Thursday, August 22, 2013

A FLOOD of changes... are you ready?


Flood Insurance Reform Act of 2012


On July 6, 2012 the Biggert-Waters Flood Insurance Reform Act of 2012 went into effect.  In June of 2013 the Federal Emergency Management Agency (FEMA) put out a specific guidelines on how the rating system would work.  A detailed explanation of the entire law can be found at but some important things to know about his new law and how it relates to older homes:

1.      The biggest impact on the rates apply to homes that were built before the Flood Program went into effect in their community.  In Sarasota County that year was 1974.

2.      Prior to enactment of the new law those homeowners were able to obtain flood insurance in high risk areas (Special Flood Hazard Areas) at a subsidized rate without obtaining an Elevation Certificate.

3.      The Elevation Certificate indicates how high the first floor living area is above what is called the Base Flood Elevation (BFE).

4.      The BFE is a height that the dwelling should be built to as a protection for a flood that would occur once every 100 years.

5.      Only an insurance agent can accurately provide a detailed premium quote given specific circumstances because flood zones where the property is located, and elevation of the lowest floor, will significantly impact premiums.

6.      Using the same information the rate from every agent will be the same.

7.      An example of what can happen to rates, both good and bad is shown below.


Subsidized Premium Rates before BW12
Pre-BW12 Subsidized Rates for $250K/$100K Building/Contents Policy in high risk, non-coastal AE zones (no elevation certificate).
Premium Rates following elimination of subsidies – after October 1, 2013
Post-BW12 non-subsidized Rates for $250K/$100K Building/Contents Policy in high-risk non-coastal AE zones (with Elevation Certificate).
Lowest floor of property is 4 feet above base flood elevation
Lowest floor of property is at base flood elevation
Lowest floor of property is 4 feet below base flood elevation

Rates based on a policy with a $1,000 deductible and $250,000 building coverage and $100,000 contents coverage. This scenario is based on a single-story building with no basement, crawlspaces or enclosures. An AE zone is an area subject to inundation by the 1-percent annual chance flood event. AE zones are used on new and revised maps in place of numbered A zones from A1 to A30.