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FEMA Extends Lower Cost Flood Insurance Option To Eligible Property Owners In High-Risk Flood Areas

WASHINGTON, D.C. -- Thousands who own homes and businesses in locations recently designated as high-risk flood areas will soon have a new way to save on flood insurance protection.  Beginning January 1, 2011, the Federal Emergency Management Agency's (FEMA) National Flood Insurance Program (NFIP) is offering a new insurance rating option that will allow many property owners to take advantage of lower-cost flood insurance for two years before they are required to pay standard rates.  The program will make Preferred Risk Policies (PRPs), which start at just $129 a year and are typically only available for properties in moderate-to-low risk areas, available for properties that have been newly mapped into high-risk areas due to a flood map revision on or after October 1, 2008.

Flood risks are dynamic and change over time due to a variety of factors, including changes in the natural landscape, the impacts of land use and development and the condition of flood control structures such as levees. Since 2003, a multi-year effort has been underway to update the nation's flood maps to reflect these changes.  Using state-of-the-art technology and modeling techniques, new maps are providing more detailed and accurate information about where flooding is most likely to occur.  As new maps are released nationwide, many property owners are finding that their risk has changed and they may now be required to purchase flood insurance.  FEMA understands the financial burden this may place on some property owners and, to help them better manage the cost of coverage, is expanding eligibility for its lower-cost policies. 

"While everyone is at some risk for flooding, it is especially important for home and business owners with properties in high risk areas to protect their finances by obtaining flood insurance," said Edward L. Connor, Acting Federal Insurance and Mitigation Administrator.  "FEMA created the PRP extension opportunity to offer flexibility to home and business owners facing the challenges of today's economy.  It's an important immediate measure to help make flood insurance more affordable for those who will be newly required to carry it."

The costs for standard flood insurance policies vary, with the average policy costing approximately $570 a year.  PRPs offer the same quality of protection, and can include coverage on a building's contents, at a fraction of the cost.  In addition to the requirement that properties have been mapped into a high-risk area on or after October 1, 2008 due to a flood map revision to be eligible, all buildings must also meet PRP loss history requirements.  After two years at the reduced PRP rates, policies will increase to standard rates.  However, there are additional NFIP saving options - including a grandfathering provision, use of elevation ratings and higher deductible policies - that can help reduce costs.  Individuals should talk to their insurance agent to learn more.

Although extended eligibility for the PRP does not become effective until January 1, 2011, insurance companies should already be contacting policyholders who may qualify for the extension.  Agents are required to provide insurance company documentation that shows the structure is eligible for the PRP extension, including current and prior flood map information.  This information can be found on FEMA's mapping website (http://msc.fema.gov) or through a community's floodplain administrator.

Property owners in communities that have received flood map updates since October 1, 2008 should contact their insurance agent for further details.  Additional information can also be found at www.floodsmart.gov and www.floodsmart.gov/PRPExtension, or by calling the NFIP Help Center at 1-800-427-4661.

FEMA's mission is to support our citizens and first responders to ensure that as a nation we work together to build, sustain, and improve our capability to prepare for, protect against, respond to, recover from, and mitigate all hazards.

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