If there seems to be a rising tide of properties subject to flood zones, that is no illusion.

The Federal Emergency Management Agency, four years into a flood-map modernization process that wraps up in 2010, reports an increase in properties identified at risk of flooding, and this upsurge presents landowners with new decisions.

In communities that voluntarily participate in floodplain management, relatively affordable flood insurance is available through the National Flood Insurance Program.

In New Orleans, Richard Olsen considers himself lucky to have had flood insurance. His $350,000 home ended up under 7 feet of water during Hurricane Katrina. While his children finished high school at night in Baton Rouge, he and his wife felt driven to return. They were among the first families to be able to return and rebuild. Their house now carries the maximum in flood coverage.

Having adequate insurance is always better and less costly than relying solely on federal disaster aid, stresses policy analyst Russell Riggs of the National Association of Realtors.

There was a time that flood insurance was virtually unavailable through private insurers, which led to the launch of the National Flood Insurance Program in 1968. The program was designed to be self-sustaining and in recent years has faced losses, only receiving temporary extensions in Congress as various reform ideas are floated.

In the map-modernization process, about 40 percent of the population is represented by map panels (areas) that include new engineering information. An additional 13,700 previously unmapped panels in sparsely populated regions are also being added. Standards have been devised for setting accurate flood-zone boundaries.

For the lowest rates, residents in newly identified flood zones can obtain insurance before the map change goes into effect to lock in more affordable premiums — as long as the insurance is continually maintained.

Policies average $540 a year and are available from the National Flood Insurance Program through private insurers. Federally backed lenders make coverage mandatory in flood zones.

If the flood zone designation is contested, there is an appeals process. One approach is to pay for a survey and submit an elevation certificate, requesting a map amendment.

Flooding is the most common natural hazard, and historically the most expensive. Standard homeowners insurance does not cover flood damage, but National Flood Insurance Program policies offer up to $250,000 in structural coverage for a home and $100,000 for contents. Buildings constructed before the first effective date for a community’s Flood Insurance Rate Map receive a subsidized rate.

Sharlene Leurig, insurance program manager for CERES, a national network of investors and public interest groups, believes real estate values should better reflect climate effects. "Pricing is an essential reflection of a risk," she says, "whether it is insurance or real estate." …CONTINUED

In a 100-year flood zone, there is a 1 percent annual chance of flooding, which translates into a 26 percent chance during a 30-year mortgage. The greatest property damage occurs in river areas, which represent the majority of flood-prone property. In coastal areas, flooding causes the greatest loss of life.

There, climate change may have an incremental impact on the safety of structures over time. For instance, in California, the average sea level increased 7 inches over the past century.

Industry watchers in some states, and particularly Florida, would like to see insurance for flood and wind risks combined. John Sebree of the Florida Association of Realtors notes that wind often creates more damage there, and estimates the state carries 40 percent of the national flood insurance policies but represents only 9.5 percent of flood claims.

The program is intended to direct development away from vulnerable regions. In Johns Island, the second-largest island on the East Coast, planners are working to steer development away from the coastline, with only 20 percent of the island’s center slated for development.

"We can avoid so much damage through wise actions," says Charleston Mayor Joseph Riley.

As an incentive for prudent planning, communities that exceed minimum flood-control measures receive rate reductions of 5 percent to 45 percent.

Whether flood risk affects property values is uncertain. Usually, the exposure comes up after an offer has been made, since the disclosure is among the last notifications during a real estate transaction.

Awareness seems to be on the rise, however. Participation in the National Flood Insurance Program has increased since its FloodSmart campaign started in 2004.

Georgia State professor of econometric studies Robert Klein said he noticed that after 2005 the cost of risk and insurance "began to bite — you began to see Realtors comment, particularly in Florida."

In his own home he is concerned about upkeep of a storm drain a few hundred yards away, Klein said. Although he is not in a flood hazard zone, he purchased flood insurance.

"One principal purpose," he says, "is peace of mind."

Nancy Garcia is a freelance writer in California.


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