FEMA Flood Insurance Problems

Some property owners are appealling the new guidelines for FEMA's flood insurance program.

The Federal Emergency Management Agency requires anyone who owns property within an established flood zone and has a mortgage from a federally insured lending institution to buy a policy through the government's National Flood Insurance Program, the only type of flood insurance available in the United States. To determine who must purchase flood insurance, FEMA has published nearly 100,000 new maps of flood zones. However, critics say the new maps are inaccurate, will cost property owners millions in premiums, and will discourage property sales and new development.

Updating the Maps

In 2004, FEMA began updating its flood zone maps using sophisticated computer models, digital photography and elevations recorded with lasers. Many flood zones that were established by maps created in the '60s and '70s were expanded to include more properties and some areas were recorded as having higher risks of flooding than previously thought. However, surveyors who have reviewed the maps have discovered many instances of inaccurate measurements.

High Premiums

The FEMA flood zone and hazard maps are also called Flood Insurance Rate Maps, or FIRMS, because they determine if a property owner must carry flood insurance, and the premium rate, which is dependent upon the risk of damage. Thousands of property owners in all parts of the country suddenly discovered they were in a flood zone and were required to buy insurance. According to FEMA, the average annual costs for flood insurance in a high-risk zone can reach $2,150.

Decreased Property Values

Property values have also been affected by FEMA's new flood zones and the mandatory flood insurance. A 2008 study in the Journal of Risk and Insurance found that properties with any structure located in a flood zone saw in average drop in price of $11,600, or 7.3 percent.

Effects on Development

In order for communities to participate in the National Flood Insurance Program and to be eligible for federal disaster relief, they must develop a flood plain management plan. Most plans include flood-related restrictions on development, such as limiting the ground floor of a new building to a garage area. Urban planners have raised concerns that the new regulations will discourage economic development.

Appealing FEMA's Flood Maps

Property owners who disagree with FEMA's maps and flood-risk assessment can appeal the agency's decision. However, they must provide evidence that proves FEMA's data and methodology are inaccurate. Some property owners must hire their own engineers to do costly additional surveys of property. In some communities where many residents have been affected, the city or town is mounting a challenge to the FEMA maps. Initially, FEMA provided a 90-day appeal period for challenges after the maps of a particular area were published. However, because there have been so many questions and complaints about the new flood maps, FEMA has extended the deadline for appeals in many locations.

References

• Homeland Security Newswire: Cities say new FEMA flood maps contain many errors
• U.S. Sen. Charles E. Schumer (N.Y.): Schmuer Calls for Congressional Investigation
• National Flood Insurance: Premium Examples For A $100,000
• Science Daily: Proximity To A Flood Zone Lowers Property Values
• Northwest Real Esate Law Blog: FEMA's Revised Flood Maps to Affect Development

Resources

• Your News Now-Central New York: FEMA extends flood map appeal deadline