Accomack County is a participating community in the National Flood Insurance Program (NFIP) which protects your home, your business, and its contents. Flood insurance can be a good thing to have as most homeowner’s insurance policies do not cover losses due to flooding.  

The National Flood Insurance Program provides up to $250,000 coverage for single-family residential buildings and up to $100,000 coverage for contents. Contents of commercial and other structures are capped at $500,000.

If you have a federally backed mortgage, and your property is in the Special Flood Hazard Area SFHA, also known as the 100 year flood zone or zones AE or VE in Accomack County), you are required by federal law to carry flood insurance on your property. Flood insurance is optional outside of the SFHA although your mortgage holder may still require it.

Even if your property is not in a Special Flood Hazard Area you may still wish to secure coverage to protect your property.  If a flood occurs, the type and amount of federal disaster assistance you can qualify for is impacted by whether or not you have flood insurance.

For federally secured financing in a Special Flood Hazard Area, the law requires flood insurance in an amount equal to the outstanding principal balance of the loan, the value of the building, or the maximum coverage available, whichever is less. It also requires flood insurance to be maintained for the life of the loan. While the law requires coverage only for the loan balance, you should consider protecting your equity. It’s wise to insure primary residences and businesses in sufficient amounts to fully protect the building and its contents. 

If you do not secure flood insurance coverage your note holder will likely secure a policy for you and add it to the amount you owe them.  It is in your best interest to secure your policy yourself as what you can find is often less than what the financial institution will acquire on your behalf.

Outside of the Special Flood Hazard Area while there is no federal insurance requirement for federally backed mortgages, you financial institution may still require that you secure coverage as a condition of your note or mortgage.  This can be good as 25% of flood insurance claims are for areas outside the Special Flood Hazard Area.

Property owners and renters are encouraged to consider flood insurance even if not required federally in order to protect your property and investments.  Insurance premiums vary depending on:

• Location and elevation of the lowest floor of the structure.
• Amount of coverage sought to include structure only or structure and contents.

Keep in mind there is a 30-day waiting period between purchase and when coverage begins, to prevent purchasing insurance when a major storm is forecast (only to cancel the policy when the threat passes). The following exceptions apply: 

• When the purchase of insurance is done in connection with making, increasing, extending or renewing a loan. 
• When the purchase of insurance occurs during the one-year period following issuance of a revised flood map for a community.
• If flood insurance is required as a result of a lender determining that a loan that does not have flood insurance coverage should be protected by flood insurance. 
• If an additional amount of insurance is selected as an option on the renewal bill.

Discounts on Annual Flood Insurance Premiums:

Because Accomack County participates in the FEMA’s Community Rating System (CRS), property owners in the unincorporated portions of Accomack County qualify for annual discount on their flood insurance.  The CRS is an incentive program that encourages communities to adopt floodplain management activities that exceed the minimum requirements for FEMA's National Flood Insurance Program (NFIP) to:

1. Reduce flood losses.
2. Facilitate accurate insurance ratings.
3. Promote the awareness of flood insurance.

In return for a community’s adoption of standards that go above and beyond the minimum NFIP requirements, flood insurance premium rates for property owners residents within the participating community are discounted. The discount varies according to the community’s level of effort.

Within Virginia, 28 counties, cities, and towns participate in the CRS program.  As of October 2023 Accomack County is rated a Class 5, which provides a 25 percent discount on flood insurance premiums within the unincorporated portions of Accomack that are new or renewed beginning October 2023.  After this change, flood insurance policyholders in the unincorporated portions of Accomack are projected to save $164,719 annually, an average of $159 on their annual premiums. 

Within Accomack the incorporated towns of Chincoteague and Wachapreague also participate in the CRS program.  Participating communities are awarded points for their local floodplain management activities that exceed the NFIP minimum standards. Communities are placed into classes ranging from Class 1 (highest) to Class 10 (lowest) based on the total number of points accrued and other specific requirements. All participating communities start out as a Class 10, which offers no flood insurance premium discount, and each class increase results in an additional five percent premium discount.

October 2021 Changes to the NFIP - Risk Rating 2.0 (from the Association of State Floodplain Managers):

On October 1, 2021, new flood insurance rates went into effect for all new NFIP policies. It will be the biggest change to the NFIP since the program’s inception.

Since its start in 1968, the NFIP has been the primary source of flood insurance coverage for residential properties in the United States. When conceived, the purpose of the NFIP was both to offer affordable flood insurance and reduce flood risk through the adoption and enforcement of floodplain regulations. A longer-term objective of the NFIP is to reduce federal expenditure on disaster assistance after floods.

Today, there are more than five million policies providing $1.3 trillion in coverage. The program collects about $4.6 billion in annual revenue from premiums and fees. Unfortunately, climate change and increased flooding has damaged the program. Since Hurricane Katrina (2005) the program has gone deeply into debt. That debt is over $20 billion today. Interest alone on the debt is estimated at more than $1 million per day.

