News

Flood of insurance costs ahead

Coastal property owners urged to buy now

By Victor Tine
Staff writer
Published: June 17, 2009

NEWBURYPORT — Buying flood insurance now could save many area homeowners thousands of dollars over time, according to federal and local officials.

The Federal Emergency Management Agency has issued preliminary new flood maps for Essex County, maps that will enlarge the flood zone to include many properties that are not currently in it. FEMA distributed the proposed new maps to city and town halls in Essex County at the end of May. They are available for public viewing.

But, according to a FEMA spokeswoman and local insurers, property owners who buy insurance before the new maps become final will be able to lock in their current level of flood exposure even if their properties are later re-classified to a higher level of vulnerability.

"It's going to make thousands of dollars of difference to people who buy prior to this change," said Jay Howlett, president of Chase & Lunt Insurance of Newburyport. "People really need to be acutely aware of the ramifications of this."

The maps will become final in July 2010, said map modeling outreach specialist Lauren Pawlik of FEMA's Boston office.

Premiums on flood insurance are set based in part on the level of vulnerability. The owners of properties in areas that are designated as less likely to flood pay lower premiums for the same coverage, Pawlik said.

Moreover, she said, the flood insurance policy — with the lower vulnerability designation — can be transferred to a new owner if the property is sold as long as the policy is up to date.

"You lock in the zone, not the rate," she said. "Like any other insurance, flood insurance rates will rise from year to year."

She gave examples that showed annual insurance costs doubling, depending on the zone.

"It's very important for people to take advantage of this," Pawlik said. "The savings can be significant."

She gave an example, stressing that each individual case is different.

Someone who is not in a high-risk zone could buy the maximum amount of coverage — $250,000 on a building and $100,000 on the contents — for $388 for the first year, an amount which would rise automatically to $1,084 for the building alone in the second year. The same buyer in a high-risk zone would pay $2,279, right from the first year.

By locking in coverage in the lower-risk zone, Pawlik said, the hypothetical buyer would save $1,891 in the first year of premiums, $1,195 in the second year and a total of $12,646 over a 10-year span.

Salisbury Selectman Donald Beaulieu, who owns and operates an insurance agency in Amesbury, was the first to alert the public to the potential savings when the new flood maps came out.

Beaulieu has said that some premiums in high-risk zones could exceed $5,000 per year.

"The advice we should give to the citizenry is buy insurance now," Beaulieu said. "It's easier to stop paying later than to find out you should have bought sooner."

Newbury Conservation Agent Doug Packer has estimated that approximately 200 Plum Island properties could be re-classified as high risk if the new maps become final in their current form. The number could rise from about 70 to about 270, he said.

The maps affect not only coastal properties but also those with river frontage.

Packer said most of Newbury's claims against the flood insurance program in recent years have not been from Plum Island. The bulk of the claims are for riverine flooding, he said.

Flood maps can be amended if contrary scientific or technical data is presented to FEMA, Packer said.

For more information about the National Flood Insurance Plan, go to www.floodsmart.gov.