Welcome to the 2011 Hurricane Season!

Today begins the official 2011 hurricane season and all that is involved.  Needless to say, there are predictions of increased activity and at the same time Congress is still wondering what to do with flood insurance.  My article is about current flood changes already in the works.

Suffice it to say that our weather patterns are changing and the federal government is looking to find ways to help finance the National Flood Insurance Program.  Recent storms have left the program in serious debt and in order to continue with the flood insurance program the NFIP will have to find ways to increase premiums or spread the cost over a larger group of people, or both.

So a few years back, the National Flood Insurance Program began revising the maps along coastal areas for what will be “new” flood hazard zones.  In essence, they are expanding the existing territories where flood insurance is mandated by banks and other lenders.

Areas in Monmouth County are currently going through this process and within the next 12 months this process will be commencing in Ocean County with Atlantic and Cape May to follow.

WHAT DOES THIS MEAN TO YOU?

Many homes that are not currently in the Special Flood Hazard Area  (but are  in a zone B, C or X which is near the Special Flood Hazard Area) will likely be re-classified into a  new flood hazard zone on the revised maps. Ocean County will start seeing these changes during the year 2012. Do not be surprised when your  bank or mortgage company  notifies you that to be in compliance with your mortgage agreement, you will  now be required to obtain a flood insurance policy to cover the amount of your loan.

In the past we have told you that we are ALL in a flood zone, some more hazardous than others.  All   areas are eligible for flood insurance – but rest assured the premiums vary significantly! If you are in a less  hazardous zone, you can purchase preferred flood insurance at less expensive rates.  What the government is  proposing is a program allowing you to buy in now at a discounted rate before the maps change.   Folks in a these areas,  who choose to purchase a preferred flood insurance policy now, will be “grandfathered” into a less expensive flood zone in the future. You could potentially   save you thousands of dollars over the course of home ownership.

All of this is very confusing.  And of course, the rules are changing and as of the date that I write this article, the flood insurance program is set to expire on September 30, 2011.  The US Senate and the House of Representatives are close to a five year agreement but these changes to the map regulations are still in the works.

We strongly urge you to call us and discuss your individual situation, as to where your home is located and how these changes may affect you personally.

Rich Hauswirth, CIC, CPIA Flood Insurance Expert

President Obama late Thursday signed into law legislation extending the National Flood Insurance Program–averting what would have been another shutdown of the program. The law will extend the NFIP until September 30, 2011.

This extension means that property owners across the country who need flood insurance coverage will continue to be able to obtain it while the NFIP reform process proceeds.

Congress is currently working on the Flood Insurance Reform and Priorities Act of 2010, which has already been passed overwhelmingly on a bipartisan basis in the House. H.R.5114 extends the program for a full five years and makes key substantive reforms. The National Flood Insurance Program has lapsed three times this past year. It has become a highly sensitive issue because it is more than $18 billion in debt.

As we start the 2010 year, our weather patterns along the east coast have been anything but normal! This alone is a cause for concern. Add to that the fact that each of the last few hurricane season storms have become more and more costly and you can see why FEMA, the government agency that oversees the National Flood Program, must make changes in order to keep the program solvent.

To solve this financial dilemma, FEMA and the National Flood Insurance Program will be bringing more properties into the mandatory flood insurance program, updating their flood hazard maps across the country and initiated a rate increase last fall. At present, they are updating maps in Monmouth County and will continue into Ocean County this spring.

How will this affect you?

When new maps are issued, YOUR home flood zone category may change as well—along with some flood insurance requirements for your location. What this all means is if you’re home flood map category has been changed from a low or moderate flood risk area( such as “I’m not in a flood zone but I’m darn close”) into a high-risk flood zone, you will be required to purchase flood insurance, minimum to the amount of your mortgage loan. Obviously, high risk flood zone rates are more expensive.

The good news is that you can save money through a process known as “grandfathering”. The National Flood Insurance program has initiated grandfathering rules to recognize policyholders whose homes were built in compliance with the flood map in effect at the time of construction and have maintained continuous preferred flood insurance coverage. OK Hauswirth, say it in layman’s terms. Say for example that your home is not in a federally mandated flood insurance zone but you’re home is close to a high risk flood zone. Chances are your area will be re-mapped and you’ll be deemed to be in a high risk flood zone. So if you purchase a flood policy now, you will be paying preferred rates even after the zone does change. That’s “grandfathering”. That’s also cost effective!

To lock in the lower rate, you must purchase the flood insurance before the new maps become effective. At the present time, FEMA is re-drawing the maps in Monmouth County which will take effect this fall, followed by Ocean County then Atlantic County.

For many of our policyholders there will be no change in the risk level. However, this is a good time to review your coverage and to ensure that your building and contents are adequately protected.