In late 2019, FEMA released preliminary revisions to the Flood Insurance Rate Map (FIRM) in Florida. With many homeowners, unit owners, and associations compelled to purchase Flood insurance annually, this created many questions as to how the revisions may affect policyholders’ premiums. This is a topic that Gulfshore Insurance has been monitoring closely.
The FIRM shows the “flood zone” of a particular area. A building’s flood zone, along with other factors, is a direct contributor to the Flood insurance premium associated with the policy. A lesser risk flood zone can mean significantly lesser premiums. But, for those buildings now preliminary rated in a higher risk zone, it could mean significantly higher Flood insurance premiums. This is especially true for coastal properties. To make matters more confusing, these FIRM maps are extremely detailed. Your property may be moved into a higher risk zone than it previously was, and your adjacent neighbor may remain unchanged.
There is some reassurance. At Gulfshore, your insurance agent is familiar with the nuances of Flood insurance, and they will be able to determine a strategy that puts your property in position for the best possible rates when these maps do finally go into effect.
Frequently Asked Questions
When are the new Flood Insurance Rate Maps taking effect?
- The target date to take effect is late 2021 or early 2022.
- Local officials point out it could be much later based on hearings and proceedings.
- At the time of writing this article, local hearings have not yet been held.
Who are the new FIRM maps impacting?
- It is important to understand that each property must be researched independently because FIRM maps are very detailed. Your property may be impacted by the change, but your adjacent neighbor’s may not be.
Can I “Grandfather” my property so my flood zone doesn’t change?
- The preliminary map proposals have not done away with grandfathering and it remains a viable option if it is to your benefit. Your Gulfshore Insurance agent will be researching this.
For more preliminary FIRM revision details, visit your county website flood page:
Jeff Sanders, TRIP is Client Advisor at Gulfshore Insurance specializing in community and condominium associations. Jeff works with a wide range of business clients to deliver strategic risk analysis and guidance. Comments and questions are welcome at email@example.com
The National Flood Insurance Program (NFIP) recently announced changes effective April 1, 2020. These changes include:
- Premiums will increase an average of 9.9%.
- The Reserve Fund Assessment will increase to 18% and the Severe Repetitive Loss premium will increase to 10%.
- Primary Residence Determination – when the property address and mailing address match, no additional documentation will be required before issuing the policy as the primary residence.
- Non-Residential Flood-proofing Credit – FEMA has updated the process and outlined documents needed prior to submission.
- V-Zone Risk Rating Factor Form – FEMA is discontinuing use of this form.
Below is a breakdown of the premium increase by Flood Zone:
Preferred Risk Policies (PRPs) – Premiums will increase 12.5%
Pre-FIRM Subsidized Policies – SFHA Zones (A, A1-30, AE, AH, AO, AR, AR/A, AR/A1-30, AR/AE, AR/AH, AR/AO, V1-30, VE)
- Primary Residences +7.5%
- Non-Primary Residences +23.1%
- Substantially Improved +23.8%
- Severe Repetitive Loss (SRL) Properties +24%
- Non-Residential Business +24.2%
Other Subsidized Policies
- A99 & AR Zones – Premiums will increase 4.2%
Post-FIRM V Zones
Post-FIRM A Zones
- A1-30 AE +4.1%
- AH, AHB, AO, AOB +2.7%
- Unnumbered A Zones +5.1%
- Standard Rated X zones +3.8%
Understanding what an elevation certificate is and how to read one will help you better navigate the issues a home may have in regards to flood insurance, a critical component of the home buying process. An elevation certificate (EC) is a document prepared by a land surveyor (or other licensed professional) that details the elevation of a home in reference to the Base Flood Elevation, commonly referred to as the “BFE.” The BFE is the elevation that floodwaters are estimated to have a 1 percent chance of reaching or exceeding in any given year. Remember, no type of flood damage, no matter the source of the water, is covered by standard homeowners policies.
FEMA Fact Sheet: Elevation Certificates
FEMA Elevation Certificates Instruction Guide
How an EC Is Used
If the property is in a high-risk area—a zone indicated with the letters A or V on a Flood Insurance Rate Map (FIRM)—the EC includes important information that is needed for determining a risk-based premium rate for a flood insurance policy. For example, the EC shows the location of the building, lowest floor elevation, building characteristics, and flood zone. The EC consists of six pages. Pages one through four are informational regarding the property, the Flood Insurance Rate Map (FIRM), and data pertaining to the structure. Pages five and six are photos of the property and structure. Your insurance agent will use the EC to compare your building’s elevation to the BFE shown on the map being used for rating, and determine the cost to cover your flood risk.
