What You Need To Know About Flood Insurance Rate Changes – Part 2

Welcome back to Part 2 of our mini-series on flood insurance and recent changes to NFIP.

In this series, we’re trying to answer some questions that came up after particularly hyperbolic news articles about changes to the NFIP (National Flood Insurance Program).

If you’re just joining in, feel free to start at the beginning

  1. Unravel the Flood Insurance Vocabulary – understanding what goes into setting flood insurance premiums in the US (the previous post)
  2. Why Were Some Policies Subsidized, but Not Anymore? – The original intent behind subsidies to some flood insurance policy holders and why that policy has changed. (this post)
  3. Is My Current Policy Subsidized? – How current policy holders can look up their locations and determine if their policies are subsidized. (this post)
  4. What’s My Future Risk? – For current policy holders and non-policy holders, how to look at FEMA’s maps and make informed decisions about your flood risk and need for flood insurance. (this post)


Step 2 – Why Were Some Policies Subsidized And Aren’t Now?

In the first post, we described how market rates are set for flood insurance premiums, and talked briefly about how the Biggert-Water Flood Act is eliminating subsidies on policies. But we didn’t really talk about what a subsidy is and why someone would have one.

A subsidized policy is any policy where the premium is less than the market rate. So the policy holder is getting a discount on their policy because the premium they are paying doesn’t correctly account for the actual flood risk at that location.

The most common reason that a policy is subsidized is because the structure in that location was built prior to when the FIRM was first established in the late 1970’s. It is also sometimes the case that FIRM has also changed over time and what used to conform to the old maps, might not conform to the new FIRM. The NFIP did not want to penalize homeowners who bought older homes, so basically grandfathered those property owners in at heavily discounted rates that did not accurately represent their FEMA/FIRM established flood risk.

The Biggert-Waters Flood Act now basically says that these non-conforming properties are no longer eligible for discounts/subsidies because FEMA can’t afford it anymore.


THIS IS A BIG POLITICAL MESS, and seems to be purple rather than red or blue.  Those affected by these changes vary a lot in their means and political persuasion.  Some of them are long-time property owners who have owned that property and not had any claims since for 35+ years.  Many of them are more modest structures and if they are located by scenic water like the ocean or a riverfront, they may have watched many other older modest homes get torn down over the years and replaced with giant McMansions and not want to see that happen to their own home.  So while some people might think it’s the McMansion owners being subsidized (and it could be, in part) it could also be people of modest means who are long time property owners.

There are other property owners that bought knowing their property was not conforming to current flood laws.  When we were looking for our first home back in 2009, Mr PoP and I did look at a few that were just a block or two from the beach (our current house is ~1.5 miles from the beach), and our insurance agent at the time warned us that the policies on those beach houses (heck, one was a beach double-wide, but man was it classy!) would be subsidized and that technically our risk would be much higher than the rates would make it “feel”.  That wasn’t the whole reason we didn’t buy there, but it certainly played a role.

Some people have sympathy for one group, but not the other, while others have no sympathy for any subsidized policy holders.  Honestly, it’s a very sticky situation and it’s unfortunate that the government shutdown has come at a time when some policy holders feel they need guidance more than ever.  Personally I can see both sides of the situation.  I like the idea of having government programs that are actuarially sound, but I also have a certain level of sympathy for property owners that have owned for 35+ years, since before the maps were created.  (Though I guess at that point, they are likely to be mortgage free, so they technically wouldn’t be required to buy insurance anymore…)


Part 3 – Is My Current Policy/Premium Subsidized?

Only 20% of policies were subsidized in 2012, so chances are the answer is no. But here’s how you can tell for sure…

If You Have An Elevation Certificate

The easiest way to tell if your current policy is subsidized is to look at the elevation certificate you used to get your flood insurance policy. (Of course, this only applies if you used an elevation certificate…)

If you have an elevation certificate, there should be a section of it that describes the FIRM codes and BFE for your location. (Our FEMA official elevation certificate has this information in section B.) There should also be another section where you can find the “lowest adjacent grade”, ie the lowest elevation of your structure. (Our certificate has this in section C.)

  1. Add your BFE and the numeric portion of your FIRM rate zone (if there is one listed) together.  Note: If there is no numeric portion to your rate zone on your elevation certificate, the numbers are already added together and listed combined under BFE.  (See, I told you this was confusing.)
  2. If this number is less than the lowest elevation shown on your elevation certificate, Congratulations! You are currently paying market rates and are not subsidized.
  3. If this number is greater than the lowest elevation shown on your elevation certificate, your policy was probably subsidized and you’ll likely be subject to increases in your rate (up to 25% per year) until your premium reaches market rates under the Biggert-Waters Flood Act.

