NFIP Flood Policy Rate Changes effective 10/1/2013—are you ready?

Surviving Katrina or Sandy might not be enough—it’s recovering that matters! The National Flood Insurance Program (NFIP) is administered by the Federal Emergency Management Agency (FEMA). If you hold an NFIP policy on your home or business, changes to the NFIP program beginning 1/1/2013 may not be welcome news for your New Year financial outlook. FEMA has announced long-term changes to the NFIP program that include likely overall rate increases to reflect true flood risk and elimination of insurance discounts. Among the changes: for secondary homes in high-risk areas, rates could increase 25% per year over the next 4 years. Additional rate increases could apply if your property changes ownership, coverage lapses, risk changes, or a building sustains substantial damage or improvement.

For example, the rate changes effective 10/1/2013 will have an effect on risks currently located in Zone A. Locations currently written under a Flood Policy that are Pre-Firm located in Zone AE subject to an Elevation Certificate will be cancelled and rewritten on renewal based upon a new Flood Elevation Certificate. In order to mitigate any large increases in premium, you may want to consider increasing the policy deductibles.

Evaluate Your Exposure

Some important considerations for evaluating your future risk: 1) “Location, Location, Location”: Revised flood risk maps; 2) Has your building sustained repeat severe flood damage? 3) Are you rebuilding merely to pre-flood conditions but not according to mandatory elevations determined by FEMA? 4) When have you filed claims?

In some cases, NFIP policy coverage may not even be available to you moving forward. In others, the premium for coverage will be considerably higher than in past years! Manage your risk. Know your options. Contact your agent regarding flood map and elevation certificate questions. For additional information, visit FEMA’s website

As always, Sigma’s risk management consultants are available to assist with any additional questions that you may have.