NFIP Rating Change

The NFIP’s current rating structure follows general insurance practices that were in effect more than 40 years ago when the NFIP was established and has not changed much since then. Three basic characteristics are used to classify properties:

1. Flood zone on a Flood Insurance Rate Map (FIRM),
2. Occupancy type, and
3. Elevation of the structure compared to the base flood elevation.

With Risk Rating 2.0, flood zones, mapping, and elevations will no longer be used in calculating a property’s flood insurance premium. Instead,the premiumsare to be calculated based on the specific features of each individual property including:

1. Structural and geographical characteristics of the individual structure,
2. Height (not elevation) of the lowest floor of the structure, and
3. Replacement cost value of the structure.

Risk Assessment

FEMA’s current risk model considers only two types of flooding: the 1%-annual-chance fluvial (river) flood and the 1%-annual-chance coastal flood (storm surge and wave action). Information about the flood risk is determined through NFIP flood studies (watershed, hydrology, and floodplain topography) and the performance of certain flood protection measures (i.e., levees). This data is incorporated into a flood risk assessment, which yields an estimate of the average annual loss, which is then used to calculate premiums. Across the nation, properties with the same NFIP flood risk are charged the same insurance rate.

Risk Rating 2.0 is designed to incorporate a broader range of flood frequencies and sources, including pluvial flooding (drainage and urban flooding due to heavy rainfall) and other coastal risks such as erosion. Risk Rating 2.0 will also factor additional geographical variables, such as the distance to water, the type and size The Insider March 2021 9of nearest bodies of water, the elevation of the property relative to flooding source, and specifics on the building. As proposed, NFIP premiums calculated under Risk Rating 2.0 will reflect an individual property’s flood risk (rather than national averages).

According to FEMA, Risk Rating 2.0 will also use commercial catastrophe models to estimate future loss potential. The use of catastrophe models to estimate potential losses caused by natural hazard events has become a standard risk management practice in the insurance industry.

FEMA has suggested that Risk Rating 2.0 will provide credits for three mitigation actions:

1. Installing flood openings,
2. Elevating onto posts, piles, and piers; and
3. Elevating machinery and equipment above the lowest floor.

FEMA has not yet given any information on how these credits will be applied to individual property premiums 

Flood zones and LOMCs

Under Risk Rating 2.0, the boundary of the mapped floodplain will still be used to determine where mandatory purchase of flood insurance will be required. However, flood zones will no longer be used in calculating a property’s flood insurance premiums; instead, the premium will be calculated based on the specific features of an individual property. As proposed, flood zones will still be needed for floodplain management purposes. All new construction and substantial improvements to buildings in a mapped floodplain must still be elevated to the locally adopted flood protection elevation.

The FIRM map appeal process (LOMAs and LOMRs) will still exist, but once Risk Rating 2.0 begins, map appeals are not to have any effect on the premium that a policyholder pays, just the federal flood insurance requirement for lenders.

Impacts

According to FEMA, Risk Rating 2.0 will:

• Reflect an individual property’s risk,
• Reflect more types of flood risk in rates,
• Use the latest actuarial practices to set risk-based rates,
• Provide rates that are easier to understand for agents and policyholders, and
• Reduce complexity for agents to generate a flood insurance quote.

FEMA believes that Risk Rating 2.0 will provide a more transparent and accurate flood insurance pricing, will lead to better risk communication, and an increase in flood insurance take-up rate. Risk Rating 2.0 is not designed to increase or decrease revenue for the NFIP. If the new rates lead to a shortfall, the rating plan will be revised. FEMA cannot currently give any information about the number or percentage of properties which will see their premiums change under Risk Rating 2.0.

Under Risk Rating 2.0 all types of properties may see changing rates. However, certain types of properties may be more likely to be affected by the rate increases. These may include grandfathered properties, properties currently on the border of flood zones, properties currently outside the mapped floodplain, and properties with above-average or below-average replacement cost values. For example, the use of distance to water, rather than flood zone, may mean that premiums for properties at the landward boundary of a Special Flood Hazard Area could go down, while premiums for a property at the water boundary could go up.

Although FEMA has not yet given any details of how grandfathered properties will be affected by Risk Rating 2.0, other than to say that “all properties will be on a glide path to actuarial rates,” the implication of the fact that flood zones will no longer be used to set premiums appears to indicate that zone grandfathering, at least, will no longer be relevant.

Risk Rating 2.0 will continue the overall policy of phasing out NFIP subsidies. Because the limitations on annual premium increases are set in statute, Risk Rating 2.0 will not be able to increase rates faster than the existing limit for primary residences of 5%-18% increase per year.

Again, these changes went into effect for new policies issued October 1, 2021 or later.  Existing policies took effect when their policies renewed after April 1, 2022.

For more information about the National Flood Insurance Program and flood insurance, call (800) 427-4661, or contact your insurance company or agent. For an agent referral, call (888) 435-6637 TDD (800) 427-5593.