New Flood Insurance Rate Maps (FIRMs), issued by the Federal Emergency Management Agency, will go into effect for the City of Maysville on April 16, 2013. This is the first update of the maps since 2004, and new areas have been identified as being in a Special Flood Hazard Area (SFHA). A SFHA is an area in which a 100 year flood has a 1% chance of occurring. Any structures located in a SFHA that contain a federally backed mortgage, are required by federal law to contain flood insurance. These new maps are available for review in the Code Enforcement Office at the Municipal Building. You can also click on the link on the front page of the City’s website that says “Flood Maps: New Areas in Special Flood Hazard Area,” to see if your property is located in a flood zone.
If you own a structure near a stream or floodway, you are advised to contact your mortgage holder or insurance agent to see if you will be required to obtain flood insurance. If your structure(s) was NOT located in a SFHA, but WILL be included with the new maps on 4/16/2013 and you are required to obtain flood insurance, if you get that insurance prior to the new maps becoming effective, you may be eligible for a reduced rate. Again, it is important that you contact your mortgage holder and/or insurance agent for that determination.
Please feel free to contact Matt Wallingford at City Hall if you have any questions regarding structures you may own. 606-564-2504 or
National Flood Insurance Program (NFIP)
The NFIP makes federally backed flood insurance available for all buildings, whether they are in a floodplain or not. Flood insurance covers direct losses caused by surface flooding, including a river flowing over its banks, a lake, or local drainage problems.
The NFIP insures buildings, including mobile homes, with two types of coverage: structural and contents. Structural coverage is for the walls, floors, insulation, furnace, and other items permanently attached to the structure. Contents coverage may be purchased separately provided the contents are in an insurable building. Go to http://www.fema.gov/business/nfip for more info on the NFIP.
Mandatory Purchase Requirement
The Flood-Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994 made the purchase of flood insurance mandatory for federally backed mortgages on buildings located in a Special Flood Hazard Area (SFHA). The requirement also applies to all forms of federal or federally related financial assistance for buildings located in a SFHA and affects mortgages, loans and grants for the purchase, construction, repair, or improvement of any publicly or privately owned building in the SFHA.
The rule applies to secured mortgage loan from such financial institutions as commercial lenders, savings and loans association, savings banks, and credit unions that are regulated, supervised, or insured by Federal agencies such as the Federal Deposit Insurance Corporation (FDIC) and the office of Thrift Supervision. It also applies to all mortgage loans purchased by Fannie Mae or Freddie Mac in the secondary mortgage market.
Federal financial assistance programs affected by the laws include loans and grants from agencies such as the Dept. of Veterans Affairs, Farmers Home Administration, Federal Housing Administration (FHA), Small Business Administration (SBA), and FEMA.
How it Works
Before a person can receive a mortgage, loan or other financial assistance, Federal agencies and lenders are required to complete a Standard Flood Hazard Determination (SFHD) form whenever they make, increase, extend or renew a mortgage, home equity, home improvement, commercial, or farm credit loan to determine if the building or manufactured (mobile) home is in a SFHA. The SFHA is the base (100-year) floodplain mapped on a Flood Insurance Rate Map (FIRM). The SFHA is shown as one or more zones that begin with the letter “A”. Copies of the FIRM are available for review at the City of Maysville Municipal Building.
If the building is in a SFHA, the Federal agency or lender is required by law to require the recipient to purchase a flood insurance policy on the building
Federal regulations require purchase of structural insurance coverage equal to the amount of the loan or the maximum amount available from the NFIP, whichever is less. The maximum amount available for a single-family house is $250,000. Government sponsored enterprises, such as Freddie Mac and Fannie Mae, have stricter requirements.
The mandatory purchase requirement does not affect loans or financial assistance for items that are not covered by a flood insurance policy, such as vehicles, business expenses, landscaping, and vacant lots. It does not affect loans for buildings that are not in the SFHA, even though a portion of the lot may be floodprone. While not mandated by law, a lender may require a flood insurance policy, as a condition of a loan, for a property in any zone on a FIRM.
If a person feels that a SHFD form incorrectly places the property in the SFHA, he or she may request a Letter of Determination Review from FEMA. This must be submitted within 45 days of the determination. More information can be found at: http://www.fema.gov/plan/prevent/fhm/fq_genhm.shtm.
How can I reduce the cost of flood insurance?
Two solutions the National Flood Insurance Program (NFIP) offers to help lower the cost of flood insurance include Preferred Risk Policies (PRPs) and the Grandfathering Rule.
PRPs, which start at just $129 a year, are only available for properties in moderate-to-low risk areas. However, recognizing the financial burden that being mapped into a high-risk area and having to purchase flood insurance can place on affected property owners, FEMA extended the eligibility period of the low-cost PRP for two years for buildings that have been newly mapped into high-risk flood zones. In general, this cost-saving option is available to property owners whose buildings have a favorable flood loss history and who may or may not have received limited amounts of federal disaster assistance.
The NFIP “Grandfathering” rules recognize policyholders who have built in compliance with the flood map in place at the time of construction or who have maintained continuous coverage. These rules allow such policyholders to benefit in the premium rating for their building. Flood insurance premiums should be calculated using the new map if it results in a lower premium.
Renewal of an Existing Policy
When determining the premium you will pay for flood insurance, an insurance agent will rate your flood insurance policy based on the flood map that is in effect on the date you purchase your policy. Flood insurance policies may then be renewed and still be rated based on the flood map in effect when the policy was initially rated as long as the flood insurance coverage is continuous and the building has not been altered in a manner that would remove this benefit. For example, if the building on the property is currently mapped in an X zone, you could purchase the policy before the flood maps are adopted and keep the lower rate associated with the X zone even after the new flood maps become effective. To help maintain this grandfathering benefit for the next owner, you may transfer the policy to them at the time of sale. An insurance agent can provide you with information about eligibility for the PRP and the PRP Two-Year Eligibility Extension.