Insurance Agents: Fixing Homes More Important Than SRL Classification

In addition to dealing with the immediate problem of cleaning up from flood damage, some county property owners are worried that their homes will end up on a list that will lead to even higher flood insurance premiums.

Most flood insurance is underwritten by the federal government, and those properties with multiple claims of significant damage can be classified as Severe Repetitive Loss properties.

The designation was adopted by the Federal Emergency Management Agency in order to prevent just a small percentage of properties from being a huge burden on the National Flood Insurance Fund.

As the FEMA website says, "The primary objective of the RL properties strategy is to eliminate or reduce the damage to property and the disruption to life caused by repeated flooding of the same properties."

Homeowners might not want to find their homes classified as SRL by FEMA because it can cause flood insurance premiums to increase (probably about $1,500 per year) and/or lead to other consequences. In extreme cases, homes can be bought out or demolished.

Because of that, local insurance agent Doug Wiles of Herbie Wiles Insurance said he's heard that some locals are afraid to file flood claims following Hurricane Irma because of concern over the SRL tag.

That could be a big mistake, said Ralph Klein, a certified insurance counselor and a certified floodplain manager with Herbie Wiles Insurance.

Klein and others in the industry are worried that flood damage will not be adequately handled because property owners can't afford to hire professionals to clear out the moisture but don't want to make a flood claim.

That could lead to further damage to a home. And that additional damage might not be recouped in a later insurance claim if the owner failed to act responsibly to the initial problem.

Klein said that could end up being worse than being designated SRL.

"Don't panic," Klein said. "If you have flood insurance and you have significant damage, you should be filing a claim. And the cleanup and repair should be done by licensed contractors."

One of the main reasons not to overreact is that it's very difficult to end up on the list.

According to FEMA, for a property to be declared SRL, it must have either: four or more separate claim payments of more than $5,000 each (including building and contents payments); or two or more separate claim payments (building payments only) where the total of the payments exceeds the current value of the property.

In either case, two of the claim payments must be within 10 years of each other. And all activity is considered only since 1978. It's important to note that the claims are considered for the property regardless of ownership.

Klein said St. Augustine has generally fared well in storms until the last 11 months. And although Hurricane Irma was a massive storm, the flood damage was generally much less severe than last year.

Wiles Insurance ended up handling about 1,200 flood claims last year. So far this year, there have been 400 claims filed through the local office, a third of which are flood. The rest are wind or a combination of wind and flood.

"From what I'm seeing, the extent of the damage (in flood claims) is a lot less than in Matthew, although there are some streets (with major damage)."

Other insurance agents around St. Augustine have said the flooding from Irma has been measured mostly in inches as opposed to feet in Matthew.

Even if a property does get named SRL, it doesn't mean the owner has a disaster on his hands.

FEMA says flood insurance premiums will not increase merely because a property is on the SRL list. Sometimes the flood risk can be mitigated by actions from the owner or from the local government (such as through better drainage systems).

"I would not discourage people from filing a claim just because you're going to reach that (SRL) threshold," Klein said.