UNDERSTANDING THE EFFECTS OF MAP CHANGES
A Better Picture of Flood Hazards
Over time, water flow and drainage patterns can change dramatically due to environmental changes, land use, and other forces. The likelihood of inland riverine and coastal flooding will change as well. However, older flood hazard maps may not reflect these changes and many areas have not been studied to determine flood risk. Based on new digital mapping techniques, detailed, reliable, and current information on county and local community flood hazard maps, also known as Digital Flood Insurance Rate Maps or DFIRMs. The new maps present a better picture of the areas most likely to be impacted by flooding and provide a better foundation from which to make important building and land use decisions.
Newer Maps Mean Safer Communities
These maps are important tools in effort to protect lives and property as well as the beneficial functions that floodplains provide. By showing the extent to which specific areas and neighborhoods -- individual properties -- are at risk for flooding, flood maps help business and property owners make financial decisions about protecting their property. They also enable community planners, local officials, engineers, builders, and others to determine where and how new structures and developments should be built, resulting in safer buildings.
With the introduction of new flood maps, it is especially important that property owners, insurers, lenders, real estate agents and brokers, developers, and builders, understand what the changes are and what the effects will be.
FLOOD MAPS ARE CHANGING; KNOW YOUR RISK
Flood Maps Are Changing
Everyone has some level of flood risk. New flood hazard maps provide and 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.
Know Your Risk
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 a Special Flood Hazard Area (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 in advance of the maps becoming effective. Property owners who obtain and maintain flood coverage before the maps become effective map be able to save through a process known as grandfathering. They should contact their insurance agent for more information and to learn the options that they have.
When a property is mapped from a high-risk zone into a low- or moderate-risk zone (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, they should discuss their options with their insurance agent.
Flood Insurance Requirements and 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.
| If Maps Show... | These Requirements, Options and Savings Apply |
| Change from low or moderate flood risk to high risk (flood zone B, C, or X to zone A, AE, AH, AO, V, VE) | Flood insurance is mandatory.
Flood insurance will be federally required for most mortgage holders.
Insurance costs may rise to reflect the true (high) risk. "Grandfathering" can offer savings. The National Flood Insurance Program has "grandfathering" rules to recognize policyholders who built in compliance with the flood map in effect at the time of construction or who maintain continuous coverage. Sometimes, though, using the new flood maps can actually result in a lower premium, especially if the home is high enough above the BFE. |
| Change from high flood risk to low or moderate risk (e.g. flood zone A, AE, AH, AO to X or shaded X) | Flood insurance is optional but recommended.
The risk has only been reduced, not removed. Flood
insurance can still be obtained, and at lower rates. About 25
percent of all flood insurance claims come from moderate-to-low-risk
areas. Conversion offers savings. An Existing policy can be easily converted to a lower-cost Preferred Risk Policy, if the building qualifies. Note that lenders always have the option to require flood insurance in these areas. |
| Increase in the Base Flood Elevation (BFE) | An increase in the BFE can result in higher premiums; however, "grandfathering" can offer savings. The National Flood Insurance Program grandfathering rules allow policyholders who have built in compliance with the flood map in effect at the time of construction to keep the earlier base flood elevation to calculate their insurance rate. This could result in significant savings. |
| No change in risk level | No change in insurance rates. However, this is a good time to review your coverages and ensure that your building and contents are adequately protected. |
Flood maps refer to areas of high, medium, or low risk as "flood hazard zones" and the highest risk as "Special Flood Hazard Areas".
| Risk Level | Flood Hazard Zone |
| High Flood Risk | AE, A, AH, or AO Zone. These
properties have a 1 percent chance of flooding in any year -- and a 26
percent chance of flooding over the life of a 30-year mortgage. VE or V Zone. These properties have a 1 percent chance of flooding in any year and also face hazards associated with coastal storm waves. Insurance note: High-risk areas are called Special Flood Hazard Areas, and flood insurance is mandatory for most mortgage holders.* |
| Low or Moderate Flood Risk | Shaded X Zone. These
properties are outside the high-risk zones. The risk is reduced
but not removed. X Zone. These properties are in an area of overall lower risk. Insurance note: Lower-cost preferred rate flood insurance policies (known as Preferred Risk Policies) are often an option in these areas. |
| Undetermined Risk | D Zone. 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. Flood insurance is optional and available. |
*required for loans provided by federally regulated and insured lenders as well as Government Sponsored Enterprises such as Freddie Mac and Fannie Mae.
THE FLOOD MAPS ARE CHANGING; KNOW YOUR OPTIONS
Updated digital flood maps, DFIRMs, may bring changes in flood insurance requirements for property owners. It is important for local insurance professionals to stay in touch with the community or county to learn how their clients will be affected by the new maps and what the best options are.
