TALLAHASSEE -- 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?
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.