Starting this January, the National Flood Insurance Program (NFIP) started delivering “Cost of Flood” notification letters to all Flood customers. The letters were required as part of a process called Clear Communications, and are supposed to help consumers understand their risk for flood. However, without having a conversation with our agents, the letters may seem very confusing.
There are five different letters that the NFIP is delivering to its policyholders. Below we will give a brief description of the letters and explain why you might be receiving the letter you got in the mail:
- Letter A: Buildings Newly Mapped into a High-Risk Flood Area
- If you receive this letter your property most likely got “re-mapped”. This typically means you are currently paying a premium that reflects a lower risk than what is shown on the most recent flood map. The NFIP knows that this may cause a financial burden so they limit are limiting increases 15% per year. Although this is not a problem for most of our residents, it may be in the next few years as FEMA re-maps Pinellas County.
- Letter B: Buildings Standard Rated & Located Outside the High-Risk Flood Area
- Customers who receive this letter most likely have a standard-rated policy that is located out of a high-risk flood zone (Special Flood Hazard Area[SHFHA]), and could be eligible for a Preferred Risk Policy (PRP) or a reduced premium. We highly recommend contacting our agency so we can determine the best option for you.
- Letter C: Buildings Grandfather Rated, and In a High-Risk Flood Area
- If you receive this letter, you are rated using the NFIP’s grandfather rating procedures and are paying a premium that reflects a lower risk that that indicated in the most recent flood map. If you do not have an Elevation Certificate, it is highly recommended that you purchase one to determine if your current rate or the true risk rate is more beneficial.
- Letter D: Primary Residential Pre-FIRM Buildings in a High-Risk Flood Area
- This is the most popular letter our clients have been receiving. If you receive this letter you are currently paying a subsidized flood insurance premium that will gradually increase until your premium reflects the true flood risk associated with your building. Your current rate is discounted by the NFIP because the home was built prior to the first flood maps (prior to 1974 for most of Pinellas County) and is most likely below the base flood election (negatively elevated). Your premium is expected to rise between 5% to 18% per year. We are encouraging all customers to purchase an Elevation Certificate who receive this letter. If you provide the Elevation Certificate to our agents we can advise you what the true risk-rated premium is, and we can put the Elevation Certificate on file with the carrier so they can use it when it becomes beneficial.
- Letter E: Non-Primary Pre-FIRM Buildings in a High-Risk Flood Area
- You will receive this letter if you own a non-primary home located in a high-risk flood zone (SFHA) that is currently receiving a subsidized premium. As part of the Homeowners Flood Insurance Affordability Act (HFIAA) NFIP is increasing non-primary rates by 25% per year. Again, we highly recommend that our client’s purchase an Elevation Certificate to determine their true risk rated premium.
- Letter F: Preferred Risk Policies (PRP) Mapped Outside of a High-Risk Flood Area
- You will receive this letter if you have a Preferred Risk Policy (PRP). PRPs are for buildings with a good flood loss history & that are located in areas that have a moderate to low risk of flood. Although flood may not be required by your mortgage company, it is a good idea to have these policies, because as we like to say everywhere in Pinellas county is in a flood zone.
The letters that the National Flood Insurance Program has been sending out may seem confusing, but our agents are here to answer all your questions. Please feel free to contact your agent our reach out to Brian Ford at BFord@InsuranceResourcesLLC.com or call him at 727-345-0242.