Message from Jim
Water always takes the shape of the container being used to hold it. In many ways, land development and watershed modifications become the container and change the shape of water, or in other words, define drainage flow intensity, direction, and volume. Outside of a Special Flood Hazard Area (SFHA), where risk is deemed as being low or moderate, development practices which modify the land and change drainage may be regulated less strictly and the effects of development on the watershed may not be as obvious. This means flood risk could be increasing with little awareness of it. Since approximately 25% of all flood insurance claims occur outside of a SFHA, this is a great place to acknowledge flood risk.
When fixing problems or trying to achieve a goal, I try to identify the easiest way to create momentum to get things moving in the right direction. In the flood program, the easiest way to better prepare for flood risk is to obtain a flood insurance policy since flood coverage is often not part of a homeowner’s policy. Outside of a SFHA, flood insurance is generally not required by a lender, and a Preferred Risk Policy (PRP) is rarely recommended. Unless a lender forces coverage through a PRP, it is an optional purchase flood insurance policy with a lower annual premium since properties in non-Special Flood Hazard Areas are generally identified as having lower risk.
Per a FEMA brochure dated October 2017, the average cost of a PRP is approximately $395 a year. This is less than $8 per week to have flood coverage. Assuming that going out to eat can easily cost $60, one less dinner date every other month will almost get you there! This requires no other effort than sitting down with your insurance agent and filling out the paperwork. Again, with approximately 25% percent of all flood claims being outside of a SFHA, this is a wise idea!
Of course eligibility requirements do exist, but they are not daunting if a poor loss history does not exist. If you are in a participating community, building and contents insurance are available for owners of all eligible occupancy types. Coverage for contents located in a basement is excluded.
With many communities transitioning from the paper Flood Insurance Rate Map to the Digital Flood Insurance Rate Map (DFIRM), a PRP can be a wise option if a structure is being remapped from a non-SFHA into a SFHA (going from lower risk to higher risk). Though “grandfathering a Preferred Risk Policy” does not apply, having a PRP in place before the date a DFIRM becomes effective will slow the process of moving toward a full risk rated premium through gradual annual increases. The savings could be in the tens of thousands for the same exact coverage, and you will be protected should flood damage occur!
Individuals must be accountable for preparing for future flood risk. The program is making great progress updating flood maps in areas with the highest risk, but not all maps can be updated due to budget constraints. Unfortunately, with development, watershed modifications, and the impacts of climate change, even the updated maps will become inaccurate over time. Having a Preferred Risk Policy is a very practical way to address risk amidst a changing environment.
Sit down with a qualified insurance agent knowledgeable of the flood program to find out what your options are should a map revision be proposed in your community. Find out if you are eligible for a Preferred Risk Policy and see how premiums will change over time based on your specific property. Here are some links to resources to help you learn more:
2017 NFIP Flood Insurance Manual - Preferred Risk Policy
Preferred Risk Policy Eligibility Extension - FAQs
