Flood Maps are Changing

Transcription

1 Flood Maps are Changing What Real Estate Agents Should Know Mississippi coastal counties will soon enter a new era. The Mississippi Coastal Flood Study, undertaken by the Federal Emergency Management Agency (FEMA) and the State of Mississippi, is nearing completion. This in-depth, large-scale study to re-examine flood hazards and related risks in the coastal counties will result in new Digital Flood Insurance Rate Maps (DFIRMs) that will reflect current flood risks, replacing maps that are up to 25 years old. As a result, property owners throughout Hancock, Harrison and Jackson Counties will have up-to-date, reliable and Internet-accessible information about their flood risk on a property-byproperty basis. Some residents and business owners will learn that their flood risk is higher or lower than they thought. As a real estate agent, you should inform your clients of any factors that may affect property such as the flood zone in which the property is currently located as well as any pending change to that zone. In addition to showing the region s current flood risks, the new maps are much easier to use than the old paper maps. They will be available on the Web with easy access for locating property of interest. Buyers whose home or business will be mapped into an area of high risk can save on flood insurance before new maps become effective through the National Flood Insurance Program s (NFIP) grandfathering provision. MAP ADOPTION MILESTONES As a Listing Agent, Check the Risk Level Home sellers and their agents should always make it a point to disclose to a prospective buyer if the property is now, or will be, mapped in a high-risk flood zone (known as a Special Flood Hazard Area, or SFHA). To help determine that, they can locate their property on the preliminary DFIRMs that will be available for review later this year. Information about how to use the flood maps is also available on the website. The Flood Risks and Flood Zones chart on the next page describes what the various flood zones mean. Tell Buyers About Flood Insurance Requirements Buyers also need to be made aware of any upcoming changes in flood risk status and the flood insurance requirements associated with a property. When the new maps are adopted, flood insurance requirements will change. However, many property owners can save if they purchase their insurance prior to map adoption. Additionally, current owners can transfer the policy to new owners at the time of purchase. This process is known as grandfathering. The first chart on the next page gives more details. However, your clients should always consult their insurance agent to determine the best option to protect their property. Questions, Comments and Protests Every home and commercial building in Hancock, Harrison and Jackson Late Fall 2007* Preliminary maps released Winter 2007* Start of 90-day public comment period (for filing appeals and protests) Spring 2008* - Review and resolution of appeals and protests Fall 2008* Maps adopted; new insurance requirements take effect Visit to learn more about the preliminary maps and learn when map changes take effect. For general information call the MS Coastal Mapping Call Center at Open 9:00 a.m. to 5:00 p.m. Monday through Friday *Date subject to change pending completion of review processes Counties have some risk of flooding but the risk varies, sometimes within the same neighborhood, or even the same property. One thing to keep in mind: the new flood maps indicate if the property is in a high risk area, not a specific structure on the property. In some cases, an owner may feel that the land on which the structure is built is elevated enough to warrant a lower flood insurance rate or a change in zone. If a property owner wishes to contest the new zone or the new BFE, they may file an appeal or protest during a 90-day public comment period following the release of the preliminary maps. More information on this process is available at May 2007 PAGE 1

