NATIONAL FLOOD INSURANCE PROGRAM (NFIP): THE BASICS & UPDATE

Transcription

1 May 19, 2015 NATIONAL FLOOD INSURANCE PROGRAM (NFIP): THE BASICS & UPDATE ON THE CURRENT STATE Mary-Carson Stiff, JD, CFM Shannon Hulst Jarbeau, CFM Closing the Deal: How to respond to the new realities of flood insurance OF AFFAIRS

2 THE NATIONAL FLOOD INSURANCE PROGRAM (NFIP) OVERVIEW Voluntary insurance program that local governments (cities, counties, towns, etc.) may choose to join. Created in 1968 by the National Flood Insurance Act Managed by the Federal Emergency Management Agency (FEMA)

3 THE NATIONAL FLOOD INSURANCE PROGRAM (NFIP) MAP: Mapping Flood Hazards Where will it flood during storms? RISK: Managing Floodplains (High Risk Areas) To receive the benefits of enrolling in the NFIP, local governments must meet a number of minimum regulatory requirements Ex: Reducing flooding through zoning, building codes, etc. INSURE: Providing Flood Insurance Flood insurance premiums at a low-cost

4 THE NATIONAL FLOOD INSURANCE PROGRAM (NFIP) BENEFITS Joining the NFIP allows citizens and businesses within a locality to receive flood insurance that is typically low-cost, as compared to many private companies Joining the NFIP makes local governments eligible to receive certain disaster assistance grant $$ after storm events Over time, localities become safer by implementing regulations to protect people and property from flooding

5 NFIP: MAPPING FLOOD HAZARDS THE SFHA When a local government enrolls in the NFIP, FEMA creates maps for the land according to different levels of flood risk Maps are divided by ZONES that identify levels of risk The high-risk areas, or those areas most prone to flooding, are called Special Flood Hazard Areas (SFHA) The SFHA represents how far and how high flood waters will reach during the 100-year-storm The 100-year-storm is a storm producing flooding that has a 1% chance of happening in any given year

6 NFIP: WHY DO WE CARE ABOUT SFHAS? RISK: There is a 26% chance that a property located in the SFHA will experience flooding over the course of a 30-year mortgage INSURANCE: Properties located in the SFHA that have a mortgage from a federally regulated or insured lender, then flood insurance is required. Flood insurance is NOT included in traditional homeowners insurance NOTE: Banks may require property owners to purchase flood insurance, even if the property is located outside the SFHA.

7 MAPPING FLOOD HAZARDS: SPECIAL FLOOD HAZARD AREA (SFHA) ON VIRGINIA S PENINSULAS Dark Blue = SFHA Source:

8 MAPPING FLOOD HAZARDS: FEMA FLOOD MAP MATHEWS, VIRGINIA FOR SFHA = Flood Zones that begin with A or V Red = Zone VE Blue = Zone AE Yellow/Tan = Zone X SFHA = Red & Blue Source: h*p://maps.riskmap3.com/va/mathews/

9 MAPPING FLOOD HAZARDS: FEMA FLOOD MAP MATHEWS, VIRGINIA (ZOOMED IN) FOR SFHA = Flood Zones that begin with A or V Red = Zone VE Blue = Zone AE Yellow/Clear = Zone X SFHA = Red & Blue Source:

10 MAPPING FLOOD HAZARDS: SPECIAL FLOOD HAZARD AREA

11 MAPPING FLOOD HAZARDS: DIRECTING PROPERTY OWNERS, BUYERS, SELLERS TO FLOOD MAPS In Person: Individuals can call the city/county office and ask to speak with the floodplain manager to see whether a property is located in the SFHA and whether flood insurance is required Online: Individuals can determine their own flood risk by accessing flood maps for coastal Virginia online: h*p://riskmap3.com/va

12 NFIP: PROVIDING FLOOD INSURANCE NFIP offers affordable coverage & is available almost everywhere in US Get NFIP policy through local agents FEMA determines flood insurance rates for the NFIP using flood maps Required for properties located in the SFHA zones Flood insurance is not included in homeowners insurance

13 NFIP: POLICIES IN UNITED STATES

14 NFIP: FLOOD INSURANCE REFORMS NFIP is $24 Billion in debt Congress passed law reforming the NFIP to resolve debt Rates are increasing for ALL POLICYHOLDERS Some policyholders have been paying way less than they should based on flood risk These policyholders will experience the greatest rate increases

15 NFIP: FLOOD INSURANCE REFORMS Average Rate Increase = 20% Maximum Rate Increase = 37%

16 RECOMMENDATIONS & TIPS Encourage SFHA policyholders to get an elevation certificate Elevation certificates ensure accurate premium ratings - contact a surveyor Structural renovations to reduce flood risk and lower NFIP premium Example: Elevating a structure, installing flood vents Encourage localities to participate in the NFIP s Community Rating System to reduce flood insurance premiums Advise property-buyers to purchase NFIP policies early in transaction process Be aware of 30-day waiting period and force-placement

17 RESOURCES Floodsmart.gov FEMA Resources Coastal Virginia Flood Maps Wetlands Watch Policyholder Guide

18 QUESTIONS? Mary-Carson Stiff, Shannon Hulst Jarbeau,