If you have flood insurance coverage, there’s a good chance it’s through the Federal Emergency Management Agency (FEMA), and its National Flood Insurance Program (NFIP). This is true whether it’s your primary residence, a vacation home, or one you rent out to tenants. Recently, FEMA sent out letters to all policyholders encouraging them to obtain an elevation certificate. If you received such a letter, here’s what you need to know.
You’re Not Alone
Though the letter from FEMA may look personal, it’s important to understand that all flood policyholders will be receiving similar letters. You haven’t been singled out and the letter simply serves to explain the changes that are coming through the NFIP.
Understanding the Changes to NFIP
Historically, flood insurance through NFIP has been subsidized based on outdated flood maps indicating lower risk for flood. New maps have been created and most homeowners are now in areas with higher risks for flood. Because of this increased risk, the rates for the coverage need to rise to keep up. Rates for secondary homes are expected to rise more than those for primary homes, and these increases could be upwards of 15-20%.
What Is an Elevation Certificate
While your home may be situated in a high risk area, there are certain factors about your home and property that can make it different from even the house next door. The only way to fully assess the risk of flood is by obtaining an elevation certificate. This certificate, which can be obtained from a surveyor, engineer, or architect, will indicate the base flood elevation and the estimated level to which flood waters are likely to rise. You should expect an elevation certificate to cost about $300-$700.
How an Elevation Certificate Can Help
The increases in flood insurance premiums are expected to rise indefinitely. This means that even once your rate “catches up” to the subsidized rate, it could continue to rise. However, an elevation certificate can help to stop these increases once you’re paying the true rate. There is also a chance the EC can result in a rate decrease. Therefore, it’s in your best interest to obtain the certificate. It may take some years before you stop seeing increases, but knowing what your highest rate will be can help you plan for the future.
Next Steps
Once you receive your letter from FEMA, you can investigate obtaining your elevation certificate. You may wish to speak to your neighbors to possibly hire a professional together in an effort to reduce costs. Now is also a great time to speak to your insurance agent to make sure you’re doing everything to stay protected financially. If you have any questions about your letter, your agent can help steer you in the right direction.
All insurance policies are different. Be sure to review your insurance policy for specific information about coverages available to you. Nothing in this post is meant to suggest a guarantee of coverage.