Flood Insurance - What you need to know before you purchase

There's been a lot of talk about flood insurance rates here in Monroe County, and for good reason.  On July 6, 2012, the Biggert-Waters Flood Insurance Reform Act of 2012 was signed into law. While the good news is the reauthorizing of the National Flood Insurance Program (NFIP) through September 30, 2017, the bill brings several substantive changes to the program, including several that alter the way premium rates are calculated.  These changes will take effect October 1, 2013.

The two big changes owners of real estate in the Florida Keys need to be aware of are as follows:

1.) Higher premiums for buildings below base flood elevation:  FEMA has been instructed to stop giving premium discounts to properties that are below the BFE (base flood elevation), even if they were up to code when built.

2.) Pre-firm and grandfathered rates phased out: In the past, many structures were allowed to keep their original flood-risk rating, even when conditions and improved understanding had changed.

For instance, a home that was built pre-firm (before 1975) may have been built in accordance with the code at the time it was built, but due to a change in flood maps, it may now be considered below the BFE. This home will no longer be allowed to keep the rate-class (flood zone and building elevation relative to BFE) that applied at the time of construction.  The flood insurance for properties like this will be allowed to increase by 25% per year until they achieve the full premium rate.

If you are considering a purchase in the Florida Keys, you will want to find out what flood zone the property is in and if the home is above or below the BFE.  Ground level homes, particularly older ground level homes, should be researched thoroughly. You need to know the flood zone the property is located in and have an elevation certificate to determine what the elevation of the structure is.   Elevated homes with ground level enclosures should also be researched to determine that the whole building is above BFE.   Once you know what the flood zone and elevation is, contacting an  insurance agent for a detailed quote is essential.