The information below was copied directly from the NFIP website on Thursday, February 8, 2018. Here is how a government shutdown could affect flood policyholders:
Congress must periodically renew the NFIP’s statutory authority to operate. On January 22, 2018, the President signed legislation passed by both houses of Congress that extends the National Flood Insurance Program’s (NFIP’s) authorization to 11:59 pm on February 8, 2018. The legislation also authorized FEMA to honor all policy-related transactions inadvertently accepted between January 20, 2018, and January 22, 2018.
Congress must now reauthorize the NFIP by no later than 11:59 pm on February 8, 2018.
FEMA and Congress have never failed to honor the flood insurance contracts in place with NFIP policyholders. In the unlikely event the NFIP’s authorization lapses, FEMA would still have authority to ensure the payment of valid claims with available funds. However, FEMA would stop selling and renewing policies for millions of properties in communities across the nation. Nationwide, the National Association of Realtors estimates that a lapse might impact approximately 40,000 home sale closings per month.
As affected communities recover from the devastating impacts of the 2017 hurricanes, a timely, multi-year reauthorization is critical for insured survivors and businesses. Policyholders need confidence not only that FEMA can pay flood insurance claims, but also that the NFIP will be able to sell and renew policies to help them protect against future flooding. Flood insurance – whether purchased from the NFIP or through private carriers – is the best way for Americans to financially protect themselves from losses caused by floods.
The Federal Emergency Management Agency (FEMA) has placed more than 20,000 communities in the United States into a category of flood zones. Each community is able to participate in the agency’s National Flood Insurance Program (NFIP), with premium rates determined by the risks of flooding. To indicate the risks in different parts of the country, FEMA has assigned a character from the alphabet to each zone.
The most hazardous flood zones are V (usually first-row, beach-front properties) and A (usually, but not always, properties near water).
According to FEMA and the National Flood Insurance Program, any building located in an A or V zone is considered to be in a Special Flood Hazard Area, and is lower than the Base Flood Elevation. V zones are the most hazardous of the Special Flood Hazard Areas. V zones generally include the first row of beachfront properties. The hazards in these areas are increased because of wave velocity – hence the V designation. Flood insurance is mandatory in V zone areas.
Living in a V Zone
If your home is in a “V” zone (this includes VE and V-1-V-30), adhere to the following recommendations:
• The bottom of the lowest horizontal structural member of the lowest floor elevation must be at or above the Base Flood Elevation (BFE).
• Enclosed areas below the lowest floor cannot be used for living space. The building must be elevated on piles, piers, posts or column foundation.
• Electrical, heating ventilation, plumbing, air conditioning equipment and other service facilities must be elevated to or above the BFE.
A zones – the next most volatile of the Special Flood Hazard Areas – are subject to rising waters and are usually near a lake, river, stream or other body of water. Flood insurance is mandatory in all A zones because of the high potential of flooding. A-zone maps also include AE, AH, AO, AR and A99 designations, all having the same rates. The different A zones are named depending on the way in which they might be flooded.
Living in an A Zone
If your home is in an A zone (includes AE, A1-A30, AH, AO, AR) follow these important recommendations:
• Enclosed areas below the lowest floor cannot be used for living space.
• Electrical, heating, ventilation, plumbing, air conditioning equipment and other service facilities must be elevated to or above the BFE.
• X zones are minimal-risk areas where flood insurance is not mandatory.
• D zones are areas that have not been studied, but where flooding is possible.
Finding Your Zone Information
There are several ways to find out which zone applies to you. You can determine your risk online by visiting floodsmart.gov. You can also go to your town hall or city hall, where employees responsible for issuing building permits in your area have access to flood zone maps. If you are buying a home, your Realtor and your insurance agent should be able to help you. Also, you can view your flood map by visiting the FEMA Map Service Center website at http://msc.fema.gov or by calling (800) 358-9616.
In last week’s post, we discussed the different flood zones and what they mean for your property. Remember, all properties and homes in the US are in a flood zone. Here is a quick refresher of the three current flood zones:
An “X” zone is considered non-hazardous and lenders do not typically require flood insurance in these areas. “X” zones are supposed to have less than a 1% chance of flooding each year.
“AE” zones are considered moderately hazardous, and lenders will typically require that flood insurance be obtained in these zones.
“VE” is considered the most hazardous – high-velocity or high-risk, and a lender will typically require flood insurance be obtained in these zones. These coastal areas have an additional hazard associated with storm waves, and have a 26% chance of flooding over the life of a 30-year mortgage.
Once you determine your property’s flood zone, you and your agent can determine the cost of coverage.
Coverage in “X” zones will run approximately $400 +/- per year depending on the size of your home.
In an “AE” zone, homes built to a positive elevation or with proper flood venting (more on that in a minute) will cost approximately $500 – $600 per year. Homes built to a negative elevation could cost as much as $2000 per year, or more. Beware – a full or partial enclosure under an elevated home can cause the home to be rated at a negative elevation.
In a “VE” zone, homes built to a positive elevation will typically run between $2,000 – $4000 per year. Homes built to a negative elevation can run as high as $6000+ per year. Beware – a full or partial enclosure under an elevated home can cause the home to be rated at a negative elevation.
When building or buying a home, you will want hire a surveyor to create an elevation certificate which will determine the elevation and flood zone of the dwelling. Please remember that an enclosure underneath an elevated home (like a bathroom, enclosed storage room, additional bedroom, elevator, etc.) may cause the entire home to be rated at the elevation of the enclosure rather than the elevated floor. So while that elevator may be a great convenience for moving groceries into the house, know that it can cost you significantly more in flood coverage.
Proper flood venting is also important, as this helps to reduce pressure by allowing floodwaters to move through your enclosure, thus causing less damage from a flood event. Breakaway walls for enclosures (as opposed to fully finished walls with studs, drywall, etc.) can also be a good idea as these will simply pull away from the pilings during a flood event and not cause additional damage to the structure.
If you must have an enclosure, here are some general rules to keep you out of trouble. In an AE zone, the square inches of flood vents should be equal to or greater than the square footage of your enclosure. The walls should be breakaway and have less than 20 linear feet of finished wall space. In a VE zone, your enclosure should be less than 300 square feet, made of breakaway walls, and have less than 20 linear feet of wall space. While flood vents may help to reduce damage in a VE zone, they do nothing to help reduce your flood insurance costs – only in an AE zone can they help to reduce costs.
The current maximum coverage amounts allowed through the NFIP (National Flood Insurance Program) are $250,000, for the dwelling and $100,000 for contents in a single family home; however, excess flood programs are available through other carriers such as Lloyds of London. As always, it’s vital to have a good agent who can help to mitigate your costs and ensure your properly covered.