COBRA Zones along the Emerald Coast | Flood Insurance
Here are some basics to the flood insurance situation along the Emerald Coast in Florida, including Okaloosa and Walton Counties. This is by no means an all-inclusive discussion and, as always, one should seek the advice of an experienced insurance professional that you know and trust.
A little history about COBRA zones. Because of rapid development of coastal barrier areas in the US, conflict developed between the owners (or developers) of certain coastal barrier tracts and Federal government environmental concerns about fish, wildlife, and other natural resources in these protected areas. As a result, a compromise was made whereby these areas were placed under “passive” Federal protection to discourage further development.
The Coastal Barrier Resources Act of 1982 (CBRA) designated parts of Okaloosa and Walton County COBRA zones. Individuals and entities within a CBRA zone cannot receive Federally-backed loans (i.e. VA, FHA) nor is Federal flood insurance available.
These areas include Crystal Beach (south of Hwy 98), Destiny East and West, Emerald Lakes, Regatta Bay, and Kelly Plantation.
Buyers interested in purchasing in these areas must realize that flood insurance through the National Flood Insurance Program (NFIP) may NOT be available and the home cannot be financed through any of the federally-backed agencies. Have your agent determine whether the property sits within a COBRA zone.
Please be aware, however, that COBRA zone designation has nothing to do with the flood zone designation from FEMA. Generally speaking, a lender will require flood insurance for a residence located within an A or AE or V FEMA flood zone. Zone X generally does NOT require flood insurance by the lender. Whether an individual owner wants to purchase flood insurance (that is not required by a lender) is a discussion between the trusted insurance professional and the owner of the property.
So, if a buyer is purchasing a home in flood zone X, then there will probably be no lender required flood insurance on the property. As long as the property is NOT in a COBRA zone, the owner may decide to purchase flood insurance through the NFIP which is very affordable.
Many homes in the COBRA designated communities mentioned above were initially in a Flood zone A designation. This meant that the lender would require flood insurance AND that the affordable NFIP flood insurance was NOT available. This is the scenario that presented most of the problems. However, many homeowners had modifications done to the foundation, slope, and grade of their homes and submitted a new elevation survey to FEMA and asked for a Letter of Map Amendment (LOMA) to place their home out of Flood zone A and into Flood Zone X. Once they received FEMA approval, the lender did NOT require flood insurance.
For peace of mind, the owner may still want to purchase flood insurance because of their close proximity to the Gulf. In that case, they must go to the private market for flood insurance and premiums can be as high. And as insurance professionals always remind me, 25% of flood insurance claims come from homes located in Flood Zone X. While good, the FEMA maps are not perfect for predicting floods!