Flood Zone Changes Affect Thousands of Homeowners in Massachusetts
This past July the Federal Emergency Management Association, otherwise known as FEMA, came to Massachusetts to review every community’s flood zone maps. FEMA is in charge of mapping the entire country’s flood zones. These flood zones determine if your property is susceptible to a flood and the likelihood of it happening. After reviewing the flood zone maps, FEMA made thousands of changes, placing many previously low-risk neighborhoods into high-risk flood zones.
Many homeowners on the coast of Massachusetts, most notably Hingham to Wareham, had their flood zone changed from “Outside the 100 Year Flood Plain” to “Inside the 100 Year Flood Plain.” This triggered a red flag on their mortgage or home credit line at their bank. Banks require anyone “Inside the 100 year Flood Plain” (also known as SFHA – Special Flood Hazard Area) with a loan to have a flood policy on the home for the amount of the loan or for a maximum of $250,000, whichever comes first.
A flood policy for a home inside a flood zone (for $250,000) can be extremely expensive, and the bank expects the flood policy to be put in place within 30 days of notice, leaving many homeowners in a serious bind. Flood policies typically need to be paid in full at the time of issue. However, these homeowners have options.
If the flood zone was changed from a non flood zone (C or X) to a flood zone (A, AE, VE, to name a few), the homeowner can get flood insurance based on the old zone for up to 2 years, under FEMA’s Preferred Risk Program. However, the rate may change from year 1 to year 2. The home is ushered into the program using the old zone to allow the homeowner time to save enough money for the new policy, or to hire an engineer to do an Elevation Certificate on the property. An Elevation Certificate can prove that the property is elevated enough above the flood zone, that it will never be touched by a flood. An example of this is a home on a hill or bluff overlooking the Atlantic Ocean.
Flood Insurance under the Preferred Risk Program is very reasonable, typically between $300-$1,000 for the year, and will cover $250,000 in building coverage and $100,000 in contents coverage.
Many banks are just now catching up to the flood zone changes from July, putting many homeowners on the South Shore of Massachusetts in this very scenario.