The Federal Emergency Management Agency (FEMA) has announced a new flood insurance rating option for the National Flood Insurance Program (NFIP) to help reduce the financial burden placed on some property owners whose buildings are newly mapped from a low hazard zone (B,C,X) into a high-risk flood area. However, properties that were remapped prior to October 1, 2008 are not eligible for this Preferred Risk Policy (PRP) extension.  They do continue to be eligible for the regular grandfathering provisions.

According to FEMA, while the new PRP eligibility extension does not become effective until January 1, 2011, insurance companies will be contacting policyholders – those who may potentially qualify for this extension – at least ninety days before their policy expires. Consequently, some policyholders may be receiving notification as early as October 1, 2010. Insurance agents will be required to provide their insurance company documentation to show that the building is eligible for the PRP extension, including the current and prior map information as well as a favorable loss history.

For policies effective on or after January 1, 2011, FEMA is applying the two-year PRP eligibility extension for: 1) buildings affected by map changes from October 1, 2008 to January 1, 2011; and 2) buildings affected on or after January 1, 2011. Those buildings affected by map changes made prior to October 1, 2008 are not eligible for the extension.

Click here to read the FEMA's memo issue on August 23, 2010 detailing this announcement and including a FAQ for participating agents.

August 24, 2010