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Advice

Reyne Stapelmann: New FEMA Flood Maps May Affect Your Property

On Nov. 4, 2015, FEMA (Federal Emergency Management Agency) flood maps will show new changes in some Santa Barbara areas, and because homeowners insurance policies do not cover flooding, it is important to know the potential risks to your home. 

(To see the map go to www.santabarbaraca.gov.) 

Over time, water flow and drainage patterns have changed dramatically due to surface erosion, land use and natural forces, and the likelihood of flooding in certain areas has changed along with these factors.

New digital maps provide more detailed, reliable and current information about flood risks. The result is a better picture of the areas most likely to be flooded and a better foundation for decision making.

With the release of the new maps, some property owners will learn that their risk is higher or lower than they thought. A change in risk may affect what you pay for flood insurance.

Flood insurance is available in both high-risk and moderate- to low-risk areas to help repair or replace structures and belongings after a flood.

The Federal government requires most mortgage holders in high-risk areas (known as Special Flood Hazard Areas) to carry flood insurance. In areas of lower risk, lower-cost preferred risk policies (PRP) are available.

If a new map has a property newly shown in a high-risk area, options are available to help reduce flood insurance costs.

In high-risk zones, flood insurance will be required for those who have a mortgage from a federally regulated or insured lender, but rating options can offer savings.

When updated maps show a building now falls in a high-risk area, the policyholder might initially be eligible for a lower-cost rate during the first 12 months following a map change. Premiums will then increase up to 18 percent each year as part of the premium rate revisions put in place by the Homeowner Flood Insurance Affordability Act of 2014.

Purchasing a policy before the new map goes into effect will maximize your savings. Your insurance agent can provide more details on how to save. A policy can be assigned to new owners, allowing them to keep the lower rate.

For those whose zone designation changes from high-risk to higher-risk, grandfathering can offer savings. The NFIP grandfathering option allows policyholders who have built in compliance with the flood map in effect at the time of construction to keep their previous zone or Base Flood Elevation (BFE) to calculate their insurance premium.

If a homeowner's zone decreases in risk (such as high- to moderate-risk), flood insurance is optional but still recommended, because he risk is reduced but not removed.

Flood insurance can still be purchased and maintained at a lower cost. More than 20 percent of NFIP claims come from areas mapped outside of high-risk flood areas.

Conversion offers savings. An existing policy can be converted to a lower-cost PRP easily if the building qualifies.

(Note that lenders always have the option to require flood insurance in these areas.)

If a property's zone does not experience change, there is no change to insurance rates, but homeowners can always consider opting for flood insurance.

This could result in significant savings. A grandfather-rated policy can be assigned to new owners, too. In most cases, an insurance agent will for an elevation certificate.

In reviewing the preliminary maps, a property owner may feel that even though part of the property is in a high-risk area, the structure itself is not.

Owners who wish to challenge their new designation can do so by requesting a Letter Map of Amendment (LOMA) from FEMA. 

They will need to prove that the building is at or above the BFE, the height that floodwaters are estimated to reach or exceed in any given year from a flood with a 1 percent annual chance of occurring.

National flood insurance can be purchased from private insurance companies and agents and if the seller of a property has flood insurance coverage on the building, that policy can be assigned to the buyer at the time of closing.

FEMA recommends that you look into what your insurance requirements are before the Nov, 4 map release, when the cheapest insurance options are available with the least amount of hassle.

For more information, visit www.santabarbaraca.gov and learn how Santa Barbara will be affected.

Visit www.FloodSmart.gov for more information about flood insurance or call the FEMA Help Center at 1.800.427.4661.

Reyne Stapelmann is a broker associate with Berkshire Hathaway Home Services, California Properties and the 2015 president of the Santa Barbara Association of Realtors. Contact her at [email protected] or 805.705.4353. The opinions expressed are her own.

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