My Flood Zone Changed

Five years after FEMA released their Preliminary Flood Map Updates, FEMA finally made the final version effective this past January 2021.  This was met with a lot of excitement but also with confusion.  A lack of up-front guidance on how to handle it was frustrating for agents as well as for homeowners whose property was affected by the map revisions.  Since we have been taking a lot of questions, we think it is a good idea to go through the scenarios for those who have been affected by these flood map changes with some details and logistical guidance.

My Flood Zone changed to an X Zone

Congratulations!  This is a great situation because you are now considered to have a Low Risk for Flooding.  Here are the highlights of what changes for you regarding flood insurance.

The Good:

  • If you have a mortgage on your home, the lender will no longer require you to carry flood insurance, so you can choose to continue carrying flood insurance or elect to drop insurance coverage against flood damage.
  • If you want to keep flood insurance, your policy will convert to a Preferred Rate Policy (PRP), which could reduce the cost of flood insurance for the same coverage.

Keep in Mind:

  • Your mortgage holder will no longer pay your flood insurance out of escrow, so you will have to remember to make these renewal payments yourself.
    • If you do not pay the renewal within 30 days of the renewal date, this will cause a lapse in coverage. To write a new policy for an X zone, FEMA requires a 30 day wait for the policy to be effective.

My Flood Zone changed from an X to an AE

Some people experienced an unwelcome notice that their house is now deemed to be more likely to flood than it was before, resulting in the flood zone changing from an X to an AE (or sometime from an AE to a VE).  This means that if you have a mortgage on the house, your lender will now require you to carry flood insurance.  There are 2 path options that can be taken here:

  1. If You Had Flood Insurance While an X Zone
    • If you had an existing flood insurance policy in place when the house was an X zone, your agent will be able to simply transition the policy to an AE zone policy without an Elevation Certificate by the Newly Mapped Procedure
      • This allows you to keep the Preferred Rate for the first year.
      • Glide Path – With the Newly Mapped Procedure, renewals are capped at 18% annual increases until the rate accurately reflects the true rate.
    • Continuous coverage must be maintained to keep the lower rates as they increase.
    • If a house is sold, the Newly Mapped Procedure rates can be transferred to the new owners.
  2. If You Did NOT Have Flood Insurance Before Now
    • With the Newly Mapped Procedure, people are still eligible to purchase an initial PRP up to 12 months after the new flood map went into effect – which was January 2021 in Charleston. This means a new PRP policy can be purchased until January 2022.

My Flood Zone Is the Same, but my Base Flood Elevation changed

If this is the case, you don’t need to do anything.  The policy will be re-rated at the renewal.  If the Base Flood Elevation (BFE) was reduced to a lower elevation, your agent can reach out to your FEMA carrier and have them re-rate using the new BFE.  A refund can be calculated based on the flood rates comparing your home elevation to the new BFE.  If the BFE was increased to a higher elevation, you will likely (but not certainly) see a rate increase at renewal.  Depending on the amount of increase and renewal quote, it might be time to explore private flood insurance options.  Crescent Insurance Advisers writes with a number of these companies and can look to see if any of these options is worth a change for you.

Final Thoughts

Hopefully this helps explain some logistics involved in this map change.  The change that has caused the most issues is when the renewal is no longer paid through the escrow account (i.e. a home goes from an AE to an X zone) and must be paid by the homeowner.  It is easy and understandable for people to see and discard the renewal notice since the mortgage company has always paid it.  If your house was recently re-mapped into an X zone, please be aware of this and make sure to pay the flood insurance invoice if you want to maintain insurance against the dangers of flood damage.

Flood insurance can be confusing and frustrating to everyone – including agents.  We do our best to keep up to date with the latest rules and and look to explain it to our clients in a way that is understandable – including to fully acknowledge the absurd, which happens.  Please reach out to us with any questions about this map revision and what it means for your home.