2 PAGE 2 May 2007 Flood Insurance Requirements and Options When the new maps are adopted, flood insurance requirements will change. However, options exist that will allow property owners to save money while still protecting their property. If Maps Show Change from low or moderate flood risk to high risk Change from high flood risk to low or moderate risk Increase in the Base Flood Elevation (BFE) No change in risk level These Requirements, Options and Savings Apply Flood insurance is mandatory. Flood insurance will be federally required for most mortgage holders. 1 Insurance costs may rise to reflect the true (high) risk. Grandfathering can offer savings. The National Flood Insurance Program has grandfathering rules to recognize policyholders who have built in compliance with the flood map in effect at the time of construction or who maintain continuous coverage. Sometimes, though, using the new flood maps can actually result in a lower premium than by grandfathering. Flood insurance is optional but recommended. The risk has only been reduced, not removed. Flood insurance can still be obtained at lower rates. About 25 percent of all flood insurance claims come from low- to moderate-risk areas. Conversion offers savings. An existing policy can be easily converted to a lower-cost Preferred Risk Policy, if the building qualifies. An increase in BFE can result in higher premiums; however, grandfathering can offer savings. The National Flood Insurance Program (NFIP) has grandfathering rules to recognize policyholders who have built in compliance with the flood map in effect at the time of construction. This could result in significant savings. No change in insurance rates. However, this is a good time to review their coverage and ensure that their building and contents are adequately covered. Flood Risks and Flood Zones Flood maps refer to areas of high, medium or low risk as flood hazard zones and the zones of highest risk as Special Flood Hazard Areas. Risk Level High Flood Risk Low or Moderate Flood Risk Flood Hazard Zone AE, A, AH or AO Zone. These properties have a one percent chance of flooding in any year and a 26 percent chance of flooding over the life of a 30-year mortgage. VE Zone. These properties have a one percent chance of flooding in any year and also face hazards associated with coastal storm waves. Insurance note: High-risk areas are called special flood hazard areas and flood insurance is mandatory for most mortgage holders. Shaded X Zone. These properties are outside the high-risk zones. The risk is reduced but not removed. Unshaded X Zone. These properties are in an area of overall lower risk. Insurance note: Lower-cost preferred rate flood insurance policies (known as Preferred Risk Policies) are often an option in these areas. 1 Required for loans provided by federally regulated lenders as well as government-sponsored enterprises such as Freddie Mac and Fannie Mae. Note that flood insurance can be required by a lender even if the building is located outside of a high-risk area.

3 Coastal Mapping Project FREQUENTLY ASKED QUESTIONS 1. Why are Mississippi s coastal communities getting new flood hazard maps? Flood hazard maps, also known as Flood Insurance Rate Maps (FIRMs) or Digital Flood Insurance Rate Maps (DFIRMs), are important tools in protecting lives and property in the coastal communities of Mississippi. They indicate the risk for flooding throughout the coastal area. However, the current maps are out of date. Some formerly rural areas were never mapped in detail, and other areas haven t been re-mapped in more than 25 years. Over time, water flow and drainage patterns have changed dramatically because of surface erosion, land use and natural forces. The likelihood of inland, riverine and coastal flooding in some areas has changed, as shown by Hurricane Katrina in New digital mapping techniques will provide more detailed, reliable and current data on the coastal communities flood hazards. The result: a better picture of the areas most likely to be affected by flooding and a better foundation from which to make key decisions. 2. Who is responsible for modernizing the maps? Currently, there is a nationwide collaborative effort called Flood Map Modernization across all levels of government to update the nation's flood hazard data. The effort will provide the data in a detailed digital format in accordance with a multi-year plan created by the U.S Department of Homeland Security s Federal Emergency Management Agency (FEMA). The effort evolved as a growing number of industries were affected by out-of-date flood data. The Mississippi Coastal Flood Study is a joint effort involving the Mississippi Department of Environmental Quality (MDEQ), the Mississippi Emergency Management Agency (MEMA) and FEMA in cooperation with local associations and technical experts from private sector and research institutions. Community officials from the three coastal counties have also been involved in the mapping process. Before Hurricane Katrina, FEMA, MEMA and MDEQ requested historical flood data pertaining to previous flooding incidents from all local coastal communities in Hancock, Harrison, and Jackson Counties to incorporate into the study. 3. What is a Flood Hazard Map? Flood hazard maps, also called Flood Insurance Rate Maps (FIRMs), are used to determine the flood risk to your home or business. The low- and moderate-risk zones are represented on the maps by the letters B, C, X or an X that is shaded. The inland high-risk zones will be labeled with designations such as A, AE, AO or AH. Coastal highrisk zones that have additional risk from storm surge will be labeled V or VE. These high-risk zones represent areas that have a one percent or greater chance of flooding each year. 4. What are the benefits of the new flood hazard maps? The Map Modernization project will be beneficial in different ways: Community planners and local officials will have a better understanding of the flood hazards and risks that affect their community and can consequently improve local planning activities. Builders and developers will have access to more detailed information for making decisions on where to build and how construction can affect local flood hazard areas. Insurance agents, insurance companies, real estate agents and lending institutions will have easy on-line access to updates and upcoming changes in order to serve their customers and community more efficiently. Home and business owners will be able to make better financial decisions about protecting their properties. May 2007 PAGE 1

