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 on flood insurance policies provided through the National Flood Insurance Program (NFIP). 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, depending on a building’s flood loss history:

  • 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.

Residential condominium buildings eligible for coverage under the NFIP’s 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 90 days before the expiration of a policy. Alternatively, you can contact your insurance agent to see if you qualify.

At the end of the two-year PRP eligibility extension period following a map revision, flood insurance policies must be written as standard-rated policies.

September 2019