Flood Maps Are Changing
Everyone has some level of flood risk. New flood hazard maps provide an updated picture of what that risk is. The level of flood risk can be different from neighborhood to neighborhood and even property to property. Homeowners, renters and business owners will want to learn how their risk is currently shown, and how it will be shown when the new flood hazard maps (Digital Flood Insurance Rate Maps, or DFIRMs) become effective.
Insuring Against Changing Risks
When properties are mapped into high-risk areas (shown as flood zones labeled with letters starting with “A”), construction restrictions and flood insurance requirements may apply. In these areas, known as Special Flood Hazard Areas (SFHA), if a property owner has a mortgage through a federally regulated or insured lender, flood insurance will be required once the maps become effective. Some lenders may decide to institute such requirements before the date the maps become effective.
Property owners who obtain and maintain flood coverage before the effective date may be able to save through a process known as grandfathering. Insurance agents can provide more information and explain the various flood insurance options.
Flood Risk Reduction
When properties are mapped from high-risk areas into low- or moderate-risk areas (a zone labeled with the letter “X”), flood insurance will no longer be required once the maps become effective. However, the flood risk has only been reduced, it has not been removed. Property owners can maintain coverage by converting to a lower-cost Preferred Risk Policy (PRP), with premiums starting as low as $119 per year. Again, insurance agents can explain the flood insurance options.
Flood Insurance Requirements & 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.
Change from Low / Moderate to High Flood Risk
Flood insurance is mandatory
Flood insurance will be federally required for most mortgage holders.
Insurance costs may rise to reflect the true (high) risk.
Required for loans provided by federally regulated and insured lenders as well as Government Sponsored Enterprises such as Freddie Mac and Fannie Mae.
Grandfathering offers savings
The National Flood Insurance Program (NFIP) has “grandfathering” rules to recognize policyholders who have built in compliance with the flood map or who maintain continuous coverage.
An insurance agent can provide more details on how to save.
Change from High to Low / Moderate Flood Risk
Flood insurance is optional, but recommended
The risk has only been reduced, not removed.
Flood insurance can still be obtained, at lower rates.
Twenty - 25% of all flood insurance claims come from low- to moderate-risk areas.
Conversion offers savings
An existing policy can be converted to a lower-cost Preferred Risk Policy.
No Change in Risk Level
No change in insurance rates
Property owners should talk to their insurance agent to learn their specific risk and take steps to protect their property and assets.
Flood Risks & 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."
High Flood Risk
AE, A, AH or AO Zone
These properties have a 1% chance of flooding in any year - and a 26% chance of flooding over the life of a 30-year mortgage.
VE or V Zone
These properties have a 1% chance of flooding in any year and also face hazards associated with coastal storm waves.
High-risk areas are called Special Flood Hazard Areas, and flood insurance is mandatory for most mortgage holders.
Required for loans provided by federally regulated and insured lenders as well as Government Sponsored Enterprises such as Freddie Mac and Fannie Mae
Low / Moderate Flood Risk
Shaded X Zone
These properties are outside the high-risk zones
The risk is reduced but not removed
These properties are in an area of overall lower risk
Lower-cost preferred rate flood insurance policies (known as Preferred Risk Policies) are often an option in these areas
The Zone D designation is used for areas where there are possible but undetermined flood hazards.
In areas designated as Zone D, no analysis of flood hazards has been conducted.