Government puts focus on update of flood maps

Project: An effort is under way to better identify areas most likely to be affected by flooding. Insurance premiums could change,

October 12, 2003|By Rebecca Boreczky | Rebecca Boreczky,SPECIAL TO THE SUN

DAVID Martz bought a home in Fells Point four years ago, grumbling about the $1,500 he had to spend annually for flood insurance.

Given that the area surrounding his South Ann Street home had not seen serious flooding since the 1930s, Martz said, he thought the insurance was worthless even though the home sits within one of the state's 116 flood plains. To secure a loan, Martz had no choice but to pay for the federally issued insurance.

"I balked ... when I bought my property," said Martz, a real estate agent whose basement in his recently renovated home flooded to the ceiling after Tropical Storm Isabel. "Now, I am thankful I have it."

Martz and millions of other homeowners across the nation figure to see their flood insurance policies change during the next few years as a result of a $350 million effort to modernize the country's flood maps.

The maps help the government identify the areas most likely to be flooded and assist the Federal Emergency Management Agency's National Flood Insurance program in setting premiums. Based on the current maps, the nation has 20,000 flood-prone communities.

Flood insurance is so costly that some property owners can't afford it. Some choose not to buy it if they aren't forced to by a lender.

The Insurance Information Institute said the average homeowner with flood insurance pays about $1,500 a year in premiums. FEMA said the average flood insurance policy costs a little more than $300 a year for about $100,000 worth of coverage. Property owners could pay higher premiums depending on their location in a flood zone.

Federal officials said homeowners should not worry about the impact on their property with possible changes to the maps. New areas included in flood maps would be exempt from mandatory insurance, they said.

Insurance needs would become an issue when a homeowner sold the property, officials and housing industry leaders said, because financial institutions won't lend money to borrowers in flood-prone areas unless flood insurance is secured.

"We don't believe that new mapping will increase the rate of flood insurance, only make it more accurate," said Gary Setzer, program administrator for the Maryland Department of the Environment, which will assist FEMA in collecting local data.

Property flood insurance is available only through FEMA and is excluded from policies issued by private companies.

Congress created the program in 1968 in response to the rising cost of taxpayer-funded disaster relief for flood victims. Property owners who buy, build or improve structures in flood-hazard areas are required to purchase flood insurance from the government, the sole provider of the insurance.

Lenders such as Citibank said they add flood insurance costs to all mortgages for homes that lie within flood plains.

"Any lending institute that is regulated by the federal government must require flood insurance in a flood-hazard area in order to finance a property," said Mark Stevens, public affairs officer for FEMA's National Flood Insurance.

About 50,000 Maryland property owners carry flood insurance, said FEMA. The U.S. government carries about 4.5 million policies with about $652.7 billion in coverage, the Insurance Information Institute said.

Areas such as Fells Point and others in Maryland that flooded during last month's storm figure to see their flood insurance premiums rise when the new maps are drawn during the next few years, officials said. But the risk level might decline for homes in areas where levees have been built, allowing them to be removed from the flood-plain designation. That could save a homeowner hundreds of dollars in monthly insurance costs.

Ninety percent of natural disasters in the country involve flooding, the Insurance Information Institute said. The industry group added that 25 percent to 30 percent of flood insurance claims during the past few years were in areas classified as lower risks on the outdated flood maps. The group pointed to areas in Texas and Florida as some of the highest-risk areas.

Many of the maps haven't been updated since 1978. FEMA also wants to computerize the maps to make them Internet-accessible. Congress allocated $150 million for the project last year. This month, federal lawmakers added $200 million.

In Maryland, officials have $1 million to study flood-prone areas in two counties. The counties have not been chosen, Setzer said, but the agency will consider areas where the most flood claims were filed during the past 10 years and jurisdictions that have experienced rapid development.

More claims were filed in Worcester and Baltimore counties, FEMA said. And Calvert County is the state's fastest-growing area in population.

"Our goal is to update all the flood maps within five years," Stevens said. "Some flood plains will be added and some removed."

Federal officials also expect many of the flood boundaries and the risk for properties within them to change, given the boom in shoreline development during the past decade.

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