Recent NFIP Changes

Beginning January 2017 FEMA is sending letters to National Flood Insurance policyholders following the purchase or renewal of a flood insurance policy.  The letters provide an explanation of the property's flood risk as well as how the flood risk can affect the cost of flood insurance.  For some property owners, obtaining an elevation certificate may lead to lower flood insurance costs immediately or in the future.  Visit the FEMA Letters: Flood Risk and Policy Options webpage for more detailed information. 

Overview of the National Flood Insurance Program

Collier County is a participating community in the National Flood Insurance Program (NFIP), a federal program that was enacted in 1968 to make flood insurance available in communities that maintained floodplain management regulations. Collier County (including Marco Island at the time) entered into the NFIP in 1979. The City of Naples and Everglades City entered into the NFIP in 1970.  The insurance from the NFIP is considerably less expensive than federal disaster loans and it is backed by the U.S. government.

Flood Insurance

When it comes to flood protection, most homeowner insurance policies do not cover losses due to flooding. However, flood insurance is available for most enclosed buildings and can cover the structure and/or contents. This includes homes, condominiums, mobile homes on foundations, businesses or commercial structure, farms, and the contents of rental units. Flood insurance coverage protects you even when a federal disaster is not declared (which is required for most federal disaster assistance to be offered). The flood coverage from the NFIP is an asset to your home or business owner as it reimburses you for covered financial losses from flood damage.

Flood insurance coverage through the NFIP does have its limits. Buildings, single-family homes, or 2-4 family residential structures are limited to $250,000 in damages. Other residential buildings and non-residential buildings are capped at $500,000. For contents-only policies, residences are limited to $100,000 in damages, while the contents of commercial and other structures are capped at $500,000.

Mandatory Purchase Requirement

The Flood Disaster Protection Act of 1973 and the National Flood Insurance Reform Act of 1994 made the purchase of flood insurance mandatory for federally backed mortgages on buildings located in a Special Flood Hazard Area (SFHA).  A SFHA is any flood zone starting with the letter “A” or “V”.  The requirement applies to secured mortgage loans from financial institutions, all mortgage loans purchased by Fannie Mae or Freddie Mac, and all forms of federally related financial assistance.

Lenders are required to complete a Standard Flood Hazard Determination form whenever they make, increase, extend or renew a mortgage, home equity, home improvement, commercial or farm credit loan.  If the building is in an SFHA, the agency or lender is required by law to require the recipient to purchase a flood insurance policy on the building. If the recipient declines to purchase the mandatory flood insurance coverage, the agency or lender can purchase the flood insurance coverage and charge the recipient for it. This latter action is called “force place insurance” and is usually much more expensive for the recipient.

Waiting Period

There is a 30-day waiting period between purchase and when coverage begins.  This is done 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.

Please see the National Flood Insurance Program website at www.floodsmart.gov or call the NFIP toll-free at (888) 379-9531, for information on policy rates and coverage. Contacting a local insurance agent or lender for details is also suggested. Be aware that for existing loans there is typically a 30-day waiting period before coverage goes into effect – so don’t delay.

For assistance: Contact the Flood Information Hotline at (239) 252-2942 or email floodinforequest@colliercountyfl.gov

Visit: Growth Management Department, 2800 N. Horseshoe Dr., Naples, FL 34104

 
Page updated as of 7.27.20