Potential Impacts of Map Changes on Flood Insurance and Options

When flood maps are updated, some residents and business owners may find that their property’s flood risk is higher or lower than before. Others may see no change. Some may now be required to carry flood insurance, while others will no longer have to. If you find that your flood risk has changed, it is important to know how that change may affect your requirement for and cost of flood insurance. Check the different scenarios below, which include your options for reducing any financial impacts. You can also download a summary fact sheet here.

If your home or business is newly identified as being in a high-risk flood area, most lenders must require you to carry flood insurance. The National Flood Insurance Program (NFIP) offers a cost-saving flood insurance rating option called the Newly Mapped Procedure English / Spanish. Read this fact sheet English / Spanish for more details.

With this option, property owners who buy a policy within the first 12 months after a new map becomes effective are eligible for the lower-cost Preferred Risk Policy (PRP). Rates will then go up no more than 18% each year until they reach a standard Zone X rate, or the rate based on the new flood map, whichever is cheaper.

If the flood risk is increasing and your property will have a higher Base Flood Elevation (BFE), the NFIP offers a cost-saving flood insurance rating option know as Grandfathering. Grandfathering allows property owners to “lock in” the lower risk flood zone or BFE for future rating.

The NFIP grandfathering rule allows policyholders who have a policy in effect before the new maps become effective or have built-in compliance with the flood map in effect at the time of construction to keep their previous flood zone or BFE to calculate their insurance rate. This can result in significant savings. 

If your property’s flood risk is changing from a high-risk area (Zone A) to a moderate- or low-risk area (Zone X), the federal requirement to carry flood insurance by lenders is removed; however, the flood risk is not…it is just reduced. About 25% of NFIP flood claims in the U.S. are from policyholders in the lower-risk Zone X. 

The reduction in flood risk typically means flood insurance will be cheaper when the maps become effective. Residents and business owners are strongly encouraged to ask their insurance agent to convert their more expensive high-risk policy to the lower-cost Preferred Risk Policy and maintain coverage. No additional money is needed up front, and you will get a refund for the cost difference. 

While map changes will affect some property owners, many residents and business owners are not affected. However, this is a good time to review your flood insurance coverage with your insurance agent. Most homeowner policies do NOT cover damage due to flooding. When the new maps go into effect, your property may be closer to a high-risk area than before. More than 40% of NFIP flood claims in Texas are from policyholders in Zone X. 

If you have a flood insurance policy, talk with your insurance agent to see if you are fully insured to receive replacement cost for your home and that you have contents coverage. If you don’t have flood insurance, you may qualify for the lower-cost Preferred Risk Policy, which automatically includes contents coverage.