With a September 30 deadline looming, Congress has approved a broad package that will keep the government funded until December 8, provide roughly $15 billion in disaster relief from Hurricane Harvey, and raise the debt ceiling, which sets a limit on the amount of money the federal government can borrow.
The government funding package also means that the National Flood Insurance Program (NFIP), which was set to expire on September 30, will be extended until December 8.
The National Association of Home Builders continues to work with Congress to achieve a long-term reauthorization of the NFIP that will keep the program fiscally sound and let builders provide safe and affordable housing.
The City of Greenville participates in the National Flood Insurance Program (NFIP), which makes federally-backed flood insurance available for all eligible buildings whether they are in the floodplain or not. Flood insurance covers direct losses caused by surface flooding, including a river flowing over its banks and local drainage problems.
The NFIP insures buildings, including mobile homes, with two types of coverage:
- building coverage is for the walls, floor, insulation, furnace, and other items permanently attached to the structure.
- Contents coverage can be purchased separately if the contents are in an insurable building.
The Flood Insurance Protection Act of 1973 and the National Flood Insurance Reform Act of 1994 made the purchase of flood insurance mandatory for federally-backed mortgages on buildings located in Special Flood Hazard Areas (SFHA). The SFHA is the base (100-year) floodplain mapped on the Flood Insurance Rate Map (FIRM).
The City of Greenville’s Environmental Engineering Bureau provides assistance concerning floodplain locations, elevations, site-specific flood and flood-related data, and historical flooding of neighborhoods.
You can view the City of Greenville’s Special Flood Hazard Areas in your neighborhood online by clicking here. This is an interactive website that shows parcels within the city with respect to the floodplain. If you are looking for more site-specific information, you can complete a floodplain verification request by clicking here.
The Environmental Protection Bureau maintains copies of FEMA elevation certificates on all buildings constructed in the floodplain since 1991. The elevation certificates are available in the Engineering Division, on the 8th floor of City Hall at 206 South Main Street. For more information, call the Environmental Engineering Bureau at 864-467-4400.
Changes are coming to the critically important National Flood Insurance Program that could impact real estate transactions and property owners across the country. That’s according to experts from the Federal Emergency Management Agency, which manages the government’s flood insurance program, who spoke to the National Association of Realtors at Flood Insurance 101, a forum during the Realtors’ recent meetings in Washington, DC.
Kristin Robinson, senior advisor, summarized last year’s Biggert-Waters Flood Insurance Reform Act, which reauthorized the critically important NFIP through 2017 so property owners could affordably access flood insurance.
NAHB joined NAR in strongly supporting the legislation. Both groups believe the government’s insurance program saves taxpayers property and money because it increases the number of self-insured properties and reduces the cost of post-flood disaster governmental assistance.
The NFIP is responsible for writing and renewing flood insurance policies for more than 5.6 million home and business owners in more than 21,000 communities nationwide where flood insurance is required for a mortgage. Before Congress passed the legislation, the program operated under short-term extensions. In the past five years, there were 18 extensions and several lapses in program coverage, delaying or cancelling thousands of real estate transactions daily according to NAR’s research, wreaking havoc on real estate and home building markets.
Robinson said the NFIP is $24 billion in debt following several disastrous storms in recent years since the costs and consequences of flooding continue to increase. “For decades the program has made flood insurance available at subsidized rates that did not reflect the true risk of flooding; artificially low rates and discounts are no longer sustainable,” she said.
Andy Neal, actuary, addressed the gradual phase-out of subsidized rates, which was included in last year’s legislation to preserve the flood insurance program and critically important property insurance coverage for the nation’s homeowners. Neal said rate subsidies are being phased out over the next several years to help increase the NFIP’s soundness and financial stability.
The majority of policyholders, more than 80 percent, are not subsidized and won’t be impacted by subsidized rate changes since they are already paying full actuarial rates, he said. However, these owners could see routine annual rate increases.
“Only about 20 percent of NFIP policies receive subsidies, mostly older structures built before the community’s first flood insurance rate map was issued, which are known as pre-FIRM properties. Some of these policyholders will be impacted by the gradual phase-out of subsidized rates; an even smaller number will see immediate changes to their insurance policy rates,” said Neal.
Rate changes are likely to affect owners of subsidized pre-FIRM non-primary residences, business properties, and properties that have experienced severe repetitive flood losses. Owners of some pre-FIRM condos and multi-family units will also see their rates gradually increase. Owners of pre-FIRM primary residences will retain their subsidies unless the policy lapses; it suffers a severe, repeated flood loss; or it’s sold to a new owner, which is retroactive to July 6, 2012, when the legislation was enacted. Some grandfathered principal residences will also lose their subsidies over a several year period, but not until the communities’ flood map is revised.
Neal recommended that home and property owners talk to their insurance agent to determine if their property is currently being subsidized. He said flood insurance rates vary based on a property’s location, elevation and flood risk and can be as low as a few hundred dollars up to $10,000 or more if the property is well below flood level and had severe repeated flood losses.
While higher rates may place a greater burden on families, there are investments homeowners can make to either reduce or better access their flood risk so they can continue to protect their families and possessions from damaging floods. According to Neal, homeowners can lower their risk by elevating their property and potentially reduce their flood insurance rates by having an elevation certificate completed to determine the property’s elevation relative to the base flood elevation. Elevation certificates can cost several hundred dollars to complete but could potentially lower homeowners’ flood insurance premiums.
Some homeowners with flood insurance policies have already received quotes for higher rates, which may be caused by several other factors such as improvements to mapping. As FEMA improves its mapping technology and draws more accurate flood maps, some homes may now be located in a flood zone, or a higher risk zone, where flood insurance is more expensive. Also, some insurance agents may adjust rates to correct previous mistakes made about the home’s features when they are re-evaluating an insurance policy at renewal.
Representatives Bill Cassidy (R-LA) and Maxine Waters (D-CA) have successfully attached an amendment to the Homeland Security Appropriations Bill to delay removal of “grandfathered” flood insurance rates for one year. Efforts are underway to include the delay in the Senate version of the Homeland Security bill.
The grandfathered and other subsidized flood insurance rates are being phased out under the Biggert-Waters Act that extended the National Flood Insurance Program for five years. The House amendment would delay the phase-out for properties “grandfathered” under older rates in areas remapped into a higher-priced flood zone before September 30, 2014. The law’s other phase-outs — for older second homes and business properties and for homes purchased after July 2012 — will continue to take effect on October 1, 2013.
In the meantime, the Senate Banking Committee has agreed to hold a hearing on the affordability of the Biggert-Waters rate provisions. The hearing is expected to be conducted in July.
NAR and SCR will continue to work with Congressional allies on the NFIP issue and will keep you informed on the progress.
Used with permission
Source: National Association of Realtors