
specializes in flood resistant construction.
They can help you understand like what's possible, and how to make the best decision for your
situation.
So you're saying sometimes even if it costs more money up front, to rebuild to the current
code, that might actually save you money in the long run.
Exactly.
Think about it.
Future flood insurance premiums, the cost of fixing things over and over if another flood
happens, it adds up.
Yeah, that initial investment in resilient construction, it really can be the best decision
you make.
For your wallet, and for your peace of mind.
Yes, peace of mind.
Knowing your home is ready for anything.
You can't put a price tag on that.
Absolutely.
So this 50% rule is meant to protect people financially.
It also seems like there could be some unintended consequences.
Right.
Especially with all the talk about these loopholes.
It's like these efforts to help people, couldn't have hurting them in the long run.
Absolutely.
Like when properties are deliberately undervalued, just to avoid the 50% rule, it can create
a situation where people might be rebuilding to a lower standard than what their insurance
actually covers, and then if another flood hits, they might not have enough money from
insurance to cover the real cost of repair.
Right, so it's like kicking the can down the road and making the problem even worse later
on.
It makes you wonder about fairness.
Are these loopholes really fair to everyone?
Or are they just helping people who already know how to work the system?
You're a good question.
Yeah.
And it makes you think, could this rule, which is supposed to help people, actually end up
changing these communities?
Like we might see more resilient homes built above flood levels, but will people be able
to afford to live in them?
That's something to consider.
It really is.
Well, this has been a fascinating deep dive.
We've learned so much about FEMA's 50% rule.
And how it impacts homeowners.
It's definitely something to be aware of.
It is.
And it's a reminder that when it comes to natural disasters, we need to be thinking long term
about how we rebuild and how we create more resilient communities.
Absolutely.
And to wrap up today, we want to leave you with this thought.
When you see those stories about people rebuilding after a disaster, remember, it's not just
about putting the pieces back together.
It's about making smart choices.
Choices that will protect us today and in the future.
That's it for today's deep dive.
Thanks for listening.