FEMA’s New Flood Insurance Plan Revealed

Posted in Home Insurance

December 21st, 2009

A new plan to has been released by FEMA that is said to hopefully rescue flood plain dwellers from high insurance premiums. However, the plan, which was discussed on Dec. 15 and 16, is said to move in a different direction than the federal legislation introduced in July.

The New Plan

According to the new plan by FEMA, flood insurance would be required in the new high-hazard zone while premiums would be artificially reduced for 10 years. This would provide time for regions to restore levees and essentially offer low-risk premiums on high-risk properties.

Those communities that were most affected by high risk would have to apply for “AR” designation (an at-risk property); however, these areas would pay less. For instance, a home that was worth $150,000 might pay an annual premium of $1,654 in a high-hazard zone; however, those in a high-hazard AR zone would pay $718.

How This Plan Differs from July’s Federal Legislation

In July, Congressman Jerry Costello introduced legislation that would block the adoption of new flood risk maps expanding a high-hazard zone from 35 percent of the American Bottoms to the entire Mississippi flood plain. By stopping the expansion of these maps, thousands of acres would not be able to move from the low-risk designation to high risk.

However, while Costello’s plan did include the ability for those in high-risk areas to take advantage of low-risk premiums, FEMA has pointedly noted that it does not endorse the bill. It notes that it was not made aware of it until after it was introduced and thus had no role in drafting it.

To date, it looks as though FEMA is starting petitions to move forward with its own flood insurance plan.