Flood Insurance: What changes are being made by FEMA, What you need to know and How will it effect you?

Due to the number of devastating hurricanes that have hit our coasts in the past few years, FEMA (Federal Emergency Management Agency) will no longer be subsidizing flood insurance.  What does this mean for homeowners around the country?  It means, flood insurance rates and how those rates are determined will be going up.

This is not just a coastal change either.  This applies to anyone and everyone that carries flood insurance; i.e. those that live near lakes, rivers and streams are just as susceptible to flooding as those along the coast.

As it pertains to Beaufort County, South Carolina there are different categories a property may fall into based off when it was built.  These categories would be as follows:

FIRM - Flood Insurance Rate  Map
Prior to 1977 in Beaufort County the use of flood maps was virtually non-existent.  As a result, homes built at this time were not required to meet the criteria they do today.  From 1978-1984 is when flood maps started being utilized.  This put any home being built into a different category for insurance.  When the Town of Hilton Head incorporated in 1984 the maps were redrawn and have remained so until now.  As this is being written the new maps are being configured and should be out in the near future.  To gain a better understanding of each time period and how the property will be effected please see below:

PRE-FIRM

• Refers to homes built before 9/30/77
• Not built to required codes
• Effective 1/1/13 these homes will now be rated on their actual risk
• Insurance premiums will increase up to 25%/yr. until they meet the actual risk
• If the property is sold the new owners flood insurance will be paid on actual risk and the premium increase of 25%/yr. will no longer be in effect.

NOTE:  Hilton Head Island was incorporated as a town on 9/12/84.  If you are getting a flood insurance quote on a home that was built 1977-1984 it should be for a POST FIRM.

POST FIRM

• Built after 1977
• Rates May change in 2014 due to FIRM revisions
• If rates change they will go up 20%/yr. for 5 years
• If property is sold the new owner will pay the actual risk
• There will be an elimination of all grandfathering of properties

Reserve Fund
Everyone that has flood insurance will be required to pay a 5% premium for an emergency fund.  This will become effective 10/1/13 and is set in place for any shortfalls that may occur within the flood insurance programs offered.

For more information on flood insurance and how it could effect your current property or the purchase/sale of a property in Bluffton or Hilton Head Island call PNP Real Estate or your local insurance agent.