Flood Insurance Changes
Lower-Cost Options for Flood Insurance End Soon for Some County Properties
Flood Insurance Must Be Purchased by March 1st
An opportunity for lower-cost flood insurance for property owners whose buildings were newly mapped into a high-risk area from October 1, 2008, to April 1, 2015, will expire on March 31, 2016. Likewise, uninsured property owners for buildings in high-risk areas that were built in the County before August 19, 1985 may face higher rates starting April 1 if they have had a flood insurance policy for their building in the past and didn’t renew it. In either scenario, property owners need to have a policy effective by March 31 to maximize their savings. There is typically a 30-day waiting period, so that means they need to be paying for it no later than March 1st.
Letting Your Coverage Lapse Could Result in Future Higher Premiums
The unincorporated County’s first flood maps – known as Flood Insurance Rate Maps (FIRMs) – became effective on August 19, 1985. Flood insurance rates on buildings constructed in the County before then which are in high-risk areas have not been charged their full-risk rates; they have received cheaper, subsidized, pre-FIRM rates. In recent legislation, Congress has directed FEMA to put these pre-FIRM, subsidized-rated policies on a path to full-risk rates.
As part of that implementation, starting April 1, 2016, any pre-FIRM subsidized-rated policy that lapses more than 90 days and then is re-written for the same insured on the same property, will have to pay the full-risk rate, which could be significantly higher. This applies not only to future lapses, but also if such a policy lapsed in the past. The only exception to this rule is if there was a lender requirement, and the lender then no longer required coverage (e.g., the loan was paid off). To avoid this from happening, property owners are encouraged to ensure they maintain coverage. If a property owner has already let their policy on a pre-FIRM building in a high-risk area lapse, they have until March 1, 2016 to purchase a policy to help ensure they get the lower, subsidized rate.
Newly Mapped into High-Risk Areas – A Cost-Saving Option
On April 1, 2015, the Federal Emergency Management Agency (FEMA) introduced a new lower-cost flood insurance rating option for properties identified as high risk (flood zone beginning with the letter “A”, known as a Special Flood Hazard Area, or SFHA) on a new flood map if the property was identified at moderate- to low-risk (zones beginning with the letters “B,” “C,” or “X”) on a previous flood map. This Newly Mapped procedure allows for a building to be rated using a rate based on the lower-cost Preferred Risk Policy (PRP) if the policy is written and effective within the first 12 months after the new flood map becomes effective. After the first year, the rate will begin transitioning to a full-risk rate with annual rate increases of no more than 18 percent.
FEMA is also allowing this rating option to be used for any eligible property newly mapped into a high-risk area from October 1, 2008, to April 1, 2015, that did not get coverage. However, the policy must be effective before April 1, 2016. That means, since there typically is a 30-day mandatory waiting period for flood insurance to become effective, the policy must be purchased by Tuesday, March 1, 2016.
To find out if your property is in a high risk zone, go to http://gis.yavapai.us/Flood/FloodHaz.aspx and search for your property.
For more information about flood insurance and the rating options contact your insurance agent or visit www.FloodSmart.gov. For updates on the Yavapai County Flood Control District flood-related projects and studies, visit www.YCFlood.com.