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title = Flood Insurance Program of FEMA for residential mortgages and houses in a floodplain or as supplemental insurance to a homeowners’s insurance policy. description = Article and interactive study on floodplain maps, floodplain, FEMA, and flood insurance for homesin high-risk areas, as well as, random acts of nature. Originally published on September 18, 2006.

Flood Insurance

The seminar put on by the Pennsylvania Housing Finance Agency was quite worthwhile. The topic was the Mandatory National Flood Insurance Program (which falls under FEMA and Homeland Security.)

Any property that falls under certain flood zones must have flood insurance if it is under any federally regulated loan program, such as, FNMA, FREDDIE MAC, FHA, etc.

Unlike most other types of insurance, the National Flood Insurance Program (NFIP) is not private insurance; rather, it is a government program that is regulated by congress.

Here are a few interesting point:

• FEMA may raise rates 10%/year
• In theory, the cost of a $250,000 policy could reach $250,000/year
• The maximum flood insurance coverage under any condition is $250,000
• There is a private sector that will cover the difference in replacement cost if the property needs more insurance. (Recently, companies like Lloyds of London got burnt a few times and are charging large premiums or getting out.)
• mitigation is the goal of FEMA -- they hope to be effective in making flood insurance obsolete
• FEMA does not embrace flood control devices (like levees)
• 1 out of 3 claims is paid out to properties not in the flood zone

Because of the increased costs involved in environmentally sensitive areas, they are making offers to homeowners that suffer severe repetitive losses. If the house can be mitigated, they will help pay for stilts, etc. If the house can't be dealt with, or the land actually washes away, they will offer fair market value to move you out.

Prior to the seminar, I had communications with Nancy Lackey of the Pennsylvania Housing Finance Agency. She helped in gathering information on The Temple University Floodplain Maps. The study for these maps was partially funded by FEMA. However, FEMA has refused to use the finished versions due to the format inconsistency with its other maps.

When I asked the speaker, Richard Sobota, about the Temple maps he said, "Federal regulations only require you to use the FEMA maps... BUT, USE THE TEMPLE MAPS!" He went on to say that parts of the Temple maps will be incorporated into the FEMA maps over time. Until then, use the Temple maps.

conclusion:
Every property owner should understand FEMA's NFIP's "Mandatory Purchase of Flood Insurance Guidelines"

If your property falls into a FEMA flood zone where flood insurance is mandatory, it will drastically effect your value.

Industries, municipalities and lawyers are already battling over it big time. And, it's coming home to you!

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