PORTLAND, Maine — Here’s something you don’t want to think about but should: flooding.
That’s because more than 2,300 homeowners and 540 businesses in Maine are facing annual increases in currently below-market flood insurance rates.
Federal law changes that took effect April 1 will deliver rate increases to a subset of Maine flood insurance policyholders — about 3,300 — when their policies come up for renewal. The increases are limited to 10 percent of premiums for primary homeowners annually and 18 percent for secondary homes, condominiums and business properties.
Increases of that size could continue until those rates reflect what the U.S. Federal Emergency Management Agency determines to be the actual flood risk, a move intended to stabilize the federal flood insurance program that fell into a deficit after hurricanes Katrina and Sandy.
In line with those changes, all federal flood insurance policyholders will start paying a flat fee of $25 for primary residences and $250 a year to policies on second homes and businesses.
Those new fees are one point of uniformity in a sea of changing rules, changing boundaries and a changing climate that will make coastal flooding a growing concern for homeowners, real estate agents, bankers and commercial property developers.
As of Jan. 31, there were 9,190 flood insurance policies in effect in Maine, covering more than $2 billion in property, according to statistics from the Federal Emergency Management Agency.
Cale Pickford, an Allen Insurance and Financial insurance broker based in Camden, said the changes “sort of put a wrinkle” in a recovering real estate market, particularly with higher possible increases for second homes along the coast.
“Real estate is a big driver of the economy,” he said.
Those changes reflect watered-down versions of the 2012 Biggert-Waters reforms, which moved homeowners more quickly to full-risk rates. Homes that qualified for lower rates because they complied with earlier maps or were built before the national flood insurance program existed would have immediately gone to full-risk rates if sold.
So-called “grandfathered” policies can be passed on to a buyer under the revision to the 2012 law, the Homeowner Flood Insurance Affordability Act of 2014, which also ordered some refunds for policyholders who already paid higher premiums under the earlier law.
As those law changes take effect, the maps determining flood risk — and which mortgage-holders must get flood insurance — are being redrawn and could make flood insurance relevant for more Maine property owners this year.
New flood maps are in the works for a number of counties in Maine, with new maps set to take effect this summer in Waldo, Lincoln and Sagadahoc counties, according to Sue Baker, the state floodplain manager for Maine. Maps in York and Cumberland counties have been appealed, and communities in Knox County have also sought changes in the map revisions from FEMA.
That those southern Maine counties are fighting the maps is not surprising as they have the most at stake.
The York County towns of Wells, York, Old Orchard Beach, Kennebunkport and Kennebunk are the top five towns in the state by count of flood insurance policies and premiums paid for active policies, according to FEMA data. Bangor, which ranks 12th by premiums on active policies, is the highest-ranked municipality not in either York or Cumberland county by that measure.
The map changes stand to affect home prices as any home in a flood zone with a mortgage is required to get flood insurance.
For homes that are added to the flood zone, Pickford said some banks will factor monthly flood insurance payments into an existing mortgage.
“Anyone who is going to be remapped in a flood zone will have to purchase flood insurance if they have a mortgage,” Pickford said. “And that creates a lot of activity and anxiety in the marketplace.”
What’s my risk?
Getting a clear picture of flood risk to a home can be tricky as the new maps are rolled out. Preliminary maps from FEMA are available at town offices and online in PDF and geospatial information system formats. Currently, effective maps can be searched by an individual address at FEMA’s Flood Map Service Center.
Knowing that current risk is important for understanding how the pending map changes could affect a given property, whether the property is newly added to a risk zone, decreases in risk or does not change.
What’s the recourse?
Municipalities can challenge FEMA maps on behalf of a group of residents as some counties are already doing through the Letter of Map Revision process, which requires detailed studies that contest or refine the science underlying FEMA’s updated estimates.
Rockland was one such city, filing an appeal of the maps in October over concerns that the new flood risk estimates could hamper downtown development.
Individual property owners can request a Letter of Map Amendment, which would be based on land surveys that would challenge FEMA measurements.
Jim Nadeau, owner of Nadeau Land Surveys, said elevation surveys are the most common method for contesting a certain property’s placement in a higher flood risk category. Often, he said, that higher risk rating depends on horizontal measurements and doesn’t account for elevations.
Property owners can also modify or elevate buildings to reduce insurance costs.
But Nadeau cautioned that while the risk identified by the new maps affect insurance costs, building requirements and mortgages, the actual risk presented by Mother Nature can be a separate matter.
About one-fourth of flood insurance claims happen in areas outside of a flood zone, Nadeau said, which makes flooding a concern not just for properties designated a danger by FEMA.
“Mother Nature doesn’t see these lines on the map,” Nadeau said. “And with sea level rise, she’s going to seem more angry and reach us like she’s never reached us before. ”