A Preferred Flood Insurance Policy (PRP) Should Be Homeowners’ 1st Preference
There are constant reminders aired on the evening news of the importance of flood insurance; and as we are continually reminded of Mother Natures’ power, apprehensions seem uneased over the course of protecting our homes from devastation. How could we forget the haunting ramifications from the Biggert Waters Act of 2012? And just when you thought your home was safe from not only rising flood water but also rising flood premiums, coastal Floridians find themselves at a cross roads for Flood Insurance plans due to the remapping of flood zones by FEMA.
Although the scare from BW12 seemed to disappear from the forefront of local politics, recent flooding has far from diluted the concept. It seems that the national panic has subsided but the federal subsidies are also set to diminish. For many coastal residents, this will mean a large spike in their insurance rates. The remapping of flood zones throughout Florida is being facilitated in an attempt to bring an accurate assessment of elevation and remove the government subsidy from low-lying regions. Before we head for the hills, we must recognize that foreclosure isn’t exactly looming like an afternoon raincloud in the sunshine state. The Remapping concept has been designed to make our Flood Insurance program better and keep residents insured properly while avoiding the sticker shock of a large invoice payable in 30 days. The largest benefit, which is currently available to those who are not in a mandatory flood zone prior to remapping, is the ability to maintain the current preferred pricing.
The Preferred Risk Policy (PRP) is a lower-cost Standard Flood Insurance Policy (SFIP), and is available for property located in B, C, and X Zones in Regular Program communities that meet eligibility requirements based on the property’s flood loss history. For example, the Preferred Risk premium for $50,000 of building coverage and $20,000 of contents coverage on a single family residence with no basement is estimated at $302. That is a significant level of savings compared to the cost a Standard Flood Insurance Policy. It’s important to remember that although homes in B, C, and X zones qualify for Preferred Risk Policies, they are generally not required to purchase flood insurance by their mortgage lenders. So why then would we recommend doing so? The reason it is important to implement coverage even if you home is in a Preferred Risk zone is a combination of potential price and protection.
FEMA is currently remapping the flood zones and finding that many areas previously thought to be outside of the mandatory flood zones are now being considered high risk. This brings bad news for homeowners in these newly pronounced flood zones, as lenders will then require flood insurance. Furthering the concern is the National Flood Insurance Program (NFIP) requirements of a 30-day waiting period and payment in full on all new policies. Basically, you could get stuck with a large lump sum bill due in 30-days. However, if you maintain a Preferred Risk Policy at the time of remapping you are eligible to maintain that premium pricing with only marginal increases each year, as opposed to instantly owing thousands of dollars. This is also very beneficial if you are selling your home, as these rates will transfer to the home buyer and can be a selling point and an advantage over other homes in the area which will have much higher annual insurance premiums.
Protection is the most important reason to cover your home with a Preferred Risk Policy. Although it isn’t required by most lenders, it offers significant coverage for a minimal cost. Although you may feel that you are at little risk of flooding, it’s important to know that even areas that aren’t prone to floods still may be hit by disasters. In fact, residents in low-to-moderate risk zones have filed about 25% of all National Flood Insurance Program claims. So you are still benefiting from a layer of protection even if the remapping process doesn’t change your home to a high-risk zone. For the minimal cost of coverage and the potential price protection, we highly recommend that everybody in a Preferred Flood Policy (PRP) zone carry flood insurance… It’s a small price for peace of mind!
Moore Resources is an Independent Insurance Agency located in St. Petersburg, FL and offering Homeowners Insurance, Auto Insurance, Personal Insurance and Business Insurance. Our reach extends beyond the Tampa Bay area to the entire state of Florida. Moore Resources has regionally been dedicated to serving the local residents of Pinellas, Hillsborough, Polk, Pasco, Manatee and Sarasota counties; including St. Pete, Tampa, Clearwater, Bradenton, Brandon, Dunedin, Gulfport, Lakeland, Largo, Lutz, Palm Harbor, Pinellas Park, Riverview, Ruskin, Seffner, Seminole, Temple Terrace, Tierra Verde, Town n Country, and the Gulf Coast Beaches.
Please remember that the purpose of this blog is to present general information only. It does not interpret specific policies or coverage. In order to obtain detailed information regarding your insurance, contact a licensed insurance agent.