FEMA Announces Transition Flood Policy Available Jan. 1

The bulletin notes that not only will the new policies reduce the financial burden on some property owners whose buildings are newly mapped from a low-hazard zone into a high-risk flood area, but that the changes will directly affect many agencies that sell flood insurance and could affect some of their current policyholders.

PIA said in its bulletin that the changes apply on select new and renewal policies with effective dates on or after January 1, 2011. As of October 1, 2010, FEMA/NFIP (National Flood Insurance Program) began sending notices to current policyholders, PIA officials said.

According to FEMA, the PRPs will allow owners of properties subject to new, higher rates because of new maps to pay as low as $129 a year for two years.

Agency officials said the new PRPs are typically only available for properties in moderate- to low-risk areas.

FEMA officials estimated that it will reduce rates for the two-year period for "thousands who own homes and businesses in locations recently designated as high-risk flood areas."

The costs for standard flood insurance policies vary, with the average policy costing approximately $570 a year, FEMA officials said.

PRPs will offer the same quality of protection and can include coverage on a building's contents at a fraction of the cost, the officials added.

In addition to the eligibility requirement that properties must have been mapped into a high-risk area on or after Oct. 1, 2008 due to a flood map revision, all buildings must also meet PRP loss history requirements.

After two years at the reduced PRP rates, policies will increase to standard rates, FEMA officials said.

However, there are additional NFIP saving options–including a grandfathering provision, use of elevation ratings and higher-deductible policies–that can help reduce costs, FEMA officials said.