Answers about Flood Insurance

Flood maps for my community have changed and my home is now located in a Special Flood Hazard Area (SFHA). I am now required by my lender to have flood insurance. I read that I may be eligible for a lower rate on my flood insurance policy for two years, is that true?

Yes.  If your property was newly mapped into an SFHA through a map revision on or after October 1, 2008, then you may be eligible for Preferred Risk Policy (PRP) pricing. PRPs normally offer lower-cost coverage to owners and tenants of eligible buildings located in moderate- to low-risk areas.  

Federal Emergency Management Agency (FEMA) announced on July 15, 2010 that:

  • Buildings that were newly mapped into an SFHA due to a map revision on or after October 1, 2008, and before January 1, 2011, are eligible for PRP for two policy years effective between January 1, 2011, and December 31, 2012.
  • Buildings that are newly mapped into an SFHA due to a map revision on or after January 1, 2011, will be eligible for a PRP for two policy years from the effective date of the map revision.

FEMA indicated that its goal in providing this temporary extension of PRP eligibility is to reduce the financial burden on borrowers with collateral in a newly mapped SFHA.

Multi-unit residential condominium associations eligible for coverage under the Residential Condominium Building Association Policy are not eligible for the PRP and therefore, are not eligible for this two-year extension of PRP coverage.

The flood insurance policy-writing company (i.e., the flood insurance carrier), not your lender, will be responsible for determining and validating PRP extended eligibility. Flood insurance carriers will notify eligible policyholders at least ninety (90) days before the expiration of a policy.  Alternatively, you can contact your insurance agent to see if you qualify.

February 2011