Printed on Sep 02, 2014 @ 7:01 AM
WASHINGTON, D.C. – Thousands who own homes and businesses in locations recently designated as high-risk flood areas will soon have a new way to save on flood insurance protection. Beginning January 1, 2011, the Federal Emergency Management Agency's (FEMA) National Flood Insurance Program (NFIP) is offering a new insurance rating option that will allow many property owners to take advantage of lower-cost flood insurance for two years before they are required to pay standard rates. The program will make Preferred Risk Policies (PRPs), which start at just $129 a year and are typically only available for properties in moderate-to-low risk areas, available for properties that have been newly mapped into high-risk areas due to a flood map revision on or after October 1, 2008.
Flood risks are dynamic and change over time due to a variety of factors, including changes in the natural landscape, the impacts of land use and development and the condition of flood control structures such as levees. Since 2003, a multi-year effort has been underway to update the nation's flood maps to reflect these changes. Using state-of-the-art technology and modeling techniques, new maps are providing more detailed and accurate information about where flooding is most likely to occur. As new maps are released nationwide, many property owners are finding that their risk has changed and they may now be required to purchase flood insurance. FEMA understands the financial burden this may place on some property owners and, to help them better manage the cost of coverage, is expanding eligibility for its lower-cost policies.
"While everyone is at some risk for flooding, it is especially important for home and business owners with properties in high risk areas to protect their finances by obtaining flood insurance," said Edward L. Connor, Acting Federal Insurance and Mitigation Administrator. "FEMA created the PRP extension opportunity to offer flexibility to home and business owners facing the challenges of today's economy. It's an important immediate measure to help make flood insurance more affordable for those who will be newly required to carry it."
The costs for standard flood insurance policies vary, with the average policy costing approximately $570 a year. PRPs offer the same quality of protection, and can include coverage on a building's contents, at a fraction of the cost. In addition to the requirement that properties have been mapped into a high-risk area on or after October 1, 2008 due to a flood map revision to be eligible, all buildings must also meet PRP loss history requirements. After two years at the reduced PRP rates, policies will increase to standard rates. However, there are additional NFIP saving options - including a grandfathering provision, use of elevation ratings and higher deductible policies – that can help reduce costs. Individuals should talk to their insurance agent to learn more.
Although extended eligibility for the PRP does not become effective until January 1, 2011, insurance companies should already be contacting policyholders who may qualify for the extension. Agents are required to provide insurance company documentation that shows the structure is eligible for the PRP extension, including current and prior flood map information. This information can be found on the FEMA mapping website or through a community's floodplain administrator.
Property owners in communities that have received flood map updates since October 1, 2008 should contact their insurance agent for further details. Additional information can also be found at FloodSmart.gov or by calling the NFIP Help Center at 1-800-427-4661.
FEMA's mission is to support our citizens and first responders to ensure that as a nation we work together to build, sustain, and improve our capability to prepare for, protect against, respond to, recover from, and mitigate all hazards.
Benton County participates in the National Flood Insurance Program (NFIP). Federally-backed flood insurance for all structures is available through the NFIP, whether or not the structures are located within the 100-year floodplain, also referred to as the Special Flood Hazard Area (SFHA). Damage from flood waters to a structure is one of the most likely claims a homeowner is expected to file.
During the life of a 30-year mortgage there is a 26% chance of experiencing a 100-year flood and a 96% chance of experiencing a 10-year flood. Compare these odds with the 1-2% chance of the same structure catching fire during the same 30-year mortgage period. Following the purchase of flood insurance, NFIP imposes a 30-day waiting period, so residents should purchase insurance before the onset of the rainy season to ensure coverage during the flooding season.
NFIP membership — and its availability to County residents — requires the County to manage its floodplain to meet or exceed standards set by FEMA. NFIP insures residential buildings with two types of coverage: structural and contents. Structural coverage includes walls, floors, insulation, furnace and other items permanently attached to the structure. Contents coverage may be purchased separately to cover the contents of an insurable building. Flood insurance also pays a portion of the costs of actions taken to prevent flood damage.
Federal financial assistance requires the purchase of flood insurance for buildings located within the SFHA — a requirement that affects nearly all mortgages financed through commercial lending institutions. This mandatory requirement stipulates that structural coverage be purchased equal to the amount of the loan, or other financial assistance, or for the maximum amount available, which is currently $250,000 for a single family residence.
While the mandatory flood insurance purchase requirement has been in effect for many years, not all lending institutions previously required flood insurance. Today most institutions require the purchase of flood insurance and some are reviewing all mortgage loans to determine whether flood insurance is required or should have been required in the past. Upon refinancing a loan, nearly all lending institutions will enforce the flood insurance requirement. It is the lender’s responsibility to check the Flood Insurance Rate Map (FIRM) to determine whether a structure is within the SFHA.
The mandatory flood insurance requirement does not apply to loans or financial assistance for items that are not eligible for flood insurance coverage. Items such as vehicles, business expenses, landscaping and vacant lots are examples of ineligible insurables. The requirement also does not apply to loans for structures not located in a SFHA, even though a portion of the lot may be within a SFHA. Individuals with property located in the SFHA who received disaster assistance after September 23, 1994 for flood losses to real or personal property must purchase and maintain flood insurance coverage or future disaster assistance will be denied.
Related FEMA Article: Preferred Risk Flood Insurance - When Paying A Little Can Save A Lot
For more information on flooding, see:
To receive disaster alerts and updates, subscribe to FEMA's e-mail list.
The Emergency Management Office plans and directs emergency procedures to protect citizens from natural and human-caused disasters. We work on preparedness for emergencies including emergency response training and exercises and maintaining an Emergency Communications Center where response agencies coordinate actions and allocate resources in an emergency.