Be an Informed Resource
Levee Accreditation Mapping Status
Knowing and reducing the flood risk in a community is a shared responsibility. As a real estate, lending, or insurance professional, it is important for you to understand and properly communicate your clients’ risks associated with levees and the importance of flood insurance to reduce financial risk to homes and businesses that are at risk from flooding.
For example, when selling a building, the owner should disclose whether the property is located in or is soon-to-be in an area designated as a SFHA. This includes areas behind a levee system that is no longer accredited. Most lenders will require the buyer to purchase flood insurance before the sale closes. For properties located in areas newly designated as SFHA, the NFIP provides rating options to help lower the cost of flood insurance. Real estate and lending professionals should inform the owner that options are available and insurance professionals should then review all rating options with their client.
Some buildings that are being bought or sold may (or will) be located in areas designated as a moderate-to-low hazard flood zone (Zone X (shaded or unshaded)), including properties behind levee systems that are accredited or provisionally accredited. While the current or new owner will not be federally required to purchase flood insurance in these areas, a lender can still require it. Lending and real estate professionals should encourage clients to strongly consider flood insurance and to talk to their insurance agent for more information, since the flood hazard around the levee is just reduced, not removed.
Use FEMA's tools and templates to better understand the relationship between levees, flood risks and insurance.
Be An Informed Resource
Real estate, lending, and insurance professionals play an important role in helping people purchase and financially safeguard what may be their biggest asset: their home or business. Consequently, home and business owners will turn to you for information. Here are some tips to help better assist your clients.
Know the Facts About Levees
Flooding does occur in areas behind levees and levees can and do fail. Because of these unique flood risks, it is important that properties behind levees carry flood insurance, even if they are not shown in the SFHA. More than 20 percent of all flood claims come from moderate or low hazard areas (Zone X (shaded or unshaded)).
Help Your Clients Understand Their Risks
Know where the levees are in the communities you serve, and what level of risk reduction they provide. You may want to contact local officials to find out what areas are likely to flood should a levee fail or be overtopped. You may also wish to find out if the area is being remapped and if the status of the levee has or will be changing. Remember that levee system construction or restoration projects planned or underway may reduce flood insurance premium rates once the project reaches certain completion milestones. Use the tools FEMA has created to help communities understand the relationship between levees and flood risk.
Be Informed About Flood Insurance
Flood insurance is required for most loans for properties in the SFHA, and it is also strongly recommended for the moderate hazard areas (Zone X (shaded)) impacted by accredited levees where flood insurance policies can be purchased at a significantly reduced cost.
Levee Accreditation Mapping Status
When levees no longer meet the minimum federal requirements for reducing flood hazard, they are shown as non-accredited levees on a community’s flood maps and the area behind them is shown as a Special Flood Hazard Area (SFHA, the area inundated by the 1-percent-annual-chance flood). Learn more about different levee accreditation statuses and associated flood hazards.
When property owners have questions about flood insurance, they can - and should - contact their insurance agent. Insurance agents keep property owners prepared by helping them with changes to flood insurance requirements, assessing coverage options and encouraging conversion to a low-cost Preferred Risk Policy. They can help communicate that the risk of flooding is real, and it may have only been reduced, not eliminated.
Real estate professionals are a trusted source of information when property owners make, what is usually, their largest financial investment. Real estate professionals must have all the details about a property when working with their customers. Lenders also need to be made aware of the changes taking place and how those changes can impact new home and business loans.
All groups will need to be kept up-to-date about how the changes to levees impact the flood insurance requirements for local properties, particularly when many property owners will be released from the Federal flood insurance requirements. In addition, you may wish to contact trainers to arrange for a training event in your area. You can learn more about setting up a training session by visiting the NFIP training program. If training has already been arranged, you can notify agents of the date and time.
Templates for Local Officials
Provisionally Accredited Levees
When levee systems are provisionally accredited, property owners may turn to insurance agents for information. Agents can help their clients understand that the risk for flooding is still there. They can explain why flood insurance is strongly recommended for properties near all levees. They can also point out the considerable flood insurance savings available by obtaining a Preferred Risk Policy for a home in a moderate to low hazard zone.
Likewise, the presence of a provisionally accredited levee may affect a real estate transaction if the situation is not fully understood. To avoid problems, make sure local real estate and lending communities are kept informed about changes in levee-impacted flood hazard zones and how the issues of safety and long-term levee viability are being addressed. They, in turn, can inform their clients.
A provisionally accredited levee designation does not change the Federal flood insurance requirements. However, flood insurance reduces the financial devastation that can occur if a levee fails. For this reason, FEMA recommends flood insurance for all properties in areas near levees. Many property owners and renters in areas with a moderate to low hazard will be eligible for low-cost Preferred Risk Policies.
When a levee system can no longer meet NFIP regulatory requirement for reducing the flood hazard, property owners understandably become concerned. When they learn they will need to purchase flood insurance, concerns multiply. Knowledgeable insurance agents can play a major role in reducing anxiety. To do so, agents must know what is happening, whom it will impact and both the agent and the community’s role in the process well before new FIRMs go into effect.
When NFIP flood insurance and floodplain management requirements change, people planning to buy or sell property – and the lending and real estate professionals involved in the transactions – all should be aware of what will be taking place and when. If not, property closings may be disrupted. Letting the local real estate association and its members know about pending non-accredited levee system and the associated NFIP map change process keeps them informed and enables them to educate potential homebuyers. You should also ensure that lenders and mortgage brokers serving your area are aware of and prepared for the changes.
The first step is to engage these professionals and inform them about the upcoming changes and what it will mean for impacted property owners, not just in terms of their insurance or floodplain management requirements, but also their heightened risk. For the insurance professionals, you may also want to work with NFIP trainers to make sure there is a training event in your area. You can notify agents of training dates and times by mail, through trade newsletter announcements, and at local meetings. Information about the National Flood Insurance Program training program is located online. Additionally, professionals should be aware of the multiple options to help keep insurance costs low with a Federal insurance requirement, including the NFIP’s Preferred Risk Policy, Newly Mapped Procedure, and Grandfathering with a federal insurance requirement.