Mapped to a Higher Risk: The Grandfather Option
When properties are mapped into a high-risk area, flood insurance will be required for most mortgage holders. Before the new DFIRMs go into effect, insurance agents and brokers should compare the two sets of maps (the current effective map and the new preliminary map) to see if any clients will be affected and should therefore be alerted to the upcoming change. If a building is going to be mapped into a high-risk zone or if the Base Flood Elevation (BFE) is increasing, the owner should be encouraged to purchase (or maintain) a policy now. That way the owner is not only protected now but can "grandfather" or lock in that zone or elevation and maintain eligibility for the corresponding insurance rate when the map changes. For homes built before the community's first flood map was issued (known as Pre-FIRM buildings), purchasing a flood policy before the new maps become effective is the only way to lock using rates associated with the earlier zone. Note, however, that sometimes the new maps may actually provide for a better premium than through grandfathering. For more details, agents can refer to FEMA's NFIP Map & Zone Grandfather Rules and Page-Rate 22-24 of the National Flood Insurance Program's Producer Manual.
Mapped to a Moderate - Low Risk: Convert to a PRP
If properties are being mapped out of a high-risk area, the policies may be eligible for conversion to Preferred Risk Policies (PRP) when the new map becomes effective. The owner will receive a refund for the difference in the premium paid, while remaining covered.
Insurance agents and brokers should remember that they must always rate flood insurance policies using information from the Flood Insurance Rate Map currently in effect...not from the preliminary flood map.
New Vertical Datum
As part of the nationwide Map Modernization effort, the new DFIRMs are using a new vertical datum as the base for all elevations (NAVD88). This datum is a much more accurate one than the almost 80-year old one used for the previous flood maps (NGVD29). As a result, a building's base flood elevation could show one measurement on the old map (i.e., 25') and another measurement on the new map (io.e., 28') and its actual elevation will have never changed. So, before grandfathering a property where elevation is involved, make sure that the elevation on the elevation certificate and the BFE on the FIRM are both using the same vertical datum. If not, there are conversion factors that can be obtained from the Flood Insurance Study.
CHANGING MAPS; CHANGING RISKS
As the new flood maps are released, they will reflect current flood risks, replacing maps that are out-of-date. As a result, lenders and real estate professionals will have up-to-date, reliable, Internet accessible information about their community's and county's flood risk on a property-by-property basis. At the same time, property owners will learn that their flood risk is higher, or lower, than they thought. The changes may affect closings and existing loans for both residents and business owners throughout the area.
Lenders can avoid closing delays
If a building is shown to be in a high-risk zone on the flood map currently in effect, flood insurance must be in place if there is a mortgage through a federally regulated lender. This requirement does not change when new preliminary flood maps are released. Lenders (of their flood zone determination company, if they outsource that service) should not use preliminary flood maps to determine federal insurance requirements. (However, some lenders may decide to require flood insurance as part of their own internal underwriting of the loan.)
As the date that the maps become effective gets closer, loan originators and mortgage brokers will want to refer to the preliminary maps to determine whether a property might be mapped into a high-risk area when the maps do become effective. By informing the borrower of this potential change before a loan is finalized, they will help minimize any delay in loan closing due to changes in flood zones and flood insurance requirements.
Once the new flood maps become effective, federally regulated lenders will notify property owners that have been mapped into a high-risk area that they are now required to carry flood insurance. Property owners that have been mapped out of high-risk areas will be informed that they no longer are required to carry flood insurance. However, removing the requirement does not guarantee that it will not flood; property owners should also be encouraged to stay protected with a lower-cost Preferred Risk Policy, with premiums starting as low as $119.
Real estate professionals can avoid unpleasant surprises
Real estate professionals can also use the preliminary flood maps to determine how the proposed zone changes are likely to affect any properties that are for sale. This will help avoid any surprises at the time of closing that could delay and perhaps jeopardize the purchasing/sale of a property. Real estate agents and brokers should also become familiar with the flood insurance grandfather options that can help keep their clients' insurance costs down, including the possible transferring of a sellers' existing flood insurance policy to the new owner.
NEW FLOOD MAPS: BUILDING TO A SAFER STANDARD
Flood hazard maps are important tools in the effort to protect lives and properties. The maps allow community planners, local officials, engineers, builders, and others to make important determinations about where and how new structures and developments should be built.
Engineers/Developers/Builders can plan for safer construction
When preliminary flood maps are released, the building industry will need to know the differences between the preliminary maps and the current effective map. [Note that in Banks County, the more restrictive BFE is used as best available data when the preliminary maps are released/the final new maps are adopted.]
The vertical datum is changing
As new flood maps are issued, they will no longer be using the National Geodetic Vertical Datum of 1929 (NGVD29) as the vertical datum (see the Federal Emergency Management Agency's Procedure Memorandum 41). Instead, they will use the North American Vertical Datum of 1988 (NAVD88). Floodplain managers, surveyors, engineers, builders, and other users of elevation data from multiple sources (e.g., a FIRM and elevation certificate) must take care that the elevation values they use are based on the same vertical datum. If they are not the same, the values need to be converted to the same datum. Failure to do so can result in improper design (e.g., building at the wrong elevation). Note that the property owners' risk is not affected by a vertical datum change because all elevations in the local area are changed by the same amount.