Section A (Page 1)
This section provides pertinent data including: the address of the property, the property description (otherwise known as the legal description), the latitude/longitude of the property, and information regarding the type of structure that is on the property such as: basement, crawl space, on slab, etc., and information regarding buildings with attached garages.
The National Flood Insurance Program (NFIP) just announced changes effective April 1, 2019 and January 1, 2020. The changes outlined below apply to new business and renewals that will become effective on or after April 1, 2019. The premium changes for Preferred Risk Policies (PRPs) and Newly Mapped procedure policies will become effective January 1, 2020.
Premium Increases and Surcharges
Average increase of 7.3%. These amounts do not include the HFIAA surcharge or the Federal Policy Fee (FPF).
For policies issued on or after April 1, 2019, there will be no changes to:
- Deductible Factors
- Federal Policy Fee
- Reserve Fund Assessment
- HFIAA Surcharge
- Probation Surcharge
Pre-FIRM Subsidized Policies (a group of policies in SFHA Zones A, AO, AH, A1-30, AE, A99, AR, AR/A1-30, AR/AE, AR/AO, AR/AH, AR/A, V1-30, and VE, that receive rates insufficient to pay the anticipated losses and expenses for that group)
- Other Pre-FIRM Subsidized Policies Not Subject to 25% Annual Increases: These are primarily condominium policies and multifamily policies. Premiums will increase 9%, with a total amount billed increase of 8%.
V Zones (coastal high-velocity zones)
- Rate increases are being implemented again this year as a result of the Heinz Center’s Erosion Zone Study, which clearly indicates that current rates significantly underestimate the increasing hazard from steadily eroding coastlines.
- Post-FIRM V Zones: Premiums will increase 6%, with a total amount billed increase of 6%.
A Zones (non-velocity zones, which are primarily riverine zones)
- Post-FIRM A1-A30 and AE Zones: Premiums will increase 4%, with a total amount billed increase of 3%.
- AO, AH, AOB, and AHB Zones (shallow flooding zones): Some policies within this rating category will have premium changes; however, for the entire category the average premiums and total amount billed will remain unchanged.
X Zones (zones outside the Special Flood Hazard Area)
- Standard-Rated Policies: Premiums will increase 1%, with a total amount billed increase of 1%.
Click here to download the summary
As we see time and time again, no home is completely safe from the risk of flooding. Flood insurance can be the difference between recovering or being financially devastated. Just one inch of water in a home can cost more than $25,000 in damage—why risk it?
Do You Need Flood Insurance?
- FACT: Homeowners and renters insurance does not typically cover flood damage.
- FACT: More than 20% of flood claims come from properties outside high-risk flood zones.
- FACT: Flood insurance can pay regardless of whether or not there is a Presidential Disaster Declaration.
- FACT: Most federal disaster assistance comes in the form of low-interest disaster loans from the U.S. Small Business Administration (SBA) and you have to pay them back. FEMA offers disaster grants that don’t need to be paid back, but this amount is often much less than what is needed to recover. A claim against your flood insurance policy could, and often does, provide more funds for recovery than those you could qualify for from FEMA or the SBA — and you don’t have to pay it back.
It’s easy to see that having flood insurance provides important recovery help. The most common flood insurance is offered through the federally regulated program known as the National Flood Insurance Program (NFIP) with options for your home only or home and contents.
- The maximum available coverage limit for the dwelling is $250,000.
- The maximum available coverage limit for contents in your home is $100,000
What if you need more than $250,000 worth of coverage for your home or more than $100,000 of coverage for your contents? Excess Flood insurance is available through private companies.
Federal Flood Insurance – What is Covered vs. What is Not
What Qualifies as a Flood?
Water has to cover at least 2 acres of land that’s normally dry, or has to have damaged two or more properties (one being your home). Also, the water has to come from:
- Overflowing inland or tidal waters
- Unusual, rapid accumulation or runoff of surface waters from any source
- Mudflow (that’s mud carried by a flow of water, creating a river of mud)
- You’re also covered when shorefront land collapses or sinks due to waters above “anticipated cyclical levels.”
*Water and seepage that comes from sewer or drain backups, or a sump pump that overflows is not considered a flood. Wind driven rain is not covered.
Please do not wait for an impending storm to purchase federal flood insurance. There’s usually a 30-day waiting period. Some private policies offer a 15-day waiting period.