RI FLOOD INSURANCE UPENDED
Flood risk across the country, particularly in coastal areas like Newport, RI is on the rise. The Beggert-Waters Act of 2012, resulted in the redrawing of all flood insurance rate maps to reflect current elevated risks. As a result, some properties that have never needed flood insurance are now in high risk zones, some properties are no longer insurable at all, and flood insurance rates are skyrocketing.
WHY IS THIS HAPPENING?
The Federal Government’s flood insurance program has lost $19 billion in recent years. To continue to have a viable flood insurance program, the government plans to make those who have the risk pay for it. As a first step, all of the flood maps are being redrawn. Flood Maps for Newport and the Kent-Washington areas were completed in September of 2012.
HOW WILL THIS EFFECT MY RI PROPERTY?
To learn more about your property’s flood zone status, visit floodsmart.gov and type in your property address. This will give you a general idea of the type of flood risk your home might have. For an accurate assessment, you will need to provide an elevation certificate to a qualified insurer. (Note: Currently most insurers are not qualified to quote rates using the new maps. A qualified insurer list is available at floodsmart.gov)
To obtain an elevation certificate you will need to hire an engineer who will conduct an elevation study of your property and obtain the certificate. The cost ranges from $500 – $850. Once you have the certificate, your insurer will be able to provide an accurate quote for flood insurance.
WHAT IF MY RI PROPERTY WAS GRANDFATHERED?
Some homes built before the establishment of Flood Insurance Rate Maps (FIRMS) were exempt from flood insurance requirements. There’s no longer any grandfathering when it comes to flood insurance. If you are in an area of risk, you must have flood insurance.
The expense will be phased in over 4 years as follows: Year 1 homeowner premium based on 25% of actual risk. Year 2, premium based on 50% of risk. Year 3, premium based on 75% of actual risk. Year 4, homeowner pays premium based on 100% of risk.
WHAT IF I SIMPLY DON’T BUY FLOOD INSURANCE?
You will be in violation of your mortgage terms and your lender will have the right to foreclose.
IS THE REQUIREMENT DIFFERENT FOR 2ND HOMES, BUSINESSES in RI?
Yes, second homes, businesses and properties with a history of claims are now responsible for 100% of the risk. There is no 4-year phase in for flood insurance on these properties.
WHAT ABOUT HOMES ALREADY PAYING FOR FLOOD INSURANCE IN ESTABLISHED FLOOD ZONES?
These rates will increase as follows:
Zone V – after Flood Insurance Rate Maps) +11%, before Flood Insurance Rate Maps +17%
Zone A – after Flood Insurance Rate Maps) +6%, before Flood Insurance Rate Maps +16%
It’s important to note that these increases refer to the percentage of risk, not a percentage of the premium. A $1,000 premium with a 25% increase in risk, for example, would not go up $250. It could increase by many thousands of dollars in a high risk location.
If you think your flood zone status might be changing contact your insurer and make a plan. For information on how these changes might effect your home’s value, give any one of our qualified agents a call for a confidential consultation.