4 PAGE 2 May What is a floodplain and how do I determine if my property is located in this area? A floodplain is the part of the land where water collects, pools and flows during the course of natural events. Such areas are classified as Special Flood Hazard Areas (SFHA), and are located in a 100-year flood zone. The term "100-year flood" is a little confusing. It is the flood elevation that has a one percent chance of being equaled or exceeded each year; it does not mean a flood will occur only once every 100 years. The likelihood of a flood occurring within a 100-year stretch of time is very high, but there s no way to predict when the next flood will occur or the one after that. The updated maps indicate the floodplain as a high-risk area, officially classified as A, AE and VE zones. Low- and moderate-risk areas will be designated as X zones and shaded X zones on the new maps. Property owners will be able to access the new digital maps online and see exactly in which zone their property is located. Each community will also have a paper copy of the map, for those interested parties that are not able to access the flood maps online. 6. How will the new flood hazard maps affect me? Neighborhoods across Hancock, Harrison and Jackson Counties will be affected differently by these map changes. Some properties won t be affected their risk remains the same. Other properties will now be mapped into a higher-risk area and/or show a new Base Flood Elevation (BFE) 1. Some properties will be mapped into a lower-risk area than before. 7. How does this study differ from the study analysis used to determine the Advisory Base Flood Elevation (ABFEs) maps? In the wake Hurricane Katrina and at the request of state and local officials, FEMA initiated a project to provide highresolution maps that showed flood impacts from the storm for portions of Harrison, Hancock, and Jackson Counties. The Katrina Recovery Maps ( were developed to help the officials, as well as homeowners, renters and businesses, identify existing and increased flood hazards caused by Hurricane Katrina and other storms that have struck this region in the last 25 years. They were also created to provide information on where and how to build to avoid future flood damages as the area started its recovery and redevelopment effort. Though the data used to develop the ABFEs has been incorporated into the Mississippi Coastal Flood Study, the new Mississippi flood maps (DFIRMs) will be based on a more in-depth, larger-scale study. The new maps will be more precise due to advanced engineering studies, mapping technologies and improved data quality. The DFIRMs will replace the current FIRMs and the Katrina Recovery ABFE Maps that were issued in November What will happen if I move from a low- or moderate-risk area to a high-risk area? If the new maps once adopted indicate the building on your property is now at a higher risk for flooding, you will be required to purchase a flood policy if you carry a mortgage from a federally regulated lender. If you do not have a mortgage, it is still recommended that you purchase flood insurance. Over the life of a 30-year loan, the chance of having a flood in your home is nearly three times greater than having a fire 2. Most homeowners insurance policies do not provide coverage for damage due to flooding. If your building is redrawn into a high-risk area, there are lower-cost flood insurance options available through the National Flood Insurance Program (NFIP) grandfathering rule. 9. What will happen if I move from a high-risk to a low- or moderate-risk area? When a building moves to a low- or moderate-risk area there is no longer a federally mandated requirement to purchase flood insurance. However, the risk has only been reduced, not removed. Flood insurance is still recommended. Upon adoption of the new maps, you may be eligible to convert to a lower-cost Preferred Risk Policy (PRP). Through your 1 Base Flood Elevation (BFE): The height to which floodwaters have a one percent chance of reaching or exceeding in any given year. 2 FEMA, 2005

5 PAGE 3 May 2007 insurance agent, it is simple to submit a PRP application and insured-signed conversion form to avoid any gaps in your flood coverage. 10. How might the new flood maps affect me financially? If your structure is mapped into a high-risk area when the new maps are officially adopted and become effective, and you have a mortgage with a federally regulated lender, you will need to purchase flood insurance. If your property is mapped into a low- or moderate-risk area, you are not required to purchase or maintain insurance but are strongly encouraged to do so. The cost of properly protecting your home and contents from flood damage is far less than the cost to repair or replace it after a flood has occurred. Through the NFIP, coverage can often be obtained at significant savings. The average cost for a flood insurance policy is around $500 per year. Further, homeowners may qualify for a PRP that covers both a structure and its contents for as little as $112 per year. Coverage for renters starts at just $39 a year. Talk to your insurance agent to determine the appropriate level of protection you need and the money-saving options available. 11. What is grandfathering and how can it help me? The NFIP has grandfathering rules to recognize policyholders who have built in compliance with the flood map in place at the time of construction or who maintain continuous coverage. These rules allow such policyholders to benefit in the premium rating for their building. However, property owners should always use the new map if it will provide them a more favorable premium. Renewal of an Existing Policy When determining the premium you will pay for flood insurance, an insurance agent will rate your flood insurance policy based on the flood map that is in effect on the date you purchase your policy. Flood insurance policies may then be renewed and still be rated based on the flood map in effect when the policy was initially rated as long as the flood insurance coverage is continuous and the building has not been altered in a manner that would remove this benefit. For example, if the building on the property is now in an X zone, you could purchase the policy before the flood maps are adopted and keep the lower rate associated with the X zone even after the new flood maps become effective. You may even qualify for the lower-cost PRP for the first year, which provides both building and contents coverage at significant savings. To help maintain this grandfathering benefit for the next owner, you may transfer the policy at the time of sale. Built in Compliance The NFIP will grandfather buildings constructed after the first flood map for the community became effective if: The building was built in compliance with the flood map in effect at the time of construction; and If the building has not been substantially damaged or altered. When grandfathering a property, the owner must provide proper documentation to the insurance company. If you wish to keep the zone designation in effect when the structure was built, you must provide a copy of the flood map effective at the time of construction showing where the structure is located or present a letter from a community official verifying this information. In general, for buildings constructed in high-risk zones after the community s first flood map was adopted, your rates are based upon the difference between the flood map s BFE and your building s elevation. If there is a change in the BFE and keeping the BFE that existed when the structure was first built gives you a better rate, you must provide the agent with an elevation certificate and a copy of the flood map effective at the time of construction. A letter from a community official verifying this information is also acceptable.

6 PAGE 4 May What if I believe there has been an error in mapping my home or business into a high-risk area or if I believe the Base Flood Elevation is too high? Flood map designations are always based on the best data available to engineers and local officials at the time when areas within a community are surveyed and assessed. Every effort is made to ensure that the maps reflect the most accurate and reliable information about the flood risk for all properties. However, re-examining and updating flood hazard information for an entire community is often a multi-year process and you may feel that you have more accurate data about your property. To ensure your questions or concerns about the new map designations are addressed, a 90-day public comment period known as the Appeal Period will be initiated once the new maps are completed and released to the public. During this period, you will have the opportunity to submit technical and/or scientific data to support a claim that your property has been improperly placed in a high-risk area. If you have better information such as an elevation certificate, topographic map or detailed hydraulic or hydrologic data, then you may be able to protest or appeal the flood risk indicated by the new maps. For further details on this process, visit When do the new maps become effective? When the maps are officially released to county and community officials and then the public later this year, they will still be considered preliminary. The initial release is followed by a short review period by community officials. Then there is a 90-day public comment period where citizens can file an appeal or protest. Once all appeals and protests are reviewed and any adjustments made, a letter of final determination (LFD) is issued by FEMA. The maps become effective six months from the date the LFD was issued, as do the new flood insurance requirements. This allows time for the local communities to pass an ordinance to adopt the new DFIRMs as the new official flood hazard maps for the community. So overall, the process from the release of the preliminary maps to final adoption and the maps becoming effective can last as long as a year. For an updated timeline of the map modernization process, visit How can I learn more about the flood map modernization process and how it could affect me? The following list of resources and contact information provide additional information if you have further questions regarding the Mississippi Coastal Flood Study: Web site Resources: Mississippi Coastal Mapping Project: Mississippi Floodplain Management: FEMA Web site on Mapping: General information about flood insurance: Other Resources: Mississippi Coastal Mapping Project Call Center: Open Monday through Friday from 9:00 a.m. to 5:00 p.m. Central FEMA Map Assistance Center FEMAMAP ( ) Open Monday through Friday from 8 a.m. to 6:30 p.m. Eastern For questions on flood policy coverage and rates call