If You Don’t Have An Elevation Certificate

If you know your property’s elevation, but don’t have an elevation certificate handy, you can still find your FIRM, which will help you find your BFE and rate zone.

How To Look Up Your FIRM

1. Click here to search for the digital FIRM by address. Your search results will show a map with a large area (containing your address) shaded blue.

2. Click on the hyperlink FIRM code and you get a screen asking you if you want to buy or view your map. Click view.


click any of these images to enlarge

3. This opens a new window that has a thumbnail view of the area’s map and a small set of tool buttons for things like zoom in/out, pan, etc. Zoom into the map and pan around until you find your location. (These maps are finicky and occasionally shut me out with strange error messages. Keep trying.)


4. When you find your location, you should be able to tell if you are in a SFHA (Special Flood Hazard Area). These will be shaded, and you should be able to find a rate zone marker pointing to (or within) that shaded area. If you are non-coastal, look around for a squiggly line with a number in it within the flood plain nearest to your address. The number on that squiggly line is your BFE.


After looking up your FIRM and finding your BFE and FIRM rate zone, follow the same steps above to determine if your policy is subsidized.

If you think you might be on a subsidized policy and want more information on what your premiums might rise to, I recommend contacting your insurance agent, or reaching out to the NFIP directly.

Even if you aren’t required to have a policy right now, I think it can be a wise move to try and figure out…


Step 4 – What’s My Future Risk?

Pull up your FIRM following the directions above. Then start asking yourself some questions.

First – When was your FIRM last updated?

The date of the last update to your firm can be found in the legend of your map. Ours was 2008. The older it is and the more changes and development there have been to your area since the last update, the greater the probability for changes in the map going forward.

Second – Are you in an area that’s “borderline”? Is your property smack dab in the middle of a SFHA or are you near the border of a rate zone? How much of a difference is there between your lowest elevation and the minimum required to be conforming (ie BFE + numeric part of the rate zone)?

Both of the structures we own (our small home and our duplex) are located in SFHAs, but, oddly, a very short walk away from both are areas that are not considered SFHAs. So we’re in areas that we call “borderline good” – the outside edges of a large SFHA. Mr PoP and I aren’t going to assume that FEMA is going to reclassify our areas as non-SFHAs any time soon. But even if the SFHAs stretch out to encompass more area in future updates, we’re already in the SFHAs and the next worse numeric zone is quite a ways away, so it would require pretty significant changes to the maps to change our risk profile and premiums.

Additionally, our structures are both at least a couple feet above the current minimum conforming elevation (ie our current BFE + rate zone), so we have a bit of leeway should there be an incremental change in the BFE or the numeric portion of the rate zone.

Third – When Is the Next Scheduled Update To Your FIRM?

This is a map that shows the schedule of all the upcoming FIRM changes to coastal areas (if you go here, you should be able to look notices about your own community up even for non-coastal areas). For us, most of coastal Florida is due for new FIRMs in 2017 and 2018, and luckily when these rate maps are being finished by FEMA there will be a period of public review before they go into effect. If there are significant changes to our maps that will increase or decrease our flood insurance premiums we’ll have a few options:

  • pay the higher premiums as long as they’re not prohibitively high
  • contest the map changes (though I get the impression this is harder than contesting your property taxes)
  • sell the property and move
  • pay off the mortgage or HELOC, which would eliminate the requirement for flood insurance and decide to self insure or find alternative, perhaps less comprehensive, coverage.

None of these questions provide guarantees of what will happen in the future, but being able to find reasonable answers should allow you to be better prepared for changes to flood insurance premiums and policies in the future.


Any questions?

17 comments to What You Need To Know About Flood Insurance Rate Changes – Part 2

  • If we actually do end up moving to Pensacola, this is definitely something I’ll be referring back to. I think we’d be looking at an area that’s both removed from the water and elevated, so hopefully the rates wouldn’t be too bad for us. But as I mentioned on your last post, it’s crazy down there for anything on the water. Which seems totally reasonable given all the trouble they’ve had recently.
    Matt Becker recently posted..From the Crib to the Bed – Small Steps to Big ChangeMy Profile

    • That’s pretty much where we ended up, a little inland (but still close enough to enjoy the beach regularly) and “elevated”. And by that I mean our elevation is in the teens. =)

  • What great information! Our home seems to be in a similar area as yours: in a good spot but not too far away we see some areas in the not-too-great zones.

    Thanks so much for this information. I’m going to call our insurance agent with a few questions to clarify.
    Done by Forty recently posted..We’re Getting a New HousemateMy Profile

  • Matt, if you move to Pensacola I am only a short drive from there.

    I don’t think these rate changes will affect me at all, if they do I would either ha e to pay off the mortgage or sell the houses.
    Lance @ Money Life and More recently posted..Cheaper Alternatives To Boarding Pets While You’re Away From HomeMy Profile

    • Hopefully they won’t. It’s just 20% of homeowners that are getting affected by these changes, and while it stinks for them, most people aren’t going to notice any change.

  • Makes the allure of beach front property seem less alluring, doesn’t it? I still don’t think we need flood insurance, but I might see if I can at least find our area on a map.
    Kim@Eyesonthedollar recently posted..I Bought A Building This WeekMy Profile

    • It starts to make sense why the low lying properties on the beach get demo’d and replaced with giant homes where the first floor is about 20 feet or more off the ground. Otherwise they’ll be paying out the nose for flood insurance policies.

  • Ivy

    That was quite interesting and educational. Flood insurance is my pet peeve, since one quarter of our backyard sits in AE zone, but we have a mortgage and shell out almost $3000 per year, even with the highest possible deductible, for what is next to no protection. Our neighbors and the street across from us do get flooded during big storms, but we’ve escaped so far, and we have a finished basement at that.
    I’ve considered getting an elevation certificate, but the cost seemed rather high and no guarantees. I just checked the BFE and it’s 144, the question is, can we find out our elevation without getting a surveyor, or whatever the term was. Any thoughts?
    And I am certainly calling the insurance company next week, thanks for raising this. If they raise it upwards from $3000, I am just going to find a way to pay off the mortgage and cancel the insurance.

    • $3K per year just for flood? And only part of your backyard is AE? I’d definitely talk to your insurance agent. Our elevation certificate (without a full survey) cost ~$100 and came recommended through our insurance agent, so we knew they acted quickly and relatively inexpensively which is what we wanted. Granted our elevation is pretty simple to measure since there’s just one slab and no basement, but how much more are they up north?

      Some towns have records of elevations on file for all the properties – ours didn’t, and I’m not sure if they would be considered “official” for the purposes of changing your rate with FEMA anyhow.

      If we were in the same boat as you guys, we’d probably want to pay off the mortgage and self insure against flood as well.

    • trudy

      I pay $2000 for flood insurance and my house is waterfront. Your premium sounds high.

      My house will be flooded due to rising sea levels in the next 30-60 years so I am just trying to be practical. If the premiums go through the roof, I will punt on flood insurance. I would like to have it, but at $20,000 or so a year, it’s not manageable.

      No, I didn’t buy in a flood zone on purpose. My family’s owned this modest home for about a century. Back then there was even no town water system here. I get fried at people who think waterfront houses are all owned by the rich and we deserve anything that happens to us.

      • I completely understand – that’s probably how we would feel if our premiums skyrocketed. Heck, we did self-insure on our pool/lanai for a year because we couldn’t find coverage on it for less than $2K per year, and that was only for $10K worth of coverage (with a $5K deductible) in a named storm.

  • Prob8

    Thanks for providing this info. It will be very helpful to me in searching future properties in Florida. You mentioned being in a SFHA. Care to share what the premiums are?

    • Sure, our two properties are both in AEs, and their lowest grade elevation is several feet above the minimum (so we get discounts there for each foot). Additionally we get pretty good CRS discounts, so our premiums are ~$320 and $350 for coverage of about $165K and $180K, which is what we were cited as rebuilding costs.

  • We are outside of the flood zone but live near the beach so Im worried about tsunamis. I was quoted $1700 for flood insurance which is on top of my $2500 home insurance. we opted out of flood insurance as it’s not required.
    Charles@Gettingarichlife recently posted..From A Negative Net Worth To A Positive OneMy Profile

  • I can understand why you guys opted out – tsunamis are still pretty rare, right?

  • Tsunamis are rare much like hurricanes. Here is the ironic thing if a hurricane comes and causes pipes to break and flood my house the insurance doesn’t cover it. I need flood insurance as that covers the water damage despite it being cuased by a hurricane. Don’t you guys have the same problem being in FL?
    Charles@Gettingarichlife recently posted..From A Negative Net Worth To A Positive OneMy Profile