Homeowners hit with substantial increases in their flood insurance as a result of recent changes in the federal program should do their homework, experts say, because there may be ways to lower their bills.
“A lot of people don’t know the flood map is not set in stone,’’ said Jason Cummins of Cummins-Cederberg, a coastal and marine engineering firm based in South Miami. Federal officials “understand they are limited in many aspects, budget, resources and time available, and you can challenge it.”
The Herald/Times spoke with Cummins and obtained information from the Federal Emergency Management Agency to answer these questions about the new flood insurance rates:
Q: Why are flood insurance rates rising?
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A: Faced with a $24 billion deficit in the National Flood Insurance Program, Congress passed the Biggert-Waters Act to help make the program more fiscally sound. Under the act, an estimated 268,000 Florida homeowners in older homes, whose rates are now subsidized by the federal flood insurance program, will face gradual to steep increases in their premiums under a provision that took effect on Oct. 1. Also affected are homeowners who bought older homes since the act took effect July 1, 2012, and who thought they would be able to continue the subsidy under the “grandfather” provision of the flood control act, and homeowners whose home in the flood prone region is their second home.
Q: How does a homeowner know if his or her property is currently subsidized?
A. The insurance premium rate sheet includes a one-page summary that lists the flood zone as well as a box indicating if the rate is grandfathered or not. If “yes” is checked, the property is grandfathered, indicating the property was likely built before the National Flood Insurance Program was federally mandated and benefits from a subsidy.
Q: What will happen to my rates if my rate is “grandfathered?”
Until now, the federal policy was to allow property owners who maintained payments on their flood insurance to receive the subsidized rate and avoid the rate shock of having their insurance match the true market rate.
Under the Biggert-Waters Act, property owners who have subsidized policies for non-primary residences and commercial property will see annual increases in their rates of 25 percent until the rate matches the full risk rate.
Property owners with subsidized rates who sell their home, allow their policy to lapse or purchase a policy for the first time, will no longer be eligible for subsidies starting this month and will be charged the full risk rate.
Q: What is a “full risk rate”?
A: A full risk rate is one in which the premium takes into account the full range of possible flood losses, including rare but catastrophic floods.
Q: How can a property owner find out what the property’s full risk rate will be?
A: Many factors influence the rate but the most important is the elevation of the structure in relation to the base flood elevation (or BFE.) A community’s Flood Insurance Rate Map (or FIRM) indicates the portion of that community that has a 1 percent or greater chance of flooding each year. That is considered the Special Flood Hazard Area, or high risk zone. The higher the elevation of a structure above the base flood elevation, the lower the flood risk. This information is reflected on an Elevation Certificate, a form completed by a licensed engineer or surveyor.
Q. What is the importance of the risk designation?
A: The higher the risk, the higher the premium. Under Biggert-Waters, the goal was to gradually phase out subsidies so that property owners were paying the true cost of the flood risk for their property.
FEMA uses various kinds of zone designations to determine risk:
• V zones are usually located near the ocean and are particularly vulnerable to storm surges. They are the highest risk, and premiums in this zone are the most expensive.
• A zones are usually located near a river, lake or stream, the second highest risk zone. Average premium is around $500 annually.
• B, C, X, and A99 zones are less prone to flooding.
Q: How does a property owner know if the rate is an accurate reflection of the flood risk?
A: The Federal Emergency Management Agency bases its risk assessment on flood insurance rate maps (or FIRMS) based on technical studies that evaluate the flood risk in communities and regions on a large scale. Because the maps do not investigate individual properties, are not updated annually and may not reflect significant changes that could affect water flow, some homes may be mapped in the wrong zones.
If a property owner knows of a change in structure or water body, a change in mangrove vegetation, that could affect water flow, or suspects the map to be inaccurate, he can apply to FEMA to modify the map or the property’s risk designation.
“The areas we see the most conservative mapping is along the coast, where flooding is associated with storm surge,’’ Cummins said. “As a layman, you have to ask what’s changed in my area? If you can tie that to something that affects water levels, you can call a professional and ask if the typography is represented in the flood map.”
Q: How does a property owner challenge a flood map or risk designation?
A: Homeowners can file an application for a change after they raise the elevation of their property. They may also file a Letter of Map Revision (or LOMR) that asks FEMA to move the map lines based on a detailed survey, signed and sealed by an engineer, and provided by the property owners.
The property owner must supply FEMA with supporting material to justify their claim. It may be as simple as an elevation certificate or as complex as numerical modeling of wave impacts. All the supporting material usually requires three signatures: the professional engineer must validate the authenticity and technical validity of the information; the homeowner must agree to it; and, a local official must approve it.
It is expensive for most homeowners to hire an engineer to proceed with a detailed survey and it is not uncommon for a group of homeowners to pool their resources and get a community or area remapped.
Q: How do you get an elevation certificate?
Every property in a flood zone already has had a surveyor certify the property’s elevation. The insurance agent then rates the property based on that elevation certificate. Elevation certificates may be part of a homeowner’s mortgage documents or be in their file with the insurance agent or lender.
Homeowners may also hire a surveyor to complete a new elevation certificate. The cost usually starts at about $200.
Q. What can people do whose properties are now in a flood zone and face steep rate increases because of changes in maps or other conditions?
A: FEMA offers a Hazard Mitigation Assistance program that provides provide funds for projects to reduce the risk to individuals and property from natural hazards. These programs enable
To learn more about the new law and your options, you can visit FEMA’s website: www.fema.gov/flood-insurance-reform-act-2012