Great News – and Possible Risk: Changing Flood Maps

Effective October 1, 2016, the revised flood maps will finally take effect in Orleans Parish. This will be great news for almost every homeowner on the east bank of New Orleans, as Base Flood Elevations are being lowered in most areas. This means flood premiums should go down.

In some cases, the flood zone is changing from an A zone to an X zone, where flood insurance won’t be required by lenders. This is where the risk comes in. If you drop the flood insurance, you will save a few hundred dollars a year (yes full coverage in an X zone is dirt cheap). But the risk of flood damage, which was once borne by the National Flood Insurance Program will now be borne solely by you if you drop coverage “because it wasn’t required.”

We recently helped a fellow KW agent gut her flooded house in Central, LA outside of Baton Rouge. You’ve undoubtedly heard many similar stories – very few homeowners had flood insurance there. A recent column in The Advocate summed it up quite well:

“…people allow the decision of whether to carry flood insurance to be made by Washington bureaucrats. One is a data nerd at the Corps of Engineers. This person studies flood data and classifies areas into flood plains. The others are regulators from the banking and mortgage agencies, who make sure that the rules about required flood insurance are followed by lenders.

When you allow the decision of whether to buy flood insurance to be made by these bureaucrats, and in the case where the Corps of Engineers data nerd says that you are not in the flood plain, you still keep the risk. He has nothing at stake. If you have a flood, be assured that he will not cover your loss and he will not be fired.”

If the flood maps change in your favor, enjoy the lowered premium, but don’t drop your flood insurance!

We’ll send out more details next month on how to get your premiums lowered.

This content is not the product of the National Association of REALTORS®, and may not reflect NAR's viewpoint or position on these topics and NAR does not verify the accuracy of the content.