Flood Insurance Premiums Rising for Older Homes

Cross-posted from the Vermont Floodplain Management blog:

A number of changes are underway with the National Flood Insurance Program in response to the Biggert-Waters NFIP Reform of 2012.  These changes include steps to make the program financially solvent – in particular by eliminating or phasing out existing subsidies in the program.

New flood insurance policies are now required to pay actuarial rates.   This situation includes older homes and structures in flood hazard areas that have long benefited from a subsidized flood insurance rate.

Older structures (built before the first Flood Insurance Rate Maps typically in the late 1970s) are called “Pre-FIRM” (Pre-Flood Insurance Rate Map) structures.   A new flood insurance policy for a Pre-FIRM structure is now required to pay actuarial rate for the class of “Pre-FIRM” structures.  The specific premium still reflects the value of the structure and the deductible.

New policies or policies renewed after October 1, 2013 will need an Elevation Certificate (EC).  An Elevation Certificate describes the location of the building in relation to the elevation of the flood water (Base Flood Elevation).  An EC has been required for new Post-FIRM structures – but this is the first time that it will be needed for older Pre-FIRM structures.  With an Elevation Certificate, Pre-FIRM structures will get rated based on their specific actual risk situation – notably the elevation of the lowest floor (including the basement).

Please see the Summary on Biggert-Waters.  The summary includes links to additional FEMA information and other resources.

If you have a current flood insurance policy on a residential Pre-FIRM structure – the rates will rise to actuarial cost at 20% / year.

Please contact your homeowners insurance agent to discuss flood insurance costs and how you may be able to reduce your costs by making your structure safer and less risky.  This is particularly important as it will affect the situation at a future time of sale.

Vermont communities may want to consider steps to help property owners get Elevation Certificates – such as encouraging neighbors to hire a surveyor together, and/or to establish more local elevation benchmarks.

Communities may also want to pursue the FEMA Community Rating System (CRS) to provide access to discounts on flood